23/05/2012

Secret mining in the Congo: Integrity of the UK aid programme & the IMF at stake

Ahead of today’s conference of Secret Mining in the Congo, by Professor Willy Vangu, please find below a supporting statement from Pauline Latham MP.

“Until the IMF start enforcing the transparency caveats attached to their massive loan to the DRC Government, British Ministers should force the IMF to stop their support of this regime.

“The integrity of the UK’s aid programme and the work of the IMF are at stake here.  It cannot be right that, in the face of such overwhelming evidence of wrongdoing, the UK Government does nothing.  The UK aid programme is vital to protecting the lives of so many of the world’s poorest but for the long term betterment of aid recipients, the UK Government must be prepared to take tough decision on aid and loan payments through the IMF.  This includes suspension and cancellation of projects.

“UK taxpayer-funded aid programmes, delivered by DfID or via the IMF or World Bank are only value for money if Andrew Mitchell and other Ministers work together to root out corruption.  There is little point in pumping money into a DRC Government that is stealing its own natural resources through a network of shell companies housed in the British Virgin Islands.

“What is all the more concerning for UK taxpayers, seeking reassurances that their money is being spent wisely, is the involvement of London-listed FTSE 100 firms.  It raises the need for a full investigation to get to the bottom of who is benefiting from these deals – are London listed firms using Dan Gertler and shell companies to navigate around anti-bribery legislation?

“The acid test will be the sale of the Lonshi and Frontier mines, both formerly owned by First Quantum Minerals. According to the IMF rules, these two mines should be sold through a public tender to get the best deal for the Congolese people.

“This is a complex situation, made purposely so by its architects.  But for all of us who care about the Congolese and transparency in business, we must get to the bottom of it.  We must get to the bottom of it because what Professor Vangu has outlined today is evidence of the channels used by a ruling elite to keep a country with huge natural wealth tragically poor.”

For further information: http://www.freefairdrc.com/en/job

or contact: ANITA VUKOMANOVIC 0207 219 7110      anita.vukomanovic@parliament.uk

See http://www.miningweekly.com/article/west-africa-emerging-as-the-new-pilbara-west-african-minerals-2012-05-21.

Since 2010 a number of offshore companies associated with Dan Gertler – an Israeli businessman and friend of Congolese President Joseph Kabila – have secretly bought stakes in several mines from the state, paying only a small fraction of their commercially estimated values. The mines were sold without public tenders and limited details were only released long after the assets were sold off.

After buying the assets, at least two of the offshore companies made huge profits by selling on shares in them soon afterwards. Others are positioned to profit by collecting the mining revenues.

Some of the proceeds of mining sales in 2011 were used by the Congolese government to cover costs related to the 2011 election, which returned incumbent president Joseph Kabila to power. The polls were condemned as flawed by international diplomats and election observers and were marred by killings committed by government security forces.

Mr Gertler and Glencore have challenged Global Witness’s facts as laid out in the briefing, and their views are reflected in the note. A spokesman for Mr Gertler has questioned the commercial valuations for some of the mines concerned, while both Glencore and Mr Gertler’s representatives categorically deny any involvement in corruption in Congo.

“Glencore’s business in Congo is intimately tied up with a controversial friend of the president,” said Daniel Balint Kurti, Campaign Leader for the Democratic Republic of Congo at Global Witness. “In a country endowed with vast mineral wealth and yet ranked by the UN as the least developed nation in the world, the company owes its shareholders and, more importantly, the people of Congo, an explanation of exactly who now owns their natural resources.”

Mr Gertler is a key intermediary through whom Glencore has acquired stakes in Congolese mining assets. He is also a partner in all three mining ventures in Congo in which Glencore has acquired stakes that have been collectively valued at an estimated $4.6 billion. Two of those ventures, the Kansuki and Mutanda mines, together are expected to add at least 40% to the world’s cobalt output and increase Congo’s copper production by about 40% (compared to 2011 production figures) once they are fully developed.

Global Witness is asking Glencore and Mr Gertler to release the full list of shareholders of all the offshore companies involved – information which is currently secret. Global Witness believes there is a risk that the shareholders could include corrupt Congolese government officials or their proxies.

“Congo’s natural resource wealth should benefit the country as a whole,” said Balint-Kurti. “Yet hugely profitable deals are being struck in Congo by secretive offshore companies and multinationals; the Congolese state is getting peanuts and we are extremely concerned that the Congolese people are being deprived of billions of dollars.”

As the world’s largest commodity-trading firm, Glencore’s behaviour helps set the standard for how commodities companies operate across the world. It boasts that it “will not assist any third party in violating the law in any country, nor pay or receive bribes, nor participate in any other criminal, fraudulent or corrupt practice”.

“It is now incumbent upon Glencore to show that it is living up to its rhetoric and that it is ready to make public the details of its previously secret business deals,” concluded Balint-Kurti.

