A Criminal State: Understanding and countering institutionalized corruption and violence in the Democratic Republic of Congo

A Criminal State: Understanding and Countering Institutionalized Corruption and Violence in the Democratic Republic of Congo – By Sasha Lezhnev

No. 2 in the Enough Project’s series on Violent Kleptocracies in East and Central Africa

Executive Summary and Recommendations

The Democratic Republic of Congo is not a failed state—for everyone. It is a failure for the vast majority of Congolese who suffer from abysmal security, health care, and education services. However, it is an efficient state for ruling elites and their commercial partners who seek to extract or traffic resources at the expense of Congo’s development.

Over the past 130 years, Congo has had many elements of violent kleptocracy, a system of state capture in which ruling networks and commercial partners hijack governing institutions and maintain impunity for the purpose of resource extraction and for the security of the regime. Ruling networks utilize varying levels of violence to maintain power and repress dissenting voices. This system plays out today with the current regime’s attempt to subvert a democratic transition. President Joseph Kabila and his associates profit from grand corruption and are trying by all means necessary to hold on to power. From King Leopold II over a century ago to Kabila today, Congo’s leaders have redirected billions of dollars from the Congolese state and people, and have used brutal violence at times to gain or maintain the ultimate prize: control of the state and its vast natural resource base.

During Kabila’s tenure, up to $4 billion per year has gone missing or been stolen due to the manipulation of mining contracts, budgets, and state assets. This follows trends set by King Leopold, the Belgian colonial authorities, Mobutu Sese Seko, and Kabila’s father who preceded him as president before his assassination. These regimes have partnered with commercial actors to rob Congolese people of their valuable natural resource assets. These leaders’ international partners have also profited significantly, some of whom reportedly have paid large bribes to do so. For example, in a recent U.S. Department of Justice plea agreement, the U.S. hedge fund Och-Ziff asserted that some of its business partners, including Israeli businessman Dan Gertler according to sources familiar with the case, paid over $100 million in bribes to Congolese officials in order to receive billions of dollars worth of mineral concessions at very low prices.

Violence has been the systemic companion of these regimes. It is estimated that 5.4 million people have died and hundreds of thousands have been subjected to sexual violence in conflict during the rule of Joseph Kabila and that of his father, Laurent Kabila, with the active participation of neighboring states in the killing and looting inside Congo, particularly Rwanda and Uganda. This is in addition to structural violence and repression.

Based on field and historical research, this study argues that President Kabila and his close associates rely in large part on theft, violence, and impunity to stay in power at the expense of the country’s development. From the days of Leopold to the present, top officials in Congo and their associates have created seven “pillars” of violent kleptocracy. They are:

1. Let the security forces pay themselves. Mobutu said, “You have guns, you don’t need a salary.” In order to prevent being overthrown by force, the regime allows army commanders to become wealthy by exploiting resources and citizens, thus fueling cycles of conflict.
2. Stay in power, or possibly lose everything. Leaving office can mean that regime-connected elites lose their ill-gotten gains and immunity from prosecution. Pro-democracy movements are thus repressed, often violently, as they are threats to the corrupt system.
3. Ensure there is little to no accountability for regime-connected elites. Impunity is the glue that holds the system together. Judicial systems target regime opponents or low-level figures, not high-level perpetrators of corruption or human rights abuses.
4. Create parallel state structures and co-opt rebel groups to weaken political threats. Parallel chains of command are set up to ensure loyalty; rebels are brought into the army without vetting or real integration. The bloated army then commits abuses and collaborates with armed groups.
5. Ensure that high-level officials benefit from corruption. If appointed to a military post or government office, the official is expected to pass payments up the chain. This system, “rapportage,” has led the real tax burden for Congolese citizens to be around 55 percent.
6. Personally profit from natural resource deals, underspend on services, and hijack reforms. The regime receives bribes from certain outsiders to sell resources at very low prices, then outsiders flip them for large profits, depriving the Congolese state of massive revenue. Transparency reforms such as the Extractive Indsutries Transparency Initiative (EITI) help a bit, but the main vehicles for corruption—state-owned companies and their foreign shell company partners—remain opaque. The government deliberately underspends on public services, as its focus is on patronage.
7. Confuse everyone by creating uncertainty on policies in order to increase corruption. The government creates institutions that contradict its own laws or policies, and state agencies impose and collect their own taxes, which increases predation.

