DR Congo Residents Come Forward as Potential Victims in SFO Corruption Investigation into ENRC

32,000 Congolese res­i­dents, 700 for­mer work­ers iden­ti­fied as pos­si­ble vic­tims of corruption

(London, 28 January 2020) – Today, a first group of 16 res­i­dents from the Democratic Republic of Congo stepped for­ward as poten­tial vic­tims in the Serious Fraud Office’s cor­rup­tion inves­ti­ga­tion into Kazakh multi­na­tion­al min­ing com­pa­ny, Eurasian Natural Resources Corporation (ENRC). UK cor­po­rate watch­dog, RAID, said it expect­ed more to join.

The vic­tim group includes local chiefs, com­mu­ni­ty rep­re­sen­ta­tives and for­mer work­ers at the Kingamyambo Musonoi Tailings (KMT) mine, in Kolwezi, south­ern Congo (now called Metalkol RTR). The group said that for near­ly a decade fol­low­ing the strip­ping of the min­ing license from KMT’s orig­i­nal own­ers, and the sud­den clo­sure of the mine in 2009, their com­mu­ni­ties were deprived of clean drink­ing water, plagued with ongo­ing air and water pol­lu­tion, sick­ness and a lack of edu­ca­tion oppor­tu­ni­ties. Former work­ers who lost their jobs said they were not only deprived of their liveli­hoods, but also lost valu­able free health­care for them­selves and their families.

In a short film and a 112-page report released today, RAID and Congolese civ­il soci­ety organ­i­sa­tion AFREWATCH detail the harm caused by the abrupt clo­sure of the KMT mine and iden­ti­fy 32,000 Congolese res­i­dents and 700 for­mer work­ers who were neg­a­tive­ly impact­ed. The report is based on 12 months of research dur­ing which inter­views were con­duct­ed with 306 indi­vid­u­als. RAID also analysed more than 2,000 pages of rel­e­vant doc­u­ments linked to the KMT min­ing con­tract and oth­er legal documents.

Corruption is not a vic­tim­less crime and UK law enforce­ment offi­cials should step up their efforts to ensure the voic­es of over­seas vic­tims are heard in the fight against cor­rup­tion,” said Anneke Van Woudenberg, the Executive Director of RAID. “SFO offi­cials should quick­ly iden­ti­fy and sup­port the Congolese vic­tims who have come for­ward and, if there is a con­vic­tion in the ENRC case, ensure those affect­ed in Congo obtain jus­tice and are compensated.”

In April 2013, the SFO, launched a crim­i­nal inves­ti­ga­tion into ENRC for alleged fraud, bribery and cor­rup­tion. At the time, ENRC was a UK-reg­is­tered com­pa­ny list­ed on the London Stock Exchange (LSE). According to a leaked September 2016 let­ter from the SFO to Congolese judi­cial offi­cials, whose con­tents sur­faced in press reports, as well as in a judge­ment from a Swiss tri­bunal, the SFO inves­ti­ga­tion is pri­mar­i­ly focused on Congo, includ­ing the KMT mine. To date, no charges have been filed, and the inves­ti­ga­tion is ongo­ing. ENRC denies any wrong­do­ing and in 2019 launched legal action against the SFO over its inves­ti­ga­tion. The com­pa­ny points out that the orig­i­nal own­ers of the KMT mine lost their licence in August 2009, a year before ENRC pur­chased it.

The KMT mine is a rich cop­per and cobalt tail­ings site con­sid­ered one of the crown jew­els of Congo’s min­ing assets. The mine is expect­ed to bring sig­nif­i­cant amounts of cobalt to inter­na­tion­al mar­kets, much of it des­tined for bat­ter­ies in elec­tric vehi­cles. The mine was owned by a Canadian com­pa­ny, First Quantum Minerals Ltd, until 2009 when the Congolese gov­ern­ment sud­den­ly striped its min­ing licence, forc­ing it to close. Shortly after­wards, the mine was acquired by noto­ri­ous Israeli busi­ness­man Dan Gertler for a frac­tion of its val­ue and lat­er sold on to ENRC at a sub­stan­tial prof­it. Experts believe both sales were far below com­mer­cial val­u­a­tions of the mine.

According to papers released by the US Department of Justice, the strip­ping of the min­ing licence and its sale to Gertler was marred by cor­rup­tion (see fur­ther back­ground below). The co-con­spir­a­tors in the cor­rup­tion scheme includ­ed Gertler, for­mer pres­i­dent Joseph Kabila, pres­i­den­tial advi­sor Katumba Mwanke and an American hedge fund, Och-Ziff Capital Management Group (now called Sculptor Capital Management). The cor­rupt acqui­si­tion of the KMT mine is referred to by the DOJ as part of the “DRC cor­rup­tion scheme.” ENRC is not iden­ti­fied as a co-con­spir­a­tor in the scheme.

In 2013, ENRC delist­ed from the LSE fol­low­ing the launch of the SFO inves­ti­ga­tion and reports of poor gov­er­nance. It was bought by Eurasian Resources Group (ERG), reg­is­tered in Luxembourg, and tak­en into pri­vate own­er­ship. ERG did not re-start oper­a­tions at the KMT mine until the end of 2017, when some devel­op­ment projects recommenced.

