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.