More than $750 million of mining revenue in the Democratic Republic of Congo was lost to a dysfunctional state-owned mining company and opaque national tax agencies between 2013 and 2015.
In its latest study, the Global Witness says it has evidence showing how at least some of the funds were distributed among corrupt networks linked to President Joseph Kabila’s administration.
The report incriminates DRC’s state mining company Gecamines and several national tax agencies, which it says are hemorrhaging millions of dollars in suspect transactions.
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“Gecamines was the ‘cash cow’ of the whole country … [but] the company is now an emaciated cow, with no more milk to feed its children,” a Gecamines worker told the Global Witness.
The report further reveals that the company, which is currently burdened with more than one billion dollars of debt, has been making suspicious transactions that involve millions of dollars in cash, while simultaneously failing to make any substantial contribution to the national treasury or invest in its own mining operations.
Previously, Gecamines used to mine up to 500,000 tons of minerals a year, but now carries out almost no mining of its own. It largely relies on offshore companies for production, according to the report.
Corruption and Mismanagement of Resources
The Global Witness also accuses DRC’s treasury and other tax agencies of colluding with prominent government officials and private companies to fleece the public coffers.
The report says these agencies are usually very secretive in their operations and are often ran by powerful individuals with close professional and personal links to the prime minister and the president.
“Each year the national tax agencies keep back a portion of mining revenues for their ‘own funds’, rather than transfer it to the treasury,” the report claims.
The agencies are also allowed by law to impose hefty fines on tax defaulters and to keep some of the fines, which sometimes can amount to hundreds of millions of dollars.
Self-Inflicted Poverty and War
Although the Democratic Republic of Congo is one of Africa’s richest countries in terms of natural resources, it still remains one of the poorest nations, with 72 per cent of its rural households and 59 per cent of urban households ranking below the poverty line.
It is estimated that majority of families in the rural areas survive on one meal a day, while nearly 40 percent of children under the age of five suffer from chronic malnutrition.
The unprecedented poverty in the DRC, which is the world’s largest producer of cobalt, has largely been attributed to run-away corruption, mismanagement of resources and continued political instability.
Currently, the central African nation is staring at a potential civil war following the indefinite postponement of presidential elections that were slated for November 2016.
The country’s opposition has accused President Kabila, who has ruled the country for more than 16 years, of postponing the election in an attempt to hang on to power.