Carter Center (Atlanta)
14 July 2008
press release
The Carter Center is deeply concerned by the recