Rights group raises red flag over $880 million DR Congo mining deal

DR Congo President Joseph Kabila. FILE PHOTO | AFP 

By FRED OLUOCH

Cash from a lucrative mining deal in DR Congo could be diverted towards President Joseph Kabila's operations, a London based rights organisation has warned.

In its latest report, Global Witness revealed the DRC government last year signed over royalty rights in a company operated by giant London-listed commodities trader Glencore.

Global Witness estimates that royalties to an anonymous Cayman Islands company called Africa Horizons Investment Limited, could generate as much as $880 million– more than Congo’s annual health spending.

The anonymous company is part of Dan Gertler’s Fleurette Group, an Israeli billionaire mining magnate and close friend of Congolese President Joseph Kabila. He was the DR Congo partner of US hedge fund Och-Ziff in deals for which it was later charged by US authorities for foreign corruption, eventually paying out over $400 million in a settlement.

According to Global Witness campaigner, Pete Jones, it is troubling that the state miner Gecamines has signed away rights to potentially huge flows of cash that should go towards building Congo’s future.

“It’s even worse that it has handed them to this unknown, anonymous company belonging to an individual with a track record of suspicious deals. The state mining company should be trying to make money for the Congolese people, but here it is signing away its rights to potentially huge royalties,” said Mr Jones.

Glencore confirmed the transaction to Global Witness, asserting that Gecamines had “sold its rights to certain royalties” from its subsidiary KCC to Africa Horizon. It added that KCC –Congo’s third-largest copper mine—was not involved in the original discussions and had subsequently “acted in accordance with the instructions it received from Gecamines” after having taken “reasonable measures”

According to statistics published by the Extractive Industries Transparency Initiative (EITI), KCC paid royalties totaling over $63m to Gecamines in 2014, but now any such payments will go to Africa Horizons.

Good deal

The document seen by Global Witness suggests that royalty payments were made from KCC to Africa Horizons beginning 9 July 2014 under a separate earlier agreement. Gertler’s representatives did not say how much had been transferred to date in royalties under the agreement.

“The contract we have seen provides no reason for Gecamines giving away these royalties. Neither Gecamines nor Gertler’s representatives have told us whether Gecamines received any payment in return. It is imperative that Gecamines and Gertler explain what is behind this agreement. If they can’t show that this is a good deal for Congo, there should be an investigation into what’s really behind the agreement,” said Jones.

President Kabila is constitutionally required to leave power by December 19, but elections have been postponed till April 2018, prompting regular protests that have seen at least 80 civilians in two major protests in January 2015 and September 2016.