These “pillars” have made the Congolese state largely an institutional façade for an enterprise of theft and predation. This is why the government resists serious reform of its army, justice sector, and state-owned companies, which are at the heart of many crises in Congo. This has had devastating effects, as average Congolese citizens earn less than they did in the 1970s in real prices. The system coexists with a formal side in which the state performs some functions, and some basic infrastructure financed by China has been built. However, there is a logic as to why Congo has not developed into a more peaceful, capable state. A weak state that provides few services but keeps army commanders busy, mineral wealth opaque, and impunity continuous for regime leaders serves them by allowing them to maximize profits and maintain power.

The unique networks controlling kleptocratic systems often contain the seeds of their own demise, and Mobutu’s control of Congo’s kleptocracy was no different. The focus on patronage led to gross economic inefficiency, divide and rule strategies created escalating opposition which spilled over into rebellion, and when Mobutu’s patronage money ran low, elites and the population turned against him. As Mobutu’s network frayed and began to collapse, his decision to support the former Rwandan army and militias that had committed the 1994 genocide and escaped across the border into Congo led to the decision by Rwanda and Uganda to invade Congo, in turn leading to the deadliest war in the world since World War II. Some of these seeds of demise and instability are reappearing today.

Shifting the analytical lens from failed state to kleptocratic state. The international community largely analyzes Congo as a fragile or failed state, pumping in aid and peacekeeping assistance to make up for the lack of investment or interest in the provision of state services. Official aid to Congo averaged $2.6 billion annually from 2006 to 2013. Meanwhile, the Kabila regime starves state services. Just one example: while his presidential cabinet received nearly triple its planned budget in 2015 ($88 million), the electoral commission received only one-third its budget ($69 million).

If international policymakers are to have a real impact in helping Congolese reformers actually reform the system, they need to shift lenses. They should view the current situation in Congo as the latest iteration of a longer pattern of violence and corruption, and respond accordingly. Policies should focus on creating significant consequences for those most responsible for the system of violence, corruption, and undermining of democracy. This can be done by creating new leverage using tools of financial pressure normally reserved for countering nuclear proliferation and terrorism aimed at isolating certain leaders from the international financial system, and increasing support for Congolese civil society organizations and journalists to hold the government accountable.

Policy goals should be two-fold: to create accountability for financial and human rights crimes; and to create new leverage for peace, human rights, and governance reforms. The West has as-yet unrealized and unutilized leverage with the regime, as Congo’s officials and international commercial partners use U.S. dollars for transactions, thus touching the western banking system. This combination would much more strongly support Congolese efforts to change the system and enhance good governance.

Recommendations

1. Financial pressure: For a policy of financial pressure aimed at reforms, the United States and other actors within the international community should combine the use of anti-money laundering measures with widened, enforced targeted sanctions designations.  This would comprise a new and unique financial pressure approach that would create real leverage in support of processes that can bring change in Congo. The objective would be to freeze out of the international financial system those committing atrocities and undermining peace. Congress should ensure that the U.S. Department of the Treasury has sufficient resources and direction to undertake investigations and enforcement.

• Enacting anti-money laundering measures. The U.S. Treasury Department and key African and European government financial intelligence units (FIUs) should work in partnership to take measures to counter money laundering activities that transit through banks in Congo and abroad. For example, the U.S. FIU, known as the Financial Crimes Enforcement Network (FinCEN), should issue a public advisory concerning the patterns used to launder the proceeds of corruption from Congo, as well as any other sets of transactions that may represent money laundering activity, such as elements of the gold trade. Such an advisory should include, where possible, discussion of the correspondent banking channels used by Congolese and regional banks to connect to the international financial system. Other FIUs should take similar advisory steps, which collectively should urge banks and other financial institutions to conduct stronger due diligence and provide more reporting on suspicious transactions. However, given the relevance of the U.S. dollar to transactions that underlie kleptocratic activity in Congo, an advisory from FinCEN would be the strongest first step. FinCEN and FIUs from African governments, such as South Africa, Uganda, and Tanzania, should collaborate on information sharing, capacity building programs, and enforcement to make these advisories and the subsequent investigations more effective.
• Enhancing targeted sanctions. The United States, European Union, African Union, Southern African Development Community, and the United Nations Security Council each have their own sanctions frameworks and authorities. These governments or bodies should learn the lessons of past sanctions by using these authorities to impose targeted sanctions, aggressively enforce those sanctions, and place other financial pressure on senior officials, business owners, banks, and armed commanders that comprise the leadership of the kleptocratic network that is responsible for perpetrating and/or benefiting from violence, autocracy, and corruption in Congo. Where necessary, additional sanctions authorities should be adopted, such as a new executive order in the United States and the equivalent in other countries, that enable measures that target those benefitting from public corruption or misappropriation of state assets.

