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MONUC. Global Forum V Hot spots: non state sectors vulnerable to corruption. The DRC Context. History of colonial exploitation and dictatorship; Emerging from/struggling with conflict; fledgling democracy;

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Monuc

MONUC

Global Forum V

Hot spots: non state sectors vulnerable to corruption


Monuc

The DRC Context

  • History of colonial exploitation and dictatorship;

  • Emerging from/struggling with conflict;

  • fledgling democracy;

  • Weakened and dysfunctional institutions and limited extension of state authority, in a vast geographic territory (2,345,410 sq. km bordering 9 countries);

  • Collapsed justice system

  • Extensive natural resource wealth.


Natural resources in the drc

Natural Resources in the DRC

Natural Resources:

  • Coltan (cassiterite), copper, gold, silver, diamonds, niobium, tantalum, zinc, manganese, tin, uranium

  • 50% of Africa’s hardwoods

  • 10% world’s hydro-electric capacity

    (Source: UN Reports)

    Mining:

  • 1980 – generated 66% budgetary receipts

  • 1990 – export receipts = 1 billion USD

    • 465,000 tonnes of copper

  • Today – no significant contribution to budget

    • 20,000 tonnes of Copper (2006)

      (source: Programme du gouvernement 2007-2011)


  • Extractive industries in the drc

    Extractive industries in the DRC

    “IF THE DRC IS TO EMBARK ON A PROCESS OF RECOVERY, IT WILL HAVE TO RELY ON THE GENERATION OF STATE REVENUES FROM EXTRACTIVE INDUSTRIES” (s/2007/68)


    Extractive industries challenges

    Extractive industries - challenges

    • Limited extension of state authority creates vacuums (imposed “taxes”)

    • Corporate entities engage “protection forces” who extort payments from local populations

    • Government troops at border often complicit (note: many elements of the FARDC are not paid on a regular basis and only receive minimal salary)

    • Limited technology/investment required and desperate, unskilled labour easily exploited

    • Parallel systemic corruption


    Extractive industries challenges1

    Extractive industries - challenges

    • Formal sector undermined by vulnerability to interference from military elements, rebel groups, foreign interests and unscrupulous traders – allegations of protection by DRC personalities;

    • State mining companies unable to protect concessions, enabling unregulated diggers

    • Vast wealth both a source of financing for armed groups, and also a motive to continue

    • Corruption and mismanagement – resulting in large majority of sales and exports outside authority of state

    • Legitimate, conscientious mining companies, comptoirs, négociants, find it impossible to compete


    Illegal exploitation of natural resources non state actors

    Illegal Exploitation of Natural Resources: Non-State Actors

    Artisanal miners

    _____________________________________

    Economic operators violating Congolese law:

    (potential targets of UN sanctions)

    • Middlemen – buyers and traders engaged in fraudulent activities (subcontractors, négociants, comptoirs/ exporters)

    • Mining companies

      _______________________________________


    Artisanal miners

    Artisanal Miners

    • 2 million artisanal miners

    • Subsistence income at best – often in debt

    • Required to pay string of charges – i.e. local chief, unintegrated FARDC elements, mining police, de facto authorities

    • Subjected to intimidation and violence (armed gangs – suicidaires – 38 deaths registered by HR in Kasai Oriental 2006)


    Other non state actors

    Other non-state actors

    Fraudulent exporters or comptoirs

    – buy most cassiterite at prices legitimate exporters cannot afford

    • Cassiterite exports undervalued by 50-60-%

    • control of cassiterite estimated 70-75% or more

    • None contribute to the building of formal sector

    • 80-90% of gold exported fraudulently (8 million USD/month)

    • 40% diamonds exported illegally; large portion sold by négociants with no fees paid

    • Hire and exploit children

    • Tax evasion

    • Corrupt payments

      (Source: estimates quoted in S/2007/60)


    Corrupt economic operators illegal activities

    Corrupt economic operators illegal activities

    • Fraud

    • Use of armed groups to secure access to concessions and/or to extort payments from miners

    • Tax evasion

    • Corrupt payments to officials

    • Smuggling


    Is there justice in the drc

    IS THERE JUSTICE IN THE DRC ?


