Congo defends mine awards after corruption criticism
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 22 June 2012
The government of the Congo has issued a desperate defence of the way it awards its mining contracts to fend off widespread criticism of corruption in the troubled state.
In a lengthy justification of the way it handed mining concessions to the likes of controversial diamond magnate Dan Gertler, and companies including UK-listed ENRC, its ministry of mines claimed it had acted entirely lawfully and transparently.
The defence follows The Independent's revelations last week that ENRC was so concerned about the possibility of corruption around its takeover of a mine from Mr Gertler that it tipped off Britain's Serious Organised Crime Agency.
ENRC filed a suspicious activity report stating, according to the Global Witness anti-corruption group, that Mr Gertler and his associated companies may have obtained control of the Kolwezi mine "by corrupt means before selling a share of it to ENRC".
In its defence of its actions, the ministry of mines claimed that all sales of state-owned mining assets were conducted "in strict compliance with the legal, regulatory and statutory provisions regulating the company".
That was met with astonishment by several mining experts with experience in the country.
The Congolese government famously seized the Kolwezi mine from the London-listed miner First Quantum, which says it had invested about $750m (£480m) into it. The state then sold it on to a company controlled by Mr Gertler for $60m. He then sold part of the asset, known as Kolwezi, to ENRC for $175m.
During the years of dispute, the mine development remained unfinished and idle.
First Quantum was later compensated in a $1.25bn legal settlement.
At the time, First Quantum described the government's actions as "unlawful, corrupt and harmful" to the country.
But the ministry statement claimed the non-government organisations criticising it were misguided and that its transactions were "transparent."
The statement was inevitably seen as highlighting the growing pressure which is being felt by the Congo government due to the furore surrounding ENRC.
Global Witness listed several mining assets which were sold in secret processes with no open public tenders, giving rise to a significant risk that beneficiaries could include corrupt local officials.
It also alleged that "in at least two cases ENRC bankrolled the initial purchases by Gertler-related offshore companies instead of doing business directly with the Congolese government."
The Mining minister Martin Kabwelulu's statement gave a staunch defence of Mr Gertler, a long-term ally of the president, Joseph Kabila, saying: "For our part, in addition to what is stated above regarding the various asset transfers, we note that Mr Dan Gertler has invested in the Democratic Republic of the Congo for the long term through his companies, which have always obeyed the required regulations and standards."
Mr Kabila, 40, was re-elected president last year amid opposition claims of electoral fraud, meaning he will extend his rule to at least 15 years.
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