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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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Presentation Transcript
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MONUC

Global Forum V

Hot spots: non state sectors vulnerable to corruption

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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
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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