*Speaking of "Stopping the Rot and Weasels" I see where,
Gécamines bled dry by its managers
The General Inspectorate of Finance (IGF) has made public its summary control report on the management of GECAMINES SA.
This report from May highlights the observations relating to the management of mining assets, but he also makes observations concerning the actual management of this public company.
For this report, Gécamines was bled dry by its managers.
Regarding the management of Gécamines mining assets, this report reveals that between 2000 and 2008, Gécamines signed 24 partnership contracts (Joint-Venture) with private individuals.
These contracts represented 100% of its historical available mineral reserves.
To date, Gécamines has reconstituted the equivalent of 26% of these reserves.
In the meantime, it has signed three new Joint-Venture contracts.
On the question of the terms and conditions for the sale of mining assets, these took place in four forms.
This mainly concerns the contribution of deposits in partnership, within the framework of joint ventures with foreign mining groups, but it is also about leasing (leasing, for a fixed or indefinite period, of a mining right, in return for a fixed remuneration).
We also note the transfer of shares and rights of Gécamines in the partnerships concluded.
It has also entered into a mine-for-infrastructure contract, commonly known as the Chinese contract.
Improper transfers
The General Inspectorate of Finance also carried out an assessment of the damage that Gécamines and the Congolese State suffered in these various contracts.
It noted the damage in the sale of mining assets through partnership contracts.
There are also damages in the assignment of rights resulting from these partnerships as well as in the Chinese contract.
With regard to the damages in the disposals of mining assets, the IGF reveals that these disposals are all characterized by irregularities.
This is, for example, the absence of an independent evaluation of the contribution in kind made by Gécamines in the partnership.
In addition, it is the absence of equity contribution from the partners of Gécamines.
Another thing is the absence of profit made (benefit) in all the partnerships concluded by Gécamines.
The IGF also notes the disparate treatment of partnerships and deplores the lack of traceability of the payment of doorsteps in certain partnerships, but also the lack of publication of certain partnership contracts.
Unbalanced and unfair partnerships
The IGF revealed a staggering fact.
The deposits brought by Gécamines have never been evaluated.
However, these quotas were subsequently revised downwards.
In the case of TFM, for example, Gécamines initially had 45% of the share capital of the Joint-Venture, but it ended up with 17.5% before rising to 20% and this is following the revisitation of mining contracts in 2009.
In addition, the control power of Gécamines has been reduced.
This situation has allowed the private sector to control all the mining assets.
The fact that these partners have not provided equity for the exploitation of these deposits is another drama that the IGF raises. Instead, these partners are indebted to related companies.
As a result, they had extremely exorbitant financial charges. In addition to these charges, these joint ventures made massive use of subcontracting and the height was with subsidiaries of the parent companies of the partners. In addition, the production is sold to them, at a discount.
These practices result in a significant indirect transfer of operating income.
In the end, none of these partnerships was able to distribute dividends before the 2020 financial year and this is without taking into account the fact that this tax evasion also caused significant revenue to be lost.
The investments made by these partners have been accounted for without an evaluation and generally with an additional cost, compared to the feasibility studies, which is around 170% of the estimated costs and up to 200%, for financial costs.
In the end, it was the Gécamines deposits that were used to repay the loans taken out by the partners in the operations.
A loss of royalties
On account of the disparate treatment of partnerships, the IGF report focused on the right of Gécamines to collect royalties.
Indeed, to limit the effects of the capture of operating revenues by private partners, the principle of payment of royalties was introduced during the review of mining contracts.
These are deducted from the proceeds of the sale.
However, these royalties were neither generalized nor standardized, in their method of calculation or their rate, which ranged from 1% to 2.5%:
In this regard, from 2012 to 2020, Gécamines' partners achieved a global turnover estimated at 35 billion USD, while Gécamines received only 564 million USD in royalties from these partnerships, i.e. 1 .6%;
Curiously, TENKE FUNGURUME MINING, which inherited the largest reserves from Gécamines, is not required to pay any royalties! 
The loss of earnings in royalties, assessed at the rate of 2.5%, on the turnover of 14,412,657,464 USD, realized from 2012 to 2020, is 360,316,437 USD.
While royalties are calculated on gross turnover for some companies, for others, on the other hand, they are calculated on net turnover and the rate of calculation of these royalties is not uniform either.
Since the event giving rise to these royalties is the same, all concessions or waivers granted to partners, without equivalent financial compensation, constitute losses for Gécamines and, consequently, for the Public Treasury.
Disastrous management
This management was assessed on four aspects.
