Press release | Aug. 11, 2017

Regime Cash Machine has exposed deeper systematic problems within Congo than just a missing $750 million

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On 21 July Global Witness released its report Regime Cash Machine, which analyses revenue flows in Congo’s mining sector using statistics published by the Extractive Industries Transparency Initiative (EITI). The report shows that between 2013 and 2015 over $750 million of taxes, royalties and other payments by private mining companies in Democratic Republic of Congo had been paid into opaque state bodies and not the Congolese treasury.

The report has sparked a wide debate within Congo, including a rare public response from state-owned mining company Gécamines. Commentary has focused on the $750 million figure, and on the legal framework that allows certain state bodies in Congo to hold onto significant portions of taxes and other payments. The widespread discussion of these issues prompted by the report is welcome, although in some cases the focus on the total figure of missing money means other key findings of the report have been missed.

The crucial point raised in the report, and one which has been absent from some of the debate, is that an opaque and complex revenue management system means that the Congolese people, who should be benefitting from the mining revenues, are missing out.

Painstaking analysis of over 600 pages of EITI reports containing raw data on mining payments led to the headline figure of $750 million. Throughout its investigation Global Witness was in regular contact with EITI to ensure we were reading the reports correctly. Following the report release we continue to be involved in dialogue with EITI. An explanation of the calculations behind the headline figure is in a table at the end of the report, and at the end of this statement. We hope that by drawing on EITI’s official data, the report will allow Congolese and international civil society to push for greater transparency in the management of Congo’s natural resource wealth.

Global Witness recognises in its report that under the current system tax agencies and Gécamines have a legal right to hold onto certain funds. We refer to it as a form of ‘legalised corruption’, open to abuse by politically-connected heads of these government bodies, and say the system should change. ‘Regime Cash Machine’ does not say that the retention of funds by the state companies and tax agencies is necessarily illegal. Instead, we show that the opaque management of these funds means there is a high risk of embezzlement.  

The important question is what the agencies actually do with the taxes and royalty payments from private mining companies that they gather and hold on behalf of the Congolese people. Gécamines’ official statutes sets out the ways it should pass on money for its sole shareholder, the Congolese state. In the absence of Gécamines’ financial reports, Regime Cash Machine went to great lengths on the basis of leaked documents, interviews and public statements to understand what was happening inside the company. What we found is hundreds of millions of dollars coming into the state-owned company every year but very little being paid to the government. Its mineral production has decreased despite vaunted investment, and the company prioritised the repayment of a debt to a friend of Congo’s President over unpaid wages and pensions. 

Gécamines and the tax agencies are currently frustrating transparency in Congo’s mining sector. Global Witness echoes the call from Congolese civil society for a renewed debate on how to put an end to the opacity in the management of mining revenues and to support real reform.

Gécamines should publish its audited, financial accounts and be held accountable by the government ministry that oversees it. Keeping the financial accounts of a state-owned company secret does nothing to improve transparency or accountability. There should be an investigation by the Congolese parliament into the finances and operations of the tax agencies.

We remain open to discussion of the report directly with all parties mentioned in the report and any other agency, organisation or individual interested in the debate and in improving the management of Congo’s mining revenues.  It is more important than ever to ensure that the Congolese people get the full benefit of their country’s vast mineral wealth.