The impact of the KMT mine’s clo­sure and the years of delay before activ­i­ties re-start­ed had a dras­tic impact on the lives of thou­sands of peo­ple liv­ing near the mine, accord­ing to RAID and AFREWATCH.

One for­mer work­er at the KMT mine, Jean (not his real name) lost his 14-year-old son when the med­ical ben­e­fits linked to his employ­ment were sud­den­ly halt­ed fol­low­ing the mine’s clo­sure. He said, “When we arrived at [the hos­pi­tal] I gave them the papers we had always used. But the hos­pi­tal said the papers no longer had any valid­i­ty. My child was grave­ly ill but they sent me away. On the way home, he died in my arms.”

The orig­i­nal own­er of the KMT mine, First Quantum, part­nered with the World Bank’s International Finance Corporation (IFC) and had signed up to con­crete social and envi­ron­men­tal ben­e­fits for res­i­dents of local com­mu­ni­ties. Documents from the time show how First Quantum was required to deliv­er clean water, clean-up the tox­ic air and water, and improve access to health­care and edu­ca­tion for some 32,000 res­i­dents. These devel­op­ment projects were halt­ed when the KMT mine closed and IFC was forced out of the project.

Another res­i­dent who lives close to the uncov­ered tail­ings has wait­ed years for the con­tain­ment of the haz­ardous dust ema­nat­ing from the tail­ings. He said, “There is intense cough­ing that leads to pneu­mo­nia. One of my friends died because of the cough­ing and the dust prob­lem. He suf­fered so much because he lived next to the tailings.”

The near­by Musonoi River and local springs are pol­lut­ed by the tail­ings and oth­er min­ing activ­i­ties. The delay in clean­ing up the riv­er fol­low­ing the mine’s clo­sure has had severe impacts. One local res­i­dent said, “We have no oth­er source of water apart from the riv­er, so even if it looks pol­lut­ed, we have to use it. There are lots of cas­es of infec­tions [and dis­ease] as a result.”

In 2018, the UK gov­ern­ment adopt­ed the “Compensation Principles”, which require law enforce­ment agen­cies, includ­ing the SFO, to iden­ti­fy over­seas vic­tims in all rel­e­vant cor­rup­tion cas­es and to seek com­pen­sa­tion for them using what­ev­er legal mech­a­nisms are available.

The dev­as­tat­ing impact on Congolese vic­tims of the cor­rup­tion iden­ti­fied by the US author­i­ties is clear, yet the local com­mu­ni­ties and for­mer work­ers who have suf­fered have not been con­sid­ered in any cor­rup­tion inves­ti­ga­tion or legal action to date,” said Van Woudenberg. “If the Compensation Principles are to have any mean­ing in the UK, they should be ful­ly applied so that over­seas vic­tims, such as those in Congo, are not ignored.”

Further Background:
The details of the cor­rupt scheme involv­ing the KMT mine and oth­er min­ing assets were set out in papers released by US judi­cial offi­cials at the Department of Justice (DOJ) in 2016 when the American hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”, now called Sculptor Capital Management Inc) admit­ted vio­lat­ing the Foreign Corrupt Practices Act. Its sub­sidiary, OZ Africa Management GP LLC, plead­ed guilty to crim­i­nal charges. Och-Ziff paid $412 mil­lion in com­bined civ­il and crim­i­nal penalties.

Although the DOJ used pseu­do­nyms in the doc­u­ments it released when it announced the set­tle­ment, it is pos­si­ble to iden­ti­fy the indi­vid­ual co-con­spir­a­tors who oper­at­ed along­side Och-Ziff in the cor­rup­tion scheme. These includ­ed Gertler, for­mer Congolese President Joseph Kabila and one of his senior advi­sors, Katumba Mwanke, among oth­ers. The doc­u­ments set out how Och-Ziff’s pro­vid­ed funds to Gertler, know­ing that some of the funds would be used to bribe Congolese offi­cials. ENRC is not iden­ti­fied as a co-con­spir­a­tor in the DOJ doc­u­ments and it denies any wrongdoing.

Gertler has denied any wrong­do­ing and has not been charged by the US author­i­ties, but in December 2017 he was placed under US Global Magnitsky sanc­tions along­side enti­ties affil­i­at­ed to him, after being iden­ti­fied by the US Treasury as a “cor­rupt actor” who used “his close friend­ship with DRC President Joseph Kabila to act as a mid­dle­man for min­ing asset sales in the DRC”. In June 2018, the US Treasury expand­ed the sanc­tions to an addi­tion­al 14 Gertler-relat­ed entities.

In 2017, ERG re-start­ed con­struc­tion at the KMT mine. It launched some social devel­op­ment projects, includ­ing build­ing 10 water wells, and ini­ti­at­ed a Clean Cobalt Framework.

Video Materials:
A short video with back­ground and inter­views with vic­tims, click here.

Additional Links:
For the Executive Summary of the report, click here.

For the full report, click here.

For a blog “The Forgotten Victims of Dan Gertler’s Corruption,” click here.

For RAID’s report, “Bribery in Its Purest Form” analysing the US legal doc­u­ments, click here.