This is particularly in terms of investments, taxation, and employee benefits, but also in terms of poor management of collection and debt of the company.
In terms of investments, the IGF has pinpointed the misuse of income from partnerships and leases and so many other things.
The IGF reports the sale of Gécamines houses and other real estate without any formal evaluation by an independent real estate expert.
Gécamines had unilaterally set prices at USD 500.00 for one-room houses, USD 750.00 for two-room houses, USD 1,000.00 for three-room houses and USD 1,500.00 for four-room houses.
In terms of taxation, the IGF points out the presumption of embezzlement of public funds.
This is due to failure to trace tax advances and doorsteps. On this subject, Gécamines presented a file concerning tax advances.
These total USD 530,621,863.15 and net loans to the State estimated at USD 61,000,000 for a total of USD 591,621,863.15.
Of this total amount, only USD 178 million was traced to the account of the Public Treasury and from the Tax Collector is USD 413,621,863.15 not traced.
To this amount must be added the doorsteps of SICOMINES.
These are up to USD 175 million not yet traced to the Treasury account to date.
*Fyi,
La Générale des Carrières et des Mines (
Gécamines) is a Congolese
commodity trading and
mining company headquartered in Lubumbashi, in the
Katanga region of the
Democratic Republic of Congo.
It is a
state-controlled corporation founded in 1966 and a successor to the
Union Minière du Haut-Katanga.
Gecamines is engaged in the exploration, research, exploitation and production of mineral deposits including
copper and
cobalt.
One of the largest
mining companies in
Africa, and the biggest in the
Democratic Republic of Congo, Gécamines sits on the world's greatest deposit of
cobalt and has some of the world's largest deposits of copper.
Copper mines in which Gécamines has a major interests include, but are not limited to,
Kambove,
Kipushi,
Kamfundwa and
Kolwezi.
Located in the mineral-rich
Katanga Province, Gécamines is currently going through a multi-year, multi-billion reorganization strategic development plan with the main objective of repositioning itself as one of the world's top mining majors, mainly by focusing on core strategic assets in which the company has majority shares.
Among others, Gécamines has forged partnerships and
joint ventures with companies such as Anglo-Swiss
Glencore International, American giant
Freeport-McMoran and London-based
Eurasian Natural Resources Corporation.
*To Remind,
Mining giant pleads guilty to UK bribery charges
A subsidiary of the mining and commodities trading giant Glencore has pleaded guilty to seven counts of bribery in a London court.
The firm also said it will pay more than $1bn (£800m) to resolve similar claims with the US and Brazil.
The UK's Serious Fraud Office said it had exposed "profit-driven bribery and corruption" across Glencore Energy UK's oil operations in five African nations.
The firm will find how much it must pay in fines at a sentencing in June.
In 2018, the US Department of Justice launched an investigation into Glencore's compliance with American money-laundering and corruption laws dating back as far as 2007.
It concerned the mining giant's operations in Nigeria, the Democratic Republic of Congo and Venezuela.
www.bbc.com
Seeking to enhance profitability by creating lucrative competitive partnerships, in 2013 the Congolese firm appointed US businessman and
American Jewish Congress President
Jack Rosen on its
Board of Directors.
In 2015, Gécamines signed a strategic copper and cobalt cooperation accord with
Hong-Kong-listed
China Non-Ferrous Metal Mining.
In 2016, Gécamines and
China Non-Ferrous Metal Mining signed a
memorandum of understanding for the construction of two factories, one of which includes Gécamines flagship property project of Deziwa, projected to produce 200.000 tons of copper per year.
*To Remind,
Joseph Kabila is a Congolese politician who served as
President of the Democratic Republic of the Congo between January 2001 and January 2019.
He took office ten days after the assassination of his father, President
Laurent-Désiré Kabila in the context of the
Second Congo War.
He was allowed to remain in power after the 2003
Pretoria Accord ended the war as the president of the country's new
transitional government.
He was elected as president in
2006 and re-elected in
2011 for a second term.
Since stepping down after the
2018 election, Kabila, as a former president, serves as a
senator for life.
Kabila's term was due to expire on 20 December 2016, according to the terms of the constitution adopted in 2006.
Officials suggested that elections would be held in November 2016, but on 29 September 2016, the nation's electoral authority announced that the election would not be held until early 2018.
Talk focused on the need for a census before holding elections.
In August 2018, Kabila announced that he would step down and not seek reelection in the
December 2018 general election.
He was succeeded by
Félix Tshisekedi in the country's first
peaceful transition of power since independence.
