ENRC draws fire for attempt to 'clean up' its Congo holdings
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.
Tuesday 11 December 2012
A move by the controversial mining giant ENRC to severe its joint-venture ties with Dan Gertler, the Israeli diamond billionaire, has run into immediate criticism from governance watchdogs.
In what is being seen as an attempt to assuage widespread criticism of the way ENRC has bought assets from Mr Gertler, the company yesterday confirmed that it had struck a deal to buy the remaining 49.5 per cent stake in their copper and cobalt joint venture in the Democratic Republic of Congo for $550m.
This follows the International Monetary Fund's decision last week to freeze loans to Congo over concerns about the way a company associated with Mr Gertler acquired mining rights from the government of President Joseph Kabila.
While the deal will arguably clean up ENRC's reputation in the country, it still apparently sees Mr Gertler profit handsomely from the Kolwezi mine's copper and cobalt.
Global Witness - the NGO which has been heavily critical of Mr Gertler's involvement in Congo's mining asset sales, arguing that he has been given them on the cheap by the government of his friend Mr Kabila – said it deplored the deal.
A spokesman said: "We oppose this strongly. It carries with it a very significant risk of corruption. This is exactly the kind of deal we have been complaining about."
ENRC bought its original 50.5 per cent stake in the assets from Mr Gertler in 2010, paying just $50m with the promise of a further $125m to come.
Analysts at Deutsche Bank said the latest price paid to Mr Gertler looked "high", and that there was still not enough information from the company to establish whether or not it was a good deal.
ENRC's chairman Mehmet Dalman, who has been trying to clean up the image of the company's Congo operations, said: "This transaction is an integral part of the corporate governance and company structure optimisation that I set as a key priority when I assumed chairmanship."
The commodities giant Glencore, which also has significant dealings with Mr Gertler in Congo and is a co-owner on a number of projects with him, said it had not given him money for assets, instead co-operating and making loans to mining projects in which they were partners. It declined to comment on ENRC's latest move.
Mr Gertler gave a revealing interview last week to Bloomberg Markets Magazine in which he claimed he deserved a Nobel Prize for his work attracting investors to Congo.
ENRC said last night its business relationship with Mr Gertler had been "productive".
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