MONUC

1. MONUC Global Forum V Hot spots: non state sectors vulnerable to corruption

2. 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.

3. 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)

4. 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)

5. 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

6. 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

7. 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 _______________________________________

8. 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)

9. 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)

10. 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

11. IS THERE JUSTICE IN THE DRC ?

12. 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

13. 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

14. 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

15. 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)

16. 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)

17. 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

18. 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.

19. 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)

20. 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)

21. 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

22. 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.