Month after month, new revelations show that the Congolese mines continue to be plundered by a coalition of unethical miners and corrupt local officials which bizarrely remain in office.
Congo is endowed with mineral riches but there is little trickling down for the people. One of the reasons is that companies do not pay to the state treasury or to the state-owned company Gécamines what they should in terms of taxes or dividends. And examples abound.
Last January, two reports were published on two subsidiaries of the Swiss-based giant global trader Glencore. Action pour la défense des droits humains (ADDH), set up by the lawyer Daudet Kitwa Kalume, which specialises in mining governance expressed concern about the lack of profitability at the Kamoto Copper Company (KCC) joint venture set up by Glencore’s subsidiary, Katanga Mining and Gécamines. Accordingly, KCC borrowed money from other companies of the Glencore Group, at rates excessively high rates, in total contradiction with the Congolese Mining Code provisions.
ADDH also highlights a US $ 22.1 million gap between the amount of the tax on profits for 2014, which was declared to the Extractive Industries Transparency Initiative (EITI) by KCC and the figure which appears in this company’s accounts. ADDH also deplores the transfer by KCC of $ 880 million of royalties owed to Gécamines to the Cayman Islands-based Africa Horizon Investment Ltd, which is a subsidiary of the Israeli tycoon Dan Gertler’s Fleurette Group, following a bizarre agreement between Glencore, Fleurette and Gécamines. Likewise, ADDH blames Gécamines’ passivity to defend its own interest namely for failing to ask for the payment of a $ 15 m. entry fee for 2013 and of a $ 9.45 m. lease for the 2009-2014 period, both owed by KCC.
Parallel mining office
Simultaneously, another NGO called Initiative pour la Bonne Gouvernance et Droits Humains (IBGDH) published a report wondering why the Mutanda Mining (Mumi) company, 69% owned by Glencore and 31% by Fleurette, curiously lacked financial records.
IBGDH calls for the payment by Mumi of $ 115 m. of unpaid taxes to the Congolese Treasury. The authors of the report also consider that Gécamines’s sale of its stake Mumi in 2011 to an offshore company called Rowny Assets Ltd, owned by Gertler’s family, without a prior assessment of the value of these assets, represented a net loss of $ 225 m. in terms of uncashed royalties and entry fees.
Glencore itself seemed to realize in early 2017, that its relationship with Gertler’s companies could be detrimental for its reputation after revelations during the last quarter of 2016 by U.S. officials that Gertler’s business partner, the U.S. based hedge fund Och-Ziff Capital Management Group LLC acknowledged participating in the bribing of Congolese officials. Gertler denied any wrongdoing and hasn’t been charged so far. Yet, on the 13 February 2017, Glencore announced it had agreed to a $960 million deal with Dan Gertler’s Fleurette Group to buy out his holdings in Mutanda Mining, the world’s biggest cobalt mine, and in Katanga Mining Ltd.
The governance of the state-owned company Gécamines is a serious matter of concern for the New York-based Natural Resources Governance Institute (NRGI) which suspects the national miner to have become a de facto parallel mining office, which awards concessions to companies without allowing anybody to check whether or they make the lowest bids or come up with the best technical capacity to develop projects.
Furthermore, the NRGI report points out that Gécamines increased since 2008, the number of exploitation permits it owns from 38 to 73, well beyond the ceiling of 50 permits which is imposed by the Mining Code of 2002.
Moreover, there are suspicions that in Gécamines is also acting as an arm of the Kabila family interests. The Belgian daily Le Soir revealed in October 2016 several transactions which were detrimental to Gécamines but benefitted to the Kabila family. A former executive of the BGFI Bank, Jean-Jacques Lumumba, told the Belgian paper that Gécamines was given a US $ 30 million credit line and repaid twice the interest of US $ 2.7 m. owed for this service. Coincidently, BGFI DRC is 40 % owned by Joseph Kabila’s own sister, Gloria Mteyu and the Bank’s CEO is Kabila’s adopted brother, Francis Selemani Mtwale.
A copperbelt-based political group called the Katanguese Patriots (PAKAR) reported in December 2016 that only $ 13 million of this BGFI loan were spent for the purchase of mining equipments by Gécamines whose President, Albert Yuma Mulindi is the only person to know what happened with the rest of the money.
Curiously, despite the poor performances of Gécamines whose 2016 output was a miserable 11 000 tonnes of copper, below the 24,000 tonnes target for the year, representing barely one percent of the country’s output, Albert Yuma remains in office. In fact, it’s an open secret, in the copperbelt capital, Lubumbashi that there is only one explanation for the Yuma’s permanence since 2011 at the helm of Gécamines. Yuma’s links with the Kabila family are close. Coincidently, although no formal agreement has been struck with Gécamines, three of its mines are currently exploited by diggers who are forced by soldiers to sell their products below market prices, to a company called Acacia, according to a French consulting firm Sofreco report to the World Bank.
Acacia is majority owned by president Joseph Kabila’s own sister, Jaynet while their younger brother Masengo, Joseph Kabila’s 16-year-old daughter, Sifa, and his financial assistant, Emmanuel Adrupiako, are the other shareholders based on corporate records from September 2014, according to a Bloomberg story published by mid- December, with the support of the « Pulitzer Centre on Crisis Reporting ».
The need to protect these opaque deals is widely in Kinshasa as one of the reasons why Joseph Kabila is so much willing to stay in office after the expiration of his second and last presidential term, on the 19 December 2016.
According to Bloomberg, thousands of documents reveal the existence of a 70 companies network established by the Kabila, which spreads its tentacles from United States to Panama and even to the tax haven of Niue, in the Pacific. “His wife, his children and eight of his brothers and sisters are controlling more than 120 mining permits “ to exploit gold, diamond, copper, cobalt and other minerals, says the Bloomberg report which points out that two companies of the network are controlling diamond concessions which stretch over more than 700 km along the Angolan border. One of them is called Osifal after the names of Joseph Kabila’s spouse, Olive Lembe and of their children, Sifa and Laurent-Désiré. A fish rots from the head down…