In July and August 2011, news came out that state mining companies in the Democratic Republic of Congo (DRC) Gécamines and Sodimico had sold stakes in four major mining sites without making the information public. There are several major concerns over the deals, notably:
- They were done in secret and not disclosed publicly;
- Certain assets were sold for far less than most commercial estimates of their value;
- The companies that benefited from these deals were based in offshore tax havens and could thus keep their real owners secret;
- The state mining companies conducting the sales and the relevant Government bodies publish virtually nothing in terms of financial statements. This means it is impossible to trace what has happened to the sums officially received from the sales.
The behaviour of the DRC authorities in these deals appears to be part of a pattern of selling off assets to opaque offshore-registered companies. Sometimes the assets sold had been confiscated in unclear circumstances from previous owners and the sales prices subsequently agreed with the offshore-registered companies were much lower than most commercial estimates. In such circumstances, and given the well-established risks of corruption in the DRC, there is an evident concern about the risk of embezzlement and significant losses of revenue to the country.
The wider implications for the Extractive Industry Transparency Initiative are that the initiative needs to adopt international requirements to ensure greater public oversight of the allocation of extraction licences. The EITI needs to extend its scope in order to address the risk that countries deemed to be EITI Compliant may nonetheless have significant flaws in their licensing regimes that could enable significant corruption and financial losses to the state.