Several months before a contentious Presidential election in the Democratic Republic of Congo in 2011 a state mining company transferred, on the orders of the government, $10 million into an election fund.
The millions were part of the proceeds from a secretive sale by the state miner of rich copper mines to offshore companies in the British Virgin Islands linked to Dan Gertler, a close friend of the incumbent President Kabila. Kabila went on to win that election which was marred by violence, claims of ballot stuffing and intimidation of the opposition.
This is one episode in a spate of six secretive mining and oil sales that lost Congo $1.5 billion – an astronomical figure in a country where nearly two out of ten babies die before their fifth birthday and six out of ten children are not in school. Global Witness has been reporting on the corruption risks in the deals since 2012.
The UK played a crucial role in the scandal. The offshore companies got the assets at a fraction of their true value and then often sold them on to or entered into deals with London-listed mining giants ENRC (Eurasian Natural Resources Corporation) and Glencore. The deal which led to the $10m election fund contribution involved a mine that, just a little over a year later, would be bought by ENRC. Due to secrecy laws in the British Virgin Islands the ultimate beneficiaries of the deals are still unknown.
From here the plot thickened. ENRC called in US lawyers Dechert to do an independent investigation into bribery allegations in its African and Kazakhstani operations, which included the Congo deals, and then fired them. A leaked presentation by the lawyers reportedly claimed that Dechert's investigations were hampered by employees of ENRC who forged documents, gave the investigators the “wrong computer” and set up a “false office”. ENRC are now suing Dechert for overcharging on the investigation in a case being held in secret.
In 2013 the UK’s Serious Fraud Office launched an investigation into “allegations of fraud, bribery and corruption” at the company, with a focus on the Congolese secretive sales. Later that same year, ENRC delisted from the London Stock Exchange with its shares worth less than half the price investors, including pension funds, paid at its initial public offering six years earlier.
Fast-forward to 2016 and the Financial Times reports that the Serious Fraud Office has been granted extra ring-fenced funding to pursue its three-year old ENRC probe. The so-called “blockbuster” funding is reserved for investigations set to consume more than 10 per cent of the SFO’s £33m budget. This new investigative funding signals a major step towards justice for some of those potentially responsible for London’s role in the secret sales scandal, something Global Witness has long campaigned for.
Global Witness is calling for further investigations to be opened into other companies who have entered into deals with Gertler companies for similar mining assets, such as London-listed Glencore. ENRC – which now operates as ERG, Eurasian Resources Group – has previously denied any wrongdoing and has said it “is resolutely opposed to bribery and corruption in whatever form it may take.” Glencore and Gertler also both deny any wrongdoing.
In Congo another election is due at the end of the year. This one is even more contentious as opponents of President Kabila accuse him of trying to sidestep a constitutional rule limiting the top job to two terms. The space for independent voices within the country is fast closing. Just last week the Congolese government forced Human Rights Watch’s longstanding Congo-based researcher Ida Sawyer out of the country.
Another worrying trend, as we reported in May, is the uptick in new unannounced sales of mining assets ahead of the election that risk illicitly financing the poll. The contracts for these new deals must be published, as Congolese law requires, in order to allay concerns that assets are again being sold in suspicious circumstances on the cheap with the proceeds failing to benefit the Congolese people.
The SFO investigation into ENRC can help draw a line under one part of the scandal. It can also set an important precedent for the players and facilitators of these secretive mining deals based in London and the British Virgin Islands.