    Access to civilian justice

    ACCESS TO CIVILIAN JUSTICE

    • 60 of 180 required first instance courts are yet established

    • Less than half of the required 5000 magistrates

    • Total dilapidation of existing court, prosecution- and detention premises, especially in the interior of the country


    Administration of justice civilian military

    ADMINISTRATION OF JUSTICECIVILIAN & MILITARY

    Courts

    Existing critical mass of competent jurists, desiring reform, retraining

    Lack of basic equipment

    Absence of case tracking leading to excessive detention, archives, case law

    Interference/

    pressure from government officials

    Alleged corruption – lack of confidence of population

    Need for national training capacity


    Administration of justice

    ADMINISTRATION OF JUSTICE

    Prisons

    • Starvation deaths - 1/145 prisons has budget for food

    • No high security facility

    • Abuse of authority leading to unlawful detention

    • Crumbling and non-existent walls, inadequate surveillance, resulting in:

      • escapes

      • regular assault and rape

      • overcrowding

      • inability to accommodate serious offenders

      • risk of creating flash-points for violence

    • Children, women, military, militia, all detained in the same facilities


    Urgent needs

    URGENT NEEDS

    • Legislation

    • High security military detention facilities

    • Court and prison facilities (infrastructure)

    • Food for prisoners

    • Increase number and rank of military prosecutors and judges

    • Increase in support staff

    • Technical assistance (material needs and expertise) to provide immediate national capacity required to investigate, prosecute and administer justice, including in regard to serious human rights abuses

    • Support for development of independent “watchdogs” (counterbalances), i.e. regulatory bodies, media, independent NGO’s, etc)

    • Support for the development of state capacity to provide intra-governmental human rights guidance and sensitization (i.e. Ministry of Human Rights)

    • Support for development of sustainable national training programme and institution(s)


    Extractive industries reports

    Extractive Industries - Reports

    NATIONAL

    Lutundula Commission (February 2006)

    INTERNATIONAL

    • UN Panel of Experts– reports on illegal exploitation of natural resources (2001-2003)

    • UN Group of Experts monitoring the arms embargo – report to Security Council on feasible and effective measures to prevent illegal exploitation financing armed groups (res 1698 of 2006)

    • UN Secretary-General – report to Security Council (8 February 2007, pursuant to res 1698 of 2006 – currently the subject of informal debate)


    Lutundula commission

    Lutundula Commission

    • Set up by the peace accords of 2003

    • Lutundula Commission included representatives from all major parties to the conflict

    • Highly controversial: allegations of withdrawing names, not dealing with important actors, certain sectors not included – no follow-up (electoral period)

    • Sent a signal to companies that they could be exposed – naming and shaming


    Lutundula report

    Lutundula Report

    • Investigated 50 mining contracts signed during the conflict

    • Found that dozens of contracts were either illegal or of limited value for the development of the country

    • Recommended that 16 contracts be ended or renegotiated

    • Recommended that 28 Congolese and international companies be investigated for violation of Congolese law

    • Recommended that 17 persons be prosecuted for crimes including fraud and theft.


    Implications of sanctions in extractive industries

    Implications of sanctions in extractive industries

    • On armed conflict – financing armed groups

    • Artisanal miners – sanctions likely to affect them most severely – livelihood security issues

    • Impact on/of existing (corrupt) trading system – mushroom effect (cut one, another grows in its place)

      Conclusion: Sanctions may not be the answer (under consideration)


    Addressing illegal exploitation

    Addressing illegal exploitation

    Recommended governmental reform initiatives:

    • Reinforce/build institutions capable of promoting legitimate trade, reducing criminal involvement and raising public revenues (regulatory bodies, security sector)

    • Extractive industries transparency initiative (Min of Plan supporting technical committee with a view to implementation)

      Recommended non-state initiatives:

    • Organize producers to create mechanisms to promote social development

    • Engagement to respect best practices through voluntary principles, code of conduct, and respect for rule of law

      Recommended regional initiative: a cross-border commission to stem fraudulent exports (requires viable national counterparts, i.e. justice)


    Attacking corruption

    Attacking Corruption

    • Culture:

      • Integrity vs. Corruption – long-term vs. short-term

      • Regaining public trust through participation, consultation - fostering perception of integrity

    • Political will:

      • Creation of personal and corporate risks to engage in corruption – judicial, administrative, regulatory, financial, and economic sanctions


    What future

    What future?

    DRC Government Programme 2007-2011

    • JUSTICE AT THE FOUNDATION OF REFORMS – SINE QUA NON

      • Calls for restructuring public enterprises and a mechanism for monitoring the execution of mining contracts

      • Proposes reform that will include transparency, increasing revenues, as well as environmental and social sustainability

      • Recruitment and deployment of consultants to assist DRC mining officials to conduct inspections

      • Publication of key elements and analyses of partnership agreements, and the renegotiation of agreements as required

      • Adoption of a business plan and reform programme for Gecamines and short-term reform programmes for other public enterprises;

      • Adoption of transparent procedures for awarding mining rights (exploration or exploitation)

      • Political will, including justice reform, together with private enterprise support are key for executing the government’s plans.


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