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China/Africa – Syndicate or mafia?

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The growing influence of China in Africa is nothing new. From mining to agriculture, building to shipping, China is omnipresent. The Asian giant needs resources for its hungry industries, and Africa has plenty to offer. On their side, most African governments like doing business with China. They say China pay her dues in time, it delivers on its promises and – even if this is not always said publicly – does not pose questions on human rights and other similar issues. Since 2002, the government has encouraged private Chinese businessmen to invest in the continent, and many heeded the call. Not always to the highest ethical standards.

One of the business syndicates swaying much influence in Africa today is the China International Fund. This is the creation of Sam Pa, a Chinese national who forged long term connections with African official since his studies in Baku during the Cold War. There the Russians run an academy to prepare the future political class of socialist States. Sam Pa is today a very secretive man. His name rarely appears on the pres and in official documents. Yet, he is believed to exert control on the syndicate through a group of people connected with him. In a special way Veronica Fung, who controls 70% of Newbright International, the core company of the group. The remaining 30% is controlled by Lo Fong Hung, the daughter of a Chinese general and married to Wang Xiangfei, a well-connected banker. Newbright International, along with China Sonangol and other interconnected companies, is active in Africa, especially in the energy sector.

Sam Pa and his partners were able to win privileged entry in Angolaís crude market and now control all Angola’s oil exports towards China. Angola is China’s largest supplier of crude oil, a business amounting to more than $20 billion a year. China Sonangol is present also in Guinea. With the help of the then minister of mines, Mahmoud Thiam, Sonagol won control over the state’s share of existing projects and, much more important, gain control of future projects in Guinea. The West African country has the world’s largest reserves of bauxite and large untapped reserves of high-grade iron ore. China International Fund got an 85% share in a venture called the African Development Corporation, with the government controlling the other 15%, and won exclusive rights to new mineral concessions in Guinea, including the right to negotiate oil-production contracts in the Gulf of Guinea.

The syndicate is active also in Zimbabwe. There, Pa has strong liaisons with Happyton Bonyongwe, head of the infamous secret police which helps keeping the dictator Robert Mugabe in power. Pa founded a new company, the Sino-Zimbabwe Development Limited, which acquired rights to extract oil and gas, and to mine gold, platinum and chromium. In return, the company is to build infrastructures valued at £ 4 billion. The syndicate extends its reach to other African countries, and it is also active in Latin America and in the United States.

There is nothing wrong in doing business. Questions remain about the ethics of such syndicate. In Angola, China Sonagol buys oil at a low price fixed in 2005, when crude went at $55 a barrel. The oil is then sold to China at market price, which now is above $100 a barrel. Profits are substantial, yet there is no reflection of these gains in Angola. According to the deal, China Sonagol was to build infrastructures like low-cost housing, public water-mains, hydroelectric plants, cross-country roads and railways. None of these materialized, and the government does not complain – after all, the very son of the President is a director of China Sonagol …The real losers are the Angolan people who see their natural resources enjoyed by other people while they do not have running water coming out of their taps.

Ethical questions are raised also for other deals. After the death of President Lansana Conte, a military junta took control of Guinea. The situation rapidly deteriorated, with soldiers taking advantage of their power to steal and abuse people. In September 2009, they went on a rampage, raping women and massacring more than 150 protesters in Konacry. Guinea was immediately sanctioned by international bodies. China International Fund stepped in providing $100m to the cash-strapped junta and giving them a new lease of life. This has been condemned by the opposition as an immoral and illegal act. It is no surprise that once the junta fell the new government placed the deals it signed in a limbo. In Zimbabwe, the China International Fund has access to the diamond mines. It pays its dues directly to the Central Intelligence Organization (CIO), the secret service. In recent months, the CIO was able to increase the salaries of agents, buy hundreds of new off-road vehicles and it is training thousands of militia who will certainly be used to intimidate voters during the next elections.

China International Fund has been scrutinized by the U.S.-China Economic & Security Review Commission and researched by various investigative journalists. Yet, no one has been able to unravel the internal working of the syndicate. Though the same people keep cropping up as directors in affiliated companies, it is impossible to say who controls what. Final ownership is impossible for an outsider to establish, as it is impossible to point a finger to who is really responsible for the unethical behaviour of the group. One thing is certain, if the government of China does strive to form partnership on a state to state basis, this is not so of private Chinese entrepreneurs; at least not all of them. China International Fund is a clear example of how political elites and businesspeople can happily share resources on the back of ordinary people, who nothing can against the continuous plunder of their land.

Mepukori ole Karam

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