Congo probe into mining companies' disappearing tax payments

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The Independent Online

The Democratic Republic of the Congo's new prime minister has ordered an investigation into the nation's mining industry after a damning report by an international watchdog found tens of millions of dollars a year in tax revenues were being lost in the system.

Augustin Matata Ponyo Mapon, who became the Congo's prime minister in April, has ordered his attorney general to investigate the "significant and unexplained discrepancies" the report highlighted between the amount of money miners say they have paid in taxes and the amount government records say has been received.

The report, by the Extractive Industries Transparency Initiative, a watchdog launched by Tony Blair, put the discrepancy at about $70m (£45m) for 2008 and 2009 combined. However, the true shortfall is thought to be much greater since EITI's calculations are based on the returns of less than a quarter of the miners operating in the Congo. Companies operating in the Congo include the FTSE 100 miners Glencore and ENRC.

The EITI said the discrepancies appeared to have resulted from "missing or low quality data from companies as well as from government" adding "it is impossible to attribute one specific source or reason for this". It also found some miners have "presented false evidence of payment".

Transparency has become a hugely political issue in the Congo's mining industry. This stems, in part, from the acquisition of the Kolwezi copper mine by Dan Gertler, a friend of President Joseph Kabila. Mr Kabila famously seized the Kolwezi mine from the London-listed miner First Quantum in 2009 and sold it to a company controlled by Mr Gertler for $60m. He later sold it on to ENRC for $175m. Mr Gertler has always denied any wrongdoing in the Congo.

The Congo is working towards "EITI validation" to improve its standing for corporate governance. Glencore became an EITI "supporting company" in 2010 ahead of listing on the London Stock Exchange in May last year. A Glencore spokesman said: "We pay our taxes and other obligations to government in line with the law."

ENRC is not currently a supporting company. However, a spokesman said the miner was having a dialogue with the EITI and was "actively working towards it" although it has not agreed a deadline to comply with its rules.