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NY Times Reports Suspicious Congo Transactions of $95.7 million; Treasury Department Should Alert Banks

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NY Times Reports Suspicious Congo Transactions of $95.7 million; Treasury Department Should Alert Banks

Posted by Enough Team on December 18, 2016

Enough Project calls on the U.S. Treasury Department, European governments to work with financial institutions to address news reports of suspicious transactions in the Democratic Republic of Congo 

In an article published today, the New York Times reported that some senior officials in the Congolese government have been involved in a series of suspicious bank transfers. The article also discusses $95.7 million in irregular “tax advances” from the state-owned mining company Gécamines to the country’s central bank. Documents provided by the Times and verified by The Sentry show that these transactions were denominated in U.S. dollars. President Joseph Kabila appoints the directors of Gécamines. It also reported the suspicions voiced by several government officials that that family members of President Kabila have been involved in suspicious cash transactions. This news comes amidst a deteriorating political crisis in which elections have been postponed by 17 months and repression has risen against democratic protestors and the media. More details regarding these transactions are found in the New York Times story, which quotes a representative of the Enough Project.

Sasha Lezhnev, Associate Director of Policy at the Enough Project, said: “It appears from the Times’ reporting that the U.S. financial system may be being used by corrupt elites in the Democratic Republic of Congo. The U.S. Treasury Department should employ the types of financial tools used to combat terrorism and nuclear proliferation to safeguard the U.S. financial system. A FinCEN advisory would make it much more difficult for corrupt officials to wire money through the international financial system.”

The transactions included an $8 million order for tax advances to be paid in cash from the mining company to a bank. According to documents viewed by The Sentry, this bank was BGFI DRC. According to Bloomberg, BGFI DRC is controlled by the president’s brother and sister. If, as it appears, that the transactions described in the article were conducted in U.S. dollars, some of them therefore may have passed through the U.S. financial system. This would provide the U.S. government with an opportunity to thoroughly examine the transactions that took place and take action to prevent abuse of the U.S. financial system.

In the Times article, Lambert Mende, Congo’s Minister of Communications, asserted that Kabila was “not a robber, not at all,” and added, “He has no account in Europe or the USA. He doesn’t have a single apartment outside of Congo. This is all storytelling.”

The transactions reported by the Times have taken place against a backdrop of large-scale poverty in Congo, as the economic situation continues to deteriorate for average Congolese citizens. The Congolese Franc has lost 27% of its value in 2016; inflation has increased to nearly 6%; Central Bank foreign exchange reserves have decreased by nearly half (45%) over the past two years; and the price of some foodstuffs is up as high as 80%. The Congolese government is also slashing state services, with budget cuts of 22% and a further 14%, including a 90% cut in spending on healthcare equipment.

The Congolese government has also delayed elections scheduled by the constitution for November 19, 2016, until April 2018, and its security forces killed at least 56 protestors in pro-democracy rallies in September. The government has also cracked down on independent media, cutting the signals of Radio France International and UN-supported Radio Okapi and several others. President Kabila is supposed to hand over power on December 19, 2016, according to Congo’s constitution.

John Prendergast, Founding Director at the Enough Project, said: “While Congo’s elites continue to benefit and profit from a violent kleptocratic system and undermine democratic processes and institutions, the Congolese people are bearing the brunt. The United States and Europe should impose appropriate, higher-level targeted sanctions now in a last-ditch effort to prevent an escalation of violence ahead of December 19.”

Holly Dranginis, Senior Policy Analyst at the Enough Project, said: “The Times article is in line with our conclusion, based on our own analysis of the situation, that, instead of using Congo’s vast resource wealth to provide social services, fund elections, and improve the livelihoods of citizens, the Kabila regime has pursuedtwo narrow, self-serving objectives: lining the pockets of the president’s inner circle and retaining power at all costs.”

The Enough Project recommends that the United States and Europe take four main policy steps in order to to negotiate a successful democratic transition. That process should include the holding of elections in 2017, Kabila’s handing over of power, and the dropping of charges against democracy activists and opposition candidates.

  1. Anti-money laundering measures: 314(a). The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) should begin to assess suspicious financial activities connected to the Kabila regime and key elites by issuing a request to financial institutions pursuant to Section 314(a) of the Patriot Act. Financial intelligence units in Belgium, the UK, and France should use their authorities to take similar steps. The request would demand vigilance and lead to more vigorous reporting of suspicious activity regarding the possible flow of the proceeds of corruption through the U.S. financial system. This would not cut off the general Congolese population from the banking system but rather be directed against a specific list of individuals and entities.

  2. Enhanced and robustly enforced targeted sanctions on higher-level decision makers found responsible for violence and corruption. The U.S. should designate a short list of high-level financial, political, and military advisors with strong influence on President Kabila and who have significant financial assets that can be impacted by a designation. The designation of three Congolese generals during the course of 2016 has been a good start but will prove insufficient to change the DRC government’s stance on elections unless higher-level targets are designated. Congolese civil society supports additional designations.

  3. Direct engagement with correspondent banks. Treasury and State Department officials should meet with the U.S. and European correspondent banks that do significant business with banks in Congo that may have facilitated suspicious money transfers, as well as with key regional bodies. By raising concerns with individual banks, the correspondent banks could cut off from the international financial system the entities in Congo posing the highest risks.

  4. Improving transparency: Pressing for an audit of the state-owned copper and cobalt company. The United States, Belgium, the United Kingdom, the International Monetary Fund (IMF), the International Conference on the Great Lakes Region (ICGLR), and mining companies investing in Congo should strongly encourage President Kabila to require that the state-owned company Gécamines should publish detailed annual financial statements and have an independent, third-party audit conducted and published.