05.08.08 D.R. Congo Reviews Mining Contracts Signed During Resource-Fueled War (Aaron Ernst |World Politics Review , NY USA)

In a 2002 report, the U.N. alleged that many foreign mining companies,
eager to exploit the lack of a strong central government in Kinshasa
and avoid paying fair market value and taxes on the minerals they
extracted, signed contracts with commanders from the invading countries
as well as with then-President Laurent Kabila, who was struggling to
cling to power in the face of the international onslaught. These
contracts almost universally favored the mining companies.

"In terms of value to the country, about 60 to 80 percent of the
contracts had language that allowed the companies to avoid an
obligation to actually ensure that it does what it says it will do,"
said Peter Rosenblum, law professor at Columbia University and an
expert on DRC mining contracts. The contracts, he said, often
undervalued the worth of the minerals being taken from the country in
order to avoid paying taxes on the wealth that was extracted.

Even after Kabila was deposed and replaced by his son, current DRC
president Joseph Kabila, many of these lop-sided contracts remained in
force. That is, until May of last year. In a move that sent ripples
through the DRC mining community, the government announced that 63
mining contracts, many of them signed during the civil war of the late
'90s, would be reviewed by a special ministerial committee.

While certain NGOs and portions of the international community saw the
announcement as the beginning of a much-needed process to shed light on
and bring accountability to an industry that has fueled much of the
conflict in the DRC, other NGOs and members of the mining community
have been more skeptical. Some have argued that the contract
renegotiation is nothing more than a ruse by members of the government
to transfer mineral riches from the pockets of foreign mining companies
to the pockets of well-connected businessmen in Kabila's government.

"The process is very much open to corruption, particularly when you
look at the history of mining in the DRC," said Carina Tertsakian,
spokeswoman for the U.K.-based group Global Witness, an NGO that
highlights the role of natural resources in fueling conflict. "Even
though this is a new government that was elected in 2006, many of the
same people in the transitional government were the ones who were
involved with negotiating these contracts in the first place," she
said. Global Witness is particularly concerned about the lack of
transparency in the review process, as well as the fact that new
contracts are already being negotiated even before the review is
completed, including a multibillion dollar deal with China whose
details remain cloudy.

It is a criticism that frustrates Karin Ryan, director of the human
rights program at the Carter Center, an organization that has been
providing the DRC government technical support with the review process.
"The assumption is that the money from the contracts is either going to
go to corrupt fat cats, or to the mining companies that deserve it,"
said Ryan. So far, however, the government has come through on all the
promises that the Carter Center made a condition of its involvement in
the process, she said.

The government published the contracts being reviewed, included civil
society in its ministerial commission, and used various NGO reports in
the review, including the independent review sponsored by the Carter
Center. "There are obviously people in the government who are
legitimately trying to do the right thing, and that should be noted,"
she said. "We should assume that the government has the right
intentions and don't demoralize them and the people by saying that the
process is corrupt. It's so dishonest."

Last month, the DRC government fulfilled yet another promise to the
Carter Center and published the results of the review online. The
contracts were divided into three categories: contracts certified
without renegotiation; contracts requiring renegotiation; and contracts
considered so illegal that they were declared null and void. No
contracts fit into the first category, most fell into the second
category, and a dozen or so were dismissed outright.

The mining companies have been tight-lipped about their reaction to the
review process. Several emails sent to Anvil Mining Corporation, a
Canadian mining company whose 90 percent stake in a copper mine has
been called into question, went unanswered. In a phone interview from
South Africa, Alan Fine, public affairs manager for Gold Ashanti said
that they are taking a wait-and-see approach. He declined to answer
specific questions about the content of the review. "We received
communication from the government about six weeks ago setting out their
wishes," he said. "We do not want to go into further detail at this
stage while we are involved in the renegotiation process."

The government has been similarly quiet. "It is hard to get anyone in
the government to talk about what is really going on," said a Congolese
reporter who requested anonymity due to the sensitive nature of the
mining review. "As soon as you request an interview, the date of the
interview is somehow never set," he said. "It's very difficult to know
what is really going on."

With the government's demands laid out, the focus has now turned
towards the renegotiation process. In a statement on their Web site,
Global Witness tentatively praised the publishing of the results of the
contract review, but cautioned that they would be watching closely to
ensure that the actual renegotiation of the contracts was done
transparently as well.

Ryan from the Carter Center agrees and takes it one step further. "It
doesn't end at renegotiation. The process is about holding everyone
responsible and determining whether the contracts benefit the people in
the long term." She fears the potential conflict that could result
should the contract review process fail. "War has flourished in the
east part of the country because of the government's lack of strong
movement to assert authority," she said. "We are just trying to
encourage forward movement."

Aaron Ernst is a freelance journalist
and a graduate student at Columbia University's School of International
and Public Affairs in New York.

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