Economic Crimes in Congo

Economic Crimes in Congo

If the Congolese people can force the multinational mining giants to pay their government fairly, this country has a chance.


Fungurume—The 73 million human beings who live here in the Democratic Republic of the Congo continue to struggle through one of the greatest humanitarian disasters on the planet since the end of the Second World War. By one estimate, more than 5 million people have died since the Second Congo War broke out in 1998. Fighting has just started up again in eastern Congo; hundreds are already dead, and there may already be more than 200,000 refugees, adding to the 2 million Congolese already displaced by war. Doctors Without Borders has just warned that the renewed violence is blocking efforts to control an outbreak of cholera.

Far more people have died in Congo over the years than in Syria or Libya, but the mainstream Western press is barely paying attention to the resurgent fighting—and it has mostly ignored other dangerous developments, like the botched presidential election last November and the possible theft of billions of dollars from the country’s mining industry.

The DR Congo’s future depends greatly on what happens here, in southeastern Katanga province. Katanga has tremendous reserves of copper and cobalt, which Belgian colonialists began exploiting nearly a century ago. Then, after independence, the dictator Mobutu Sese Seko seized power. He turned out to be a vicious and incompetent kleptomaniac, but he was supported for decades by the United States, other Western countries, Citibank and the International Monetary Fund. Mobutu looted the mining industry, which had all but collapsed by the time he finally fled, in 1997.

Now, foreign mining companies are coming back to Congo. If the Congolese people can force the mining giants to pay their government fairly, this country has a chance. The government has no other significant source of potential revenue. With the rising earnings from mining, it could slowly but steadily create a professional army to replace the current bands of unpaid uniformed looters who rape and kill civilians with impunity. The government could invest in education and health. It could reduce the 70 percent rate of undernourishment. It could start to raise a potentially rich country, in which there is no shortage of intelligent, hard-working people, from last place—187 out of 187—in the Human Development Index.

Here in Katanga, despite a few signs of hope, the outlook is still grim. President Joseph Kabila has repeatedly promised both the international community and his own people that his government will make public the amount of money the mining companies are paying it. But Kabila continues to stall, even as information has surfaced of a shocking new deal that may have cheated the Congolese people out of more than $5 billion—a lot of money anywhere, but a stupendous amount in a country with an annual budget of only $7.2 billion, half of which is international aid. And there is every depressing indication that the international community will not call the government’s bluff, just as it has already let Kabila get away with fraud in the November 2011 elections.

* * *

The DR Congo government strongly deters journalists from visiting mining areas, so I showed up here in the high plateau country of Katanga as a “tourist.” A remarkable 40-year-old teacher named Michel Dibwe showed me around, at some risk to himself; Mobutu’s old spy network, the National Information Agency, is still in business, and we had to keep our distance from its minions during my visit.

In 2007, the American mining multinational Freeport-McMoRan gained control of the copper and cobalt mine outside town, which is known locally as Tenke Fungurume Mining (TFM). Freeport invested $2 billion to start the mine up again, which is the largest single foreign investment in the entire country. Right away, this raw town with just a single paved road attracted a flood of migrants from elsewhere in Congo looking for work. By one estimate, the population has quadrupled, to 100,000, as reddish mud brick shacks sprang up along the dusty, rutted side streets.

The Freeport-McMoRan corporate website includes a slick twelve-minute video, in which it boasts about its contributions to welfare in this area. But the reality is completely different. Over several days, I met a wide range of Fungurume residents, including local government officials, out-of-work miners, traditional chiefs and independent journalists, and they were uniformly angry at Freeport. At some stage, their grievances will once again spill over into protest, and possibly violence. Already, in 2009 and 2010, hundreds of demonstrators blocked the highway here and shut off mineral exports. (Freeport has trouble elsewhere in the Third World. Its huge Grasberg gold and copper mine in Indonesia has long been under attack for environmental destruction and other ills [see Eyal Press, “Freeport-McMoRan at Home and Abroad,” The Nation, July 31/August 7, 1995]. Just last year, a bitter three-month strike in Indonesia, combined with sabotage, halted operations and threatened the company’s stock price.)

