Global Witness published this week on a previously unreported deal in the Democratic Republic of Congo in which rights to royalty payments from one of its biggest mines were signed away to an offshore company belonging to Dan Gertler, a friend of the Congolese President.
It received wide media coverage – from The Times, Bloomberg and Wall Street Journal, among others – and focused attention on how the country’s mineral wealth is being managed in this crucial period for Congo.
On the night of our publication a statement was sent to some journalists by Dan Gertler’s Fleurette Group which confirmed the deal and admitted ownership of the offshore company but which claimed that they have lost money on the deal and that it was good for Congo.
We became aware, indirectly, of the statement Fleurette was issuing to journalists in the hours before publication and worked to ensure that our press release reflected their claims.
This deal should never have been secret to start with. The Congolese people have a right to know where the money from their incredibly valuable mining assets is going. The contract in question remains unpublished, in apparent contravention of a 2011 Congolese transparency decree.
What Fleurette Group has said so far about the deal poses more questions than answers. Fleurette claimed but did not prove that the right to royalties would come to an end in 2019, referring to a separate but connected agreement between KCC and Gecamines that has already been extended twice and presumably could be extended again. It has since revised that claim to say the rights will “almost certainly fall away” by 2019. We urge them to publish the full contract and all the associated agreements and to clarify how much they paid for the royalties and which other entities or individuals, if any, have benefited from these payments.
We remain open to a discussion with Fleurette and its representatives on this story.
It is unfortunate that Gertler’s Fleurette group circulated their response on the eve of publication and did not provide it in response to earlier questions from Global Witness. We first contacted Fleurette almost three weeks before publication and gave them multiple opportunities to comment. We granted extra time to Gertler’s representatives at the public relations firm Powerscourt to reply to our questions at their request, but received no comments from them. We contacted Powerscourt again on the eve of publication, giving them the opportunity to provide us with further information but again received no response. We had also contacted Gecamines and Glencore weeks before publication, but only received a response from Glencore and this was included in our release.
Prior to the publication of this story, there was nothing in the public domain to say that Dan Gertler had received these rights. Only once the whole deal is made public will the full picture become clearer. Fleurette Group says this is “a deal which demonstrably and unequivocally benefited both Gecamines and the DRC”. If that is the case both Gecamines and Fleurette Group should be happy to release the full contract and payment details.
The Fleurette Group statement also questions the figures for the royalties. We made it clear in the original story that we were reflecting KCC’s projected potential royalties outflow, according to a Toronto Stock Exchange filing by the holding company Katanga Mining Limited, owned by Glencore. We were not attempting to come to a net present value of the royalties, but instead we reported these undiscounted projected cash flows (again, according to Katanga Mining’s own filing) to show how much cash might flow to the offshore company over the life of the mine.
Fleurette has proposed a scenario in which royalty payments could be suspended in 2019; while this would limit total cash flows from the royalty rights, Global Witness believes there are also feasible scenarios in which royalty payments could continue beyond 2019 and reach the levels outlined in our release, which were clearly described as potential cash flows.
For over 20 years, Global Witness has campaigned and reported on conflict, corruption and environmental abuses linked to the trade in natural resources. Our campaigning has led to the formation of major initiatives including the Kimberley Process and the Extractive Industries Transparency Initiative of which Congo is a member and which is finally putting some basic information about Congo’s mineral wealth into the public domain in the country.
We welcome debate on the issues raised by the story.