Financial Transparency Coalition

LONDON – Bloomberg and Reuters news agencies have reported that the International Monetary Fund has halted its loan programme with the Democratic Republic of Congo because of concerns over transparency in the country’s mining sector. While Congo is clearly in desperate need of funds, Global Witness believes that concerns over possible corruption in the country’s mining sector were so serious that the IMF was justified in stopping its lending.

The overall three-year loan programme was for over $500 million, of which $200 million was not yet disbursed. Although the programme was due to expire on 10 December this year, Congo had been hoping for an extension.

The immediate reason given by the IMF for halting its lending was the failure of the Congolese authorities to publish a June 2011 mining contract. In that month, the state-owned miner Gecamines ceded 25 per cent of mining company Comide to Straker International Corp, registered in the British Virgin Islands.

Congo had promised the IMF and the World Bank that it would publish mining contracts between public and private companies and that it would publish details on the ownership of these companies. It had also pledged to sell mining assets by public tender. Congo followed up on these promises by passing a decree in May 2011 stating that all natural resource contracts would be published within 60 days of their coming into effect.

While Global Witness welcomed these moves by the Congolese authorities, many key contracts have not been published and some of those that have been published have underscored the corruption risks we have highlighted.

Global Witness has expressed concern over the way in which, since the end of 2009, state mining companies have sold off a slew of key copper and cobalt assets in the immensely mineral-rich Katanga province secretly, without any public tenders and at sales prices that were often steeply below commercially estimated values. The companies buying the assets were registered in offshore tax havens – particularly the British Virgin Islands – that keep company ownership and directors secret. In most, possibly all, cases the companies were linked to Dan Gertler, a businessman who is a friend of President Joseph Kabila.

After acquiring the assets, the offshore companies often went on to make huge profits by selling them on to or by partnering up with international companies, in particular the mining giants Glencore and the Eurasian Natural Resources Corporation (ENRC). Both of these companies figure on the London Stock Exchange’s FTSE 100.

The reported decision of the IMF to halt funding should highlight the need for the Congolese state to ensure its natural resources are sold by public tender. Glencore and ENRC should take stock of the corruption fears surrounding their investments in Congo and ensure that all these deals are independently investigated, with all findings published.

The past and present beneficiaries of all the companies with which Glencore and ENRC are partnered in Congo should also be published, to help assure the public that corrupt government officials or their proxies are not among the secret owners of these partner companies.

Other donors should also take note and scale back governance aid to Congo until basic anti-corruption measures are enacted and until concerns over mining sales in Katanga have been addressed. Without such measures, there is a serious risk that donor nations’ loans aimed at improving governance in Congo will bear little fruit.

ENRC, Glencore and Mr Gertler’s representatives have all defended the probity of the deals they have been involved with in Congo. Mr Gertler and Glencore have also disputed that Mr Gertler’s companies have obtained mining assets at far below their commercial values. The Congolese government and Gecamines have similarly defended their records, with the Congolese mines minister Martin Kabwelulu telling Bloomberg on Monday that the government had published all the information requested.

It is not known whether Mr Gertler has any interests in Straker, the company that acquired 25 per cent of Comide. It is, however, known that Mr Gertler is a partner in the overall mining partnership, as Camrose – nearly half of which is owned by Mr Gertler – is a shareholder in Comide. Company documents from the British Virgin Islands show that Straker was registered by Trident Trust, which has registered other companies associated with Mr Gertler.

ENRC is also a partner in the Comide mine and, as such, should also shed light on the transactions being queried by the IMF and the ownership of its joint-venture partner Straker.

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Contact: 

Daniel Balint-Kurti – Campaign Leader, Democratic Republic of Congo; tel. 0207 492 5872; 07912 517 146.

Notes to editors

1. Mr Gertler’s spokesman has suggested to Global Witness the possibility of a conducting a joint audit into the beneficiaries of some of the interests associated with Mr Gertler and his family. Global Witness has on several occasions said it would be happy to discuss this possibility. The most recent response of Mr Gertler’s spokesman on the subject was on 22 June this year, when he said that he would “discuss further with my client”. Global Witness has received no communication since then from Mr Gertler’s representatives on this subject.

2. The incorporation documents from the British Virgin Islands of Straker International Corp. can be found here. Incorporation documents from the British Virgin Islands show that Trident Trust was the registered agent for both Rowny Assets Ltd and Biko Invest Corp, which are companies associated with Mr Gertler that became partners of Glencore in two Congolese mines in early 2011.

3. Global Witness’s 9 May memo to Glencore shareholders can be found here. Our 12 June memo to ENRC shareholders can be found here.

4. Global Witness e-mailed a spokesman for Mr Gertler on the evening of 4 December, asking whether Mr Gertler is the owner of Straker International Corp and, if not, whether he is in any way associated with the company. We will update this statement if we receive a response.