The irony is that Freeport is grudgingly recognized here as the least bad of the international enterprises that are reviving the mining industry in Katanga. The company is starting to disclose publicly how much it has paid in taxes to the government. Last year Freeport announced that since 2006, its tax bill was $370 million. So far, the other mining companies have not done the same.

Freeport’s disclosure is a small but important victory for the international campaign to “Publish What You Pay,” an effort to force the hard facts in oil, gas and mineral deals out into the open. Until now, people here and in other poor countries have had only the vaguest idea how much their governments are getting from the mining, oil and gas giants. Fungurume may be a muddy frontier town, but it does have a several-dozen-strong Journalists’ Association, some of whose members are quite happy to draw the contrast between the government’s large mining receipts and the Congo’s pitted, nearly impassable roads, its omnipresent unpaid, predatory soldiers and its skeletal health system.

But other than publishing those figures, Freeport is strikingly insensitive to local concerns. The company employs about 2,000 people, along with about 1,500 contractors, which should be a boon in a country where decent jobs are almost nonexistent. But Freeport imports its miners—most of them from elsewhere in Congo—and houses them in an enclave called Camp Bravo, six miles outside town.

Michel Dibwe, my guide, explained that Camp Bravo’s isolation damages the local economy: “In the old days, payday in the mines here in Katanga meant lots of business in the mining towns, plenty of movement. But now there’s no circulation of money from the mine. They don’t even buy tomatoes from our mamans, who try and make a few francs by selling in the marketplace.”

People here also regard Freeport’s effort to train locals for jobs as woefully insignificant. Jean-Paul Mutamba, an energetic, thin, 50-year-old who owns a struggling small restaurant, told me: “The company should be promoting a technical training college, to give hope to young people. They did build a shed to house our local market, but it’s small—an insignificant joke for a city this size; I call it the ‘garage.’ We do understand they are a mining company, here to make money, and not a social service organization. But they are creating tremendous anger among people.”

Still another grievance is the treatment of the local artisanal miners, who are called creuseurs, or “diggers.” Here, as elsewhere in Congo, miners who cannot find formal jobs tunnel into the hills for scraps of ore that they sell to middlemen. The creuseurs sometimes dig down a hundred feet, risking suffocation in cave-ins. There are an estimated 2 million of these artisanal miners in the whole Congo, and millions more depend on their meager gleanings. Dibwe explained: “The mining company had the government eject the creuseurs from its concession. We understand that the company is paying for the right to mine. But its concession spreads across 1,600 square kilometers and includes nearly 300 hills; couldn’t they have left at least one hill for the creuseurs?” These days, some of the creuseurs wait until nightfall and pay off the company guards to look the other way as they sneak in and scrape a few dollars out of the pits.

Jean-Paul Mutamba concludes that Freeport is not properly looking out for its own long-term interests. “This is a rich concession, which will continue to produce for thirty, forty, maybe even a hundred years,” he said. “Shouldn’t they try to build good relations with us right from the start?”

The Publish What You Pay campaign started in 2002, inspired by the vital London-based investigative organization Global Witness. It now includes 600 civil society groups worldwide, with organized branches in thirty-one different countries. Another important PWYP supporter, the vigorous New York–based Revenue Watch Institute, tries to advise Third World countries on how to earn fair returns for their minerals, oil and gas. Western governments started to feel the pressure, and in response launched the Extractive Industries Transparency Initiative in 2002, which establishes standards of openness and asks governments and mining and oil corporations to live up to them. The EITI is only voluntary, but it has the potential to at least start bringing mega-corruption out of the shadows.

In a genuine democratic system, information about massive theft of government money would lead to electoral and legislative action. But democracy in the Congo has just received a huge setback. The presidential campaign last year was vigorous and hard-fought, and by all indications looked to be close. The opposition candidate, Etienne Tshisekedi, had overwhelming support in the capital, Kinshasa, and a strong following in certain other provinces. (A New York Times report last December described Tshisekedi as a “78-year-old career rabble-rouser,” unpardonable bias in what purported to be a news story, and a questionable assertion about a brave man who fought the Mobutu dictatorship back in the 1980s and was repeatedly tortured and imprisoned for his efforts.)