 

2. Accountability: The International Criminal Court (ICC), the United States, Central and East African nations, and European states should use judicial tools to target the facilitators of violence, prosecute corruption-related crimes, and bolster atrocity crimes cases with a strategy to target assets stolen by those responsible for serious crimes to impose real accountability.

• Targeting the facilitators of violence and prosecuting pillage. The ICC and national courts with appropriate jurisdiction should investigate serious ongoing crimes in Congo including aiding and abetting atrocities perpetrated by armed groups. These courts should also investigate the war crime of natural resource pillage, particularly related to gold.
• Seizing criminally derived assets. The ICC’s Office of the Prosecutor should seize criminally derived assets in relation to its current and future Congo cases and develop a wider strategy for asset seizures across all cases. It should revive the ICC financial crimes unit. The U.S. Department of Justice’s Kleptocracy Asset Recovery Initiative should investigate and locate the proceeds of grand corruption and organized violence in Congo and use asset forfeiture provisions to recover those assets and return them to the communities from which they were stolen.
• Prosecuting corruption-related crimes. The U.S. Department of Justice, under the Foreign Corrupt Practices Act and other relevant statutes, as well as its European counterparts, e.g. in Belgium, the United Kingdom, and Norway, should investigate and prosecute embezzlement, extortion, and other crimes related to corruption.

3. Good governance and transparency: The overall objective of policymakers should be a reformed, functional state that is responsive to Congolese citizens’ needs. While pursuing financial and legal pressure to create immediate costs for current corrupt and violent behavior, the U.S., European, African, Asian, and multilateral institutions should support long-term democratic and transparency processes, governance reforms, and needed capacities by taking the following steps:

• Reforming Aid. Capacity building programs in all sectors need to be reconceived so that they no longer reinforce existing corrupt institutions, as where there is no political will for reform they will not have the desired impact. Donor countries should undertake a top-to-bottom review to focus only on aiding institutions that are in the process of reform. Donors must incorporate strong accountability and oversight measures in state capacity building and security sector programs in Congo and be willing to defund or reject projects if the government fails to include safeguards to prevent corruption. For example, an aid program should not only give equipment and training to ministry officials, but also require that the ministry pay salaries on time and its anti-corruption unit actively pursue corruption cases. Congress should play a constructive role in ensuring aid is well targeted and require oversight and reporting related to state capacity building programs.
• Pressing for the publication of financial reports and audits of state-owned companies and the China contract. The United States, European countries, International Conference on the Great Lakes Region (ICGLR), the International Monetary Fund (IMF), and mining companies investing in Congo should strongly encourage President Kabila and the DRC Minister of Portfolio to require that key state-owned companies such as Gécamines and SOKIMO publish detailed annual financial statements. Furthermore, there should be an independent, third-party audit conducted and published of the companies and the expenditures related to the $6.2 billion Congo-China agreement, an opaque arrangement.
• Strengthening EITI implementation and urge completion of the Mining Code review. The United States, the African Development Bank, European states, and the World Bank should strengthen Extractive Indsutries Transparency Initiative (EITI) implementation in Congo by pressing for EITI reports to disclose the expenditures of state-owned companies, as required by EITI, pushing for full beneficial ownership disclosure, particularly for partners of state-owned companies, and following up on contract transparency. Also, the United States, European Union, World Bank, African Development Bank, and mining companies investing in Congo should urge the Congolese government to complete the Mining Code review with the full participation of civil society.

Supporting civil society with increased legal aid, protection, and capacity building. U.S. Agency for International Development (USAID), European donor agencies, the African Union, and the U.N. Development Programme (UNDP) should increase democracy support, particularly legal aid and protection support, to civil society, faith-based, and women’s groups to enable them to function as a more effective watchdog on democracy and corruption. In addition, the U.N. Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) and international donors should increase their protection of human rights defenders.