ENRC

A year ago, the Democratic Republic of Congo was named the world’s least developed country  by the United Nations Development Programme (UNDP).  Around the same time, evidence-based arguments were put, by me and others including admirable NGO Global Witness, that the country’s only ticket out of poverty – its mineral resources –  were being sold off in ways which did not appear to provide proper benefit at all to the people of the DRC.  It seemed to those of us who know the DRC well that while the World Bank and IMF had theoretical oversight of a DRC mining deals following a long review in fact there was little or no real compliance by the DRC.  Major assets were being sold by opaque means and while end buyers were paying large figures, only a tiny proportion of the cash was finding its way to the DRC Treasury. In January this year, one such end buyer, Eurasian Natural Resources Corporation (ENRC), settled a dispute with First Quantum which threw light on how the DRC seemed to be mismanaging its vast mineral inheritance.  That deal, ENRC’s first step towards detoxifying both a significant asset and the brand itself, was in effect Stage One of a very tricky procurement operation.  The second stage is underway now, with the purchase of the remaining half of the same asset.

For observers, the central question is whether or not this  new deal, to be voted upon by ENRC shareholders tomorrow, represents the welcome end of a bad chapter in the DRC’s recent history.

For some, like Global Witness, the deal should not go ahead.  This month’s suspension of aid by the IMF raises too many questions so far unanswered by the DRC. The NGO asks; who benefits?

In truth, the final beneficiary in this case seems clear; ENRC have named the company and that entity is closely linked to the family trust of a single trader. There does not seem to be any evidence that this concluding deal will provide benefit to anyone else, such as government officials. The IMF should continue to demand full disclosure by the DRC government in respect of past income, of course.  But how best to proceed now?  If this contemporaneous deal is not concluded then production at the site will not commence; tax revenue will be lost and the potential for thousands of jobs in the DRC will be lost. There is no Plan B.

ENRC has been on a much-written-about journey this year, Google it if you like; the company’s new chairman says they have learned a great deal – it’s certainly true that many changes have taken place since his appointment. But this isn’t a matter of giving anyone the benefit of doubt.  Historical deals involving allegations of government official graft should be investigated and the DRC government itself should work with the IMF to restore aid. But  in this case, it seems that a large amount of money will be paid entirely and directly to a single wealthy individual and that, as a consequence, real jobs will be created by ENRC in the DRC.  If the deal does not go ahead, the site will remain deserted. That would be a high price for the DRC to pay.

 

Eric Joyce MP

(contact eric@ericjoyce.co.uk)