After the November 28 vote, international monitoring groups raised serious doubts about the ballot counting, which showed Kabila beating Tshisekedi by the impossibly wide margin of 49 percent to 32 percent. But the United States and the European Union have stayed quiet, and tacitly accepted that Kabila will hold on to power until 2016.

However, people here in the Congo have not given up on democracy. Some of us waited recently in a small restaurant before the start of a televised soccer match involving the legendary Katanga powerhouse, TP Mazembe. (TP is short for Tout Puissant: All Powerful. A mazembe is a giant highway grader, which squashes everything in its path; the main road west has not seen many mazembes in recent years.) Suddenly, a government spokesman in Kinshasa appeared on the television to announce the composition of the new Cabinet. Most of the soccer fans stopped talking about sports to pay close attention; Michel Dibwe even got closer to the TV set so he could take notes. Over the next few days, I heard regular discussions about the new ministers—and I struggled to imagine a similar scenario in the United States outside of certain precincts in Washington, DC.

The recent developments some seventy-five miles west of here in another mining town, Kolwezi, show just how massive corruption is. A British Member of Parliament, Eric Joyce, revealed suspicious details as ownership in two Kolwezi mines changed hands in secret deals. The maneuvering is complex, and some of it is concealed by shadow companies registered in the British Virgin Islands, but in the end the Congolese people may have been cheated out of as much as $5.5 billion. Just who benefited is not entirely clear, but the winners may include an Israeli businessman, Dan Gertler; a small number of high-level Congolese government officials; and Glencore, the Swiss-based mining and trading giant that became a public company last year and is listed on the London Stock Exchange.

The Kabila government has promised repeatedly to clean up the mining industry. In 2010, in return for canceling some $12 billion in its foreign debt, the government said it would stop the secret mining deals. The international community continues to have strong potential leverage. The outside world spent up to $500 million to fund last year’s doubtful elections, and World Bank loans are financing road repairs and other projects in Katanga and elsewhere. Half of the country’s annual budget is aid from overseas, and the international community is spending another $1.4 billion this year to fund the 20,000 United Nations peacekeepers who are probably preventing the bad security situation in Eastern Congo from getting even worse.

An International Monetary Fund delegation visited the DR Congo in June, and the secret mine deals were on the agenda, because they almost certainly violate the conditions attached to an existing $561 million IMF loan. But the international financial institutions have long lived by a double standard. Over the years, as a condition for financial bailouts, they have not hesitated to order poor countries to cut back education budgets, or to charge poor people “user fees” to visit health clinics. But the IMF and the World Bank have been less exacting when it comes to the powerful, whether the local elite or international companies. More than likely, the Kabila government will call the international community’s bluff, and the mega corruption will continue.

Once you see how people have to struggle just to survive here, theft on this scale seems even more criminal. The figure of more than 5 million dead from the wars since 1998 is not a wild guess, but is based on detailed studies by the respected International Rescue Committee and other NGOs. Only about 2–4 percent were actually killed during fighting. The rest died because they were already weakened by hunger and disease, and then they had to flee war zones, which pushed them over the edge. When you read the two-inch news articles in the Western press that report several hundred people killed as fighting once again flares up, you should probably multiply that figure ten- or twentyfold to get a reasonable estimate of the final death toll.

Jean-Pierre Muteba, president of the provincial Civil Society Steering Committee, a coalition of NGOs in Katanga, has argued that decisive new international measures are needed to stop the mass dying. Muteba says the world community should set up an International Economic Crimes Tribunal, an equivalent of the International Criminal Court in The Hague. Patrick Alley, one of the three co-founders of Global Witness, agrees that “state looting should be made an international crime.” Lawyers are dusting off laws that ban pillage and economic crimes, with reminders that executives of Nazi German companies like IG Farben were put on trial for plunder and pillage after World War II.

These days, the 1 percent who run the international corporations and their handful of criminal partners among high government officials in the third world can be worth hundreds of millions of dollars. They will just laugh at fines, even stiff ones, as another cost of doing business. The world will have an effective deterrent to the economic crimes that continue killing people in the Congo only after the perpetrators are extradited, tried and sentenced to long prison terms.

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