DRC: loses out on $1.4 bln as mine assets sold cheap -Annan panel

00123The Democratic Republic of Congo lost at least $1.36 billion in potential revenues between 2010 and 2012 due to cut-price sales of mining assets to offshore companies, according to a panel led by former U.N. secretary general Kofi Annan.

Congo, among the most mineral-rich countries in Africa, has long been under fire for opaque resource deals, many involving offshore shell companies, and last year the International Monetary Fund halted planned loans.

“No country better illustrates the high costs associated with opaque concession trading than the Democratic Republic of the Congo,” the Africa Progress Panel said in a report released on Friday at the World Economic Forum Africa.

“Total losses from the five deals reviewed were equivalent to more than double the combined annual budget for health and education in 2012.”

The annual report, on challenges associated with natural resources in Africa, said there was no inference of illegality on the part of political leaders or the companies involved.

“However, the potential scale of the overall losses merits further investigation in order to clarify the circumstances surrounding the transactions, and to determine whether or not the assets in question were knowingly undervalued,” it said.

The panel’s investigators said copper and cobalt assets were sold by state miner Gecamines in complex deals involving offshore companies and miners including Glencore, now Glencore Xstrata, and ENRC.

Both ENRC and Glencore have denied any wrongdoing.

“We estimate the losses from the five deals at $1.36 billion. Assets were sold on average at one-sixth of their commercial value,” the report said.

It did not say how the commercial value was estimated.

The role of shell companies and non-mining investors acting as intermediaries in Congo’s mining sector has long contributed to accusations of corruption and a reputation for poor transparency.

Congo’s mining minister disputed the report’s findings.

“How many times have we spoken about these assets, of ENRC, of Glencore, of the Virgin Islands? I’ve answered these questions many times,” Martin Kabwelulu said.

“In any case, I know that the Congo has lost nothing, these assets were ceded in total transparency.”

Leave a Reply