Masthead graphic based on a painting by Gudrun Thriemer.

Friday, March 28, 2008

Friends of the Congo publishes "shocking facts" behind mining review

Back in September 2007, the Halifax Initiative reported that “Export Development Canada maintains interest in controversial Tenke mine in Congo" (Ottawa, September 10, 2007)

There had been allegations of irregularities associated with the acquisition of the property.

As a result, the contract for this project, along with many others, has been under review by the new Congolese government.

The DRC had an election in 2006. They were the first democratic elections since the Congo gained its independence from Belgium in 1960, Patrice Lamumba was elected, and then assassinated a year later.

In May 2007, the government of the DRC announced its intention to revisit mining contracts signed over the past decade, during the war and under the transitional government in place until last year’s national elections. The review process, which got underway on June 18, was meant to respond to concerns raised in various audits, independent studies and a DRC parliamentary commission report, regarding the fairness and legality of the contracts.

Specifically, the World Bank, among others, has cited concerns about mining contracts in the Congo, including a lack of transparency in the negotiation and awarding of deals, undeclared conflicts of interest, the inclusion of ill-defined “management” fees and other questionable payments, a failure to properly assess Congolese assets and contributions to the deals, and the inclusion of disadvantageous terms to the Congolese government.

Speculation was that the review might lead to the cancellation or substantial revision of contracts, that ignoring the government-initiated review could result in irresponsible investments.

Yet Export Development Canada continued to signal their interest in the project even when the review was incomplete. Is EDC indifferent to the concerns addressed by the review? Did it take the outcome as a foregone conclusion. Questions have been raised in the House of Commons about the adequacy of Canada's policy in such cases, which is to rely on the principle of corporate social responsibility.

EDC responded by noting that it was reviewing the environmental impact assessment documents.

EDC has already not addressed these concerns and appears indifferent to the DRC government's investigations except insofar as they might influence environmental mitigation measures viewed strictly as a cost of doing business. ECAs are clear examples of market failure. They are instruments of direct government intervention masquerading as businesses implementing their neoliberal agendas as if they represented no particular ethical interests.

On Monday, March 24, 2008, findings of the Review were published. Friends of the Congo has posted the following facts (details to follow):

1. During the transition process (2003 - 2006) one third of the Congo was sold off to foreign companies without any discernible benefit to the Congo.

2. Mining titles dispensed totaled 4,542 to 642 companies.

3. 90 percent of exports from DRC are either illegal or unregulated.

4. Existing mining contracts do not account for more than 6% of the national budget. In 2002 when the country was at war the mining sector continued as much as 30 % to the national budget.

5. Mining companies have realized gains of 600% while discernible gain to the government has not exceeded 5%.

6. Many of the companies involved in the mining review are publicly traded on the Toronto, London or New York Stock Exchanges. Some of them include Freeport-McMoRan, DeBeers, AngloAmerican, BHP Billiton.

7. The Congolese Parliament is silent on the mining contracts and the government has yet to include provincial governments and civil society.

8. Pursuant to the publication of the mining review, on Monday, March 24, 2008 the head of the Ministry of Mines, Martin Kabwelulu announced the set-up of a government panel to follow-up with the review process. It will be lead by the Minister of Agriculture.

9. A few mining companies have already intimated that they will take the DRC to international court to maintain their ill-gotten contracts.

10. As quiet as it is kept many of the government officials who signed these odious and detrimental contracts while pocketing millions of dollars are still in government including president Joseph Kabila himself. Of course the review process and follow-up does not include the pursuit of corruption charges against those involved in selling of the Congolese people's wealth.

11. Contrary to earlier statements by the Mining Ministry, the government is not going to change the Mining Code that was put in place by the World Bank in 2002. The law was clearly written in the best interest of foreign mining companies and not the Congolese people.

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