Tag Archives: Congo corruption

Geological Scandal: Why Mining Companies Like Least Developed Countries

Iron ore. Image from enrc.com

An expert panel led by Kofi Annan, a former UN secretary-general, looked at five deals struck between 2010 and 2012, and compared the sums for which government-owned mines were sold with independent assessments of their value. It found a gap of $1.36 billion, double the state’s annual budget for health and education. And these deals are just a small subset of all the bargains struck, says the report, which Mr Annan presented in Cape Town, South Africa, on May 10th.

The report highlights some puzzling details. For instance ENRC, a London-listed Kazakh mining firm, waived its rights to buy out a stake in a mining enterprise owned by Gécamines, Congo’s state miner, only to acquire it for $75m from a company owned by Dan Gertler, an Israeli businessman, which had paid $15m for it just months earlier. Mr Gertler is close to Joseph Kabila, Congo’s president. ENRC, which is being investigated by the Serious Fraud Office in Britain, was Congo’s third-largest copper producer last year. Both ENRC and Mr Gertler deny wrongdoing.

African countries often fail to collect reasonable taxes on mining, says Mr Annan’s panel. For example, Zambia’s copper exports were worth $10 billion in 2011, but its tax receipts from mining were a meagre $240m. The widespread use by mining firms of offshore investment vehicles as conduits for profits creates scope for tax avoidance. Their use is not restricted to rich-world companies. Much of the oil that Angola ships to China is via a company called the China International Fund. Its trading prices are not made public…

Congo’s prime minister, Matata Ponyo Mapon, promises change. In January 2013… Mr Ponyo said he would rein in the state-owned mining companies and increase transparency in the industry. “We must avoid situations where we’re not publishing our mining contracts, where our state assets are undervalued, and where the government doesn’t know what its state mining companies are doing,” he told miners and officials at a conference in January….

Last year miners in Congo, which include Freeport-McMoRan and Glencore Xstrata, shipped $6.7 billion-worth of copper and cobalt from the country.

Business in the Democratic Republic of Congo: Murky minerals, Economist, May 18, 2013, at 74

See also Who is Looting Congo?

Gated Rainforests: the militarization of conservation

Epulu_River_Ituri

The  Epulu  village  in the Democratic Republic of Congo is situated inside a nature reserve in the Ituri rainforest, an area covering 5,000 square miles that is supposed to be off limits to hunters and gold prospectors. A militia, led by a former elephant poacher called Paul Sadala, has terrorised communities inside the reserve since 2012, employing methods brutal even by the grisly standards of this part of the world.

“The attacks were absolutely terrifying,” said Justin Oganda, a representative of the residents of Epulu who remain displaced in Mambasa, about 50 miles away. By the end of that day in June, the militiamen had murdered, raped, burned people alive and even eaten the flesh and heart of one of their victims. “To have killed so many people, to burn them alive, the cannibalism … Mentally they cannot be normal,” Oganda added.

As ever with Congo, it is not just a simple tale of victims and villains. Sadala, who goes by the nom de guerre Morgan, and his “Mai Mai Morgan” gunmen are thought to have powerful supporters in the security forces who enable their lucrative illegal trade in ivory and smuggled gold. Some local people with an eye on the gold in the ground beneath their feet tacitly support Morgan, who improbably also likes to be called Chuck Norris. “There is complicity between [Morgan] and certain elements within the army,” said Jefferson Abdallah Pene Mbaka, the MP for Mambasa. “With the support of certain army authorities [Mai Mai Morgan] have increased their poaching activities. The sale of ivory is organised by these figures in the army.” Many people in the region believe soldiers have orders not to arrest Morgan.

Morgan’s principal targets are those who operate and police the Unesco-recognised world heritage site known as the Okapi wildlife reserve, or by its French acronym, RFO. The laws of the reserve forbid the hunting of endangered species, especially elephants and okapi, and the exploitation of its gold reserves….The suspicion is that at least some of Morgan’s booty winds up 280 miles south-west of Epulu, in the hands of the Congolese army. At the end of 2012 the United Nations group of experts on Congo issued a report that accused Congolese general Jean Claude Kifwa in the provincial capital, Kisangani, of giving “arms, ammunition, uniforms and communication equipment to Mai Mai Morgan in exchange for ivory”….

Despite the brutality of the attacks, many reserve dwellers express sympathy for Morgan, with some even confessing to outright support for him. “I am behind Morgan,” said an 18-year-old in a small village not far from Epulu who refused to give his name. “Because Morgan is here the rangers cannot patrol and we are free to dig for gold. But I wouldn’t support him if he came here and burned our homes.”  Most people, however, have a more nuanced position, saying that although revolted by his methods, they support his stated desire to see the size of the reserve reduced and more rights given to locals to hunt and dig.  “The forest is where we find what we need to survive,” said Matope Mapilanga, the leader of a Pygmy community on the edge of the reserve. “[The park authorities] have cut our land, there is now a part we cannot access. It has worsened in the last few years, since the RFO got bigger. We would prefer that the people of the RFO weren’t in our forest. We feel like the big non-governmental organisations and the rangers have privileged the animals over the people.”

