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Congo: mining, conflict and complicity

Bretton Woods Project - February 1, 2007

Congo -Gecamines

A confidential World Bank memo dated September 2005 and leaked to the Financial Times in November 2006 finds that three of the Democratic Republic of Congo's (DRC) biggest mining contracts over which the World Bank had oversight were approved with "a complete lack of transparency".

Concerns now centre on whether the Bank has exercised sufficient oversight since it resumed lending to Congo in 2001, and its reticence to sacrifice the interests of western companies in favour of genuine anti-corruption measures, particularly since the recent inauguration of Joseph Kabila's government.

The three contracts, signed between the state-owned mining company Gécamines and three international mining groups, are worth billions of dollars and were approved in 2005 under a corrupt power-sharing government. They are estimated to have signed away 80 per cent of Gécamine's mineral asset base to private mining companies. They were signed at a time when the World Bank was involved in reforms of the mining sector, the principal source of Congo's state revenue.

In the memo, Craig Andrews, the World Bank's principal mining specialist, wrote to Pedro Alba, the Bank's country director for Congo, to say that the deals had not undergone a "thorough analysis, appraisal and evaluation" before being approved, and that the World Bank, which has taken a prominent role in helping the DRC reform its mining sector, could be seen as risking "perceived complicity and/or tacit approval" of the deals.

Tricia Feeney from UK NGO Rights and Accountability in Development (RAID) said that most of the concessions under Gécamines were awarded behind closed doors in violation of the mining code, which was created with the support of the World Bank in 2002. The deals were apparently signed before the Bank-financed restructuring of Gécamines took place, leaving little more than the shell of a company. In January 2006 Jean Pierre Muteba, the leader of the Nouvelle Dynamique Syndicale, a trade union based in Katanga called for these contracts to be renegotiated.

Jean-Michel Happi, the Bank's country manager in Congo, said legal and financial audits had been commissioned on Gécamines, which would help the government take a decision regarding possible reviews of the contracts. However Paul Fortin, brought in by the World Bank to manage Gécamines, told the Financial Times in November that although he would recommend changes to the contracts in a way that would benefit the company, he did not expect significant changes: "If the review is done in such a way that you have to review everything then you are taking a step backwards". President Joseph Kabila's allies on the Gecamines board can still exercise veto powers on any recommendations made by Fortin.

A parliamentary investigation in 2005 into mining contracts signed during the war and under the transitional government, known as the Lutundula Commission, concluded that many of the contracts should be renegotiated or cancelled. However, the World Bank and other donors have apparently been reluctant to push this. In February 2006 RAID called on Bank president Wolfowitz to investigate why the Bank's programme for restructuring the DRC's mining sector has been so disastrous. So far the Bank has failed to heed RAID's recommendation of nominating an independent group of experts to examine the legality of all the mining contracts signed by the transitional government since 2003 against the terms of the agreements governing the transition, Congolese law and international law. "Now that there's an elected government, there can be no excuses in combating corruption and supporting good governance," said Feeney. "Whether the World Bank makes public its legal, financial and environmental audits of Gécamines will be a litmus test to its commitment to transparency in the extractive industries."

In a separate process, in early 2006 the Bank's department of institutional integrity launched an inquiry into allegations that the transitional Congolese government mismanaged millions of dollars of Bank funds designed to speed the disarmament of militias and fund reconstruction projects. The results of the audits have not yet been disclosed.

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