/Ends

Notes for editors:

Contact:

Daniel Balint-Kurti, +44 (0) 207 492 5872 and +44 (0) 7912 517 146

Notes to editors:

1. The full report on Glencore’s investments in Congo and the company’s links to Dan Gertler is available at http://www.globalwitness.org/sites/default/files/Global%20Witness%20memo%20on%20Glencore%27s%20secretive%20dealings%20in%20the%20Democratic%20Republic%20of%20Congo.pdf.

2. A Q&A on the “secret sales” scandal can be found at http://www.globalwitness.org/sites/default/files/Global%20Witness%20Q%26A%20on%20Glencore%20in%20the%20Congo_0.pdf.

3. Written responses by Glencore and Mr Gertler’s representatives to questions from Global Witness can be found at http://www.globalwitness.org/library/glencore-has-questions-answer-global-witness-investigation-potentially-corrupt-deals-congo.

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses.

If you go to the weblink http://www.globalwitness.org/campaigns/corruption/oil-gas-and-mining/glencore, you will find all the associated documents, including Global Witness’s note for the attention of Glencore shareholders and replies from Glencore and Dan Gertler.

See http://www.minesandcommunities.org/article.php?a=11640.

See http://www.smh.com.au/business/bhp-scraps-plans-for-congo-smelter-20120216-1ta7h.html.

See http://www.brettonwoodsproject.org/art-569560.

See http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=142586&sn=Detail&pid=92730.

But if its power is harnessed, who will benefit – the DRC’s millions of poor or a wealthy regional and international elite?

Civil society organisations are worried that ordinary Congolese, only 6% of whom have access to electricity, will remain in the dark, while their river’s power is transmitted to mines and industrial facilities in South Africa, elsewhere in Africa or even Europe, or to power-hungry installations such as a massive aluminium smelter proposed for the coast by BHP Billiton.

See http://www.news24.com/Columnists/AndreasSpath/Energy-colonialism-in-the-Congo-20111130

(One of the companies hoping to benefit from cheap power from the Inga Dam project is BHP Billiton.)

See http://ipsnews.net/news.asp?idnews=105843.

See http://www.mining.com/2011/11/11/katanga-gets-635-million-to-build-worlds-largest-cobalt-mine/.

See http://www.internationalrivers.org/blog/lori-pottinger/2011-9-26/africas-energy-future-heading-down-dark-tunnel.

But this is threatened by AngloGold Ashanti‘s mining plans.

See http://www.towardfreedom.com/americas/2549-colombia-to-the-congo-lust-for-gold-threatens-environment-a-human-rights

AngloGold May Lift Output 68% by 2020 Excluding Acquisitions

AngloGold Ashanti Ltd (ANG), the third- largest producer of the metal, may increase output 68 percent by 2020 excluding any acquisitions as it seeks to reverse declines.

See http://www.bloomberg.com/news/2011-09-26/anglogold-ashanti-says-production-could-rise-to-7-6-million-ounces-in-2020.html.

See http://www.mineweb.com/mineweb/view/mineweb/en/page504?oid=136466&sn=Detail&pid=92730.

Glencore has leapt straight into the FTSE 100 list of the UK’s largest companies and – with a market value likely to  be at around £36 billion – will become the fourth or fifth biggest mining company traded on the London Stock Exchange’s premium main market.

And make no mistake, although Glencore’s trading in foodstuffs is a key part of its global business (attracting a wealth of criticism in recent years),  its main profits are derived from the exploitation of oil and minerals.

Those choosing to buy Glencore stock this week may blithely hope that this monstrous enterprise will now forced to clean up its numerous dubious acts. But they certainly shouldn’t bank on it.

See http://www.minesandcommunities.org/10916.

Glencore clean-up backed by EU loan

Commodities giant Glencore has used loans guaranteed by British and European taxpayers to clear up its own pollution mess in Zambia, it has emerged.

http://www.dailymail.co.uk/money/article-1390154/Glencore-clean-Zambia-backed-EU-loan.html

Glencore makes weak Hong Kong debut
http://uk.news.yahoo.com/glencore-shares-down-2-8-hong-kong-debut-012836652.html

In this particular instance, leaked US diplomatic cables alleged a raft of recent serious safety violations at uranium mines and nuclear facilities in a number of African countries. One of these cables, dated September 2007, is from Roger A Meece, the US Ambassador to DR Congo. It identifies Finnish, British, Congolese and South African companies as likely to have been complicit in the illicit trading of uranium (if not copper and cobalt as well).

In its summary of this wikileak, Godoy indicts an outfit called Malta Forest for illegally “mining and exporting” DRC’s uranium from the Luiswishi deposit in Katanga province. However, Meece’s cable is considerably more circumspect about this company’s role than Godoy’ article suggests. Ambassador Reece raised the serious possibility that it was actually a UK company, Brinkley Mining, that  tried to secure this lucrative uranium contract.

See http://www.minesandcommunities.org/article.php?a=10634.