The conservationists remain unconvinced, though. “The people who say they support Morgan are just those people who want to dig gold and exploit timber,” said Robert Mwinyihali, the project leader for Wildlife Conservation Society’s (WCS) work in the Ituri rainforest. WCS has given financial backing to the park rangers and the Congolese Wildlife Authority’s work in the reserve. “There are laws in Congo about the exploitation of resources,” said Mwinyihali. “These people can either respect those laws, or they can ignore them and commit criminal acts.”  WCS and GIC’s support for the park rangers has led to accusations that they are partly responsible for the militarisation of the conflict. However, Mwinyihali said the biggest problem was the absence of effective intervention by the Congolese state, which meant NGOs and the park rangers had had to fulfil roles that should be the government’s responsibility: for example, bringing in armed guards to track Morgan. Bernard Iyomi Iyatshi, the director of park rangers, complained about a lack of government funds for his anti-poaching operations.

Mwinyihali also accused the Congolese government of doing little to reconcile the park authorities and local communities. As mutual resentment and misunderstanding grows, Morgan and other armed groups are able to exploit the toxic atmosphere and continue their poaching, digging and savage attacks.  “There are no job opportunities created by government investment here,” said Mwinyihali. “This has led to this crisis, where people have no option but to want to dig for gold. This leads to the conflict with the park authorities, and then it is only a small step to people taking up arms and joining militias.”  Despite being a member of the ruling party, Mbaka is an outspoken critic of the government’s policy, or lack of it, in the region. “Swaths of the park are inaccessible, there’s just no infrastructure,” he said. “It’s an absolute scandal, there’s potentially so much wealth here. It also means it is difficult to track and stop men like Morgan.”  Even if Morgan is caught, people fear that his powerful backers in the army will find another militia to continue poaching and stealing gold…

About 70% per cent of the ivory from slaughtered African elephants goes to China, another of the countries warned by Cites. The price of ivory has rocketed. Cites reported that the price more than doubled between 2004 and 2010, from about $300 to $700 (£198 to £462) a kilogramme. An Associated Press investigation in 2010 claimed ivory was being sold in China for $1,800 a kilogramme.

Excerpt, Pete Jones, Gold and poaching bring murder and misery to Congolese wildlife reserve, Guardian, Mar. 31, 2013

Who is Looting Congo? Kabila, Israeli Business and the Hezbollah

Democratic Republic of Congo has awarded lucrative forestry concessions to a company controlled by a Lebanese businessman who also runs a firm subject to sanctions by the United States as a front for Hezbollah.  The 2011 concessions issued by Congo’s environment ministry to the Trans-M company, seen by Reuters, could complicate Washington’s efforts to curb what it says are the Lebanese militant movement’s growing business activities in Africa.  The concessions cover 25-year leases for hundreds of thousands of hectares of rainforest in the central African country, the world’s second forest “lung” after the Amazon. The concessions are capable of generating hundreds of millions of dollars in revenues over 25 years, if fully exploited, forestry experts say.  Trans-M is controlled by businessman Ahmed Tajideen (whose name is also given as Tajeddine in U.S. Treasury documents). He also runs another company, Congo Futur, which the U.S. government says is a front for Hezbollah. Congo Futur cites sawmilling as one of its businesses.  The U.S. Treasury Department put Congo Futur under targeted sanctions in 2010, saying the firm was part of a network of businesses ultimately controlled by Tajideen’s three brothers, Kassim, Husayn and Ali, and that this generated “millions of dollars in funding” for Hezbollah.  The sanctions aim to block U.S. dollar transfers linked to the trio, part of wider U.S. efforts to counter what Washington sees as increasing business activity in Africa by Hezbollah, which it calls “among the most dangerous terrorist groups in the world”. Hezbollah has denied U.S. accusations that it is linked to money-laundering and the international narcotics trade.

Ahmed Tajideen, who is not subject to U.S. Treasury sanctions, says his brothers have no share of Congo Futur or Trans-M and that the companies are neither directly related to each other nor act as front companies for Hezbollah.”I am the majority shareholder of both companies,” Tajideen told Reuters earlier this month.”I created both companies independently of each other”, he said. “My brothers have nothing to do with the companies”.

But leaked U.S. diplomatic cables produced in 2000 quote Ahmed Tajideen as saying Congo Futur established Trans-M, which is also described as a “subsidiary” of Congo Futur on the website of Congo’s official investment authority, ANAPI.  “The question for the Congolese government is whether they really want to continue doing business with a company that is linked to a terrorist organisation?” said a U.S. official who monitors Congo, but asked not to be named.  The U.S. Treasury made Kassim Tajideen subject to sanctions in 2009 and in 2010 also sanctioned Husayn Tajideen and Ali Tajideen, who it says was once a Hezbollah commander in Lebanon. The Treasury says Husayn and Ali are amongst Hezbollah’s “top financiers in Africa”…

Ron Prosor, Israel’s ambassador to the United Nations, told the Security Council last month that he was particularly concerned that West Africa had become a “hub” for Hezbollah. But he did not refer to central Africa or Congo.  Powerful Israeli businessmen still retain good relations with president Kabila, notably Dan Gertler, a wealthy diamond merchant who controls numerous mining and other interests in Congo, many managed via offshore companies.

Excerpts, by Dino Mahtani,Congo under scrutiny over Hezbollah business links, Reuters, Mar. 16, 2012

See also Global Enterprises Corporate, Nikanor, Glencore 

An Israeli tycoon, the Virgin Islands, and Africa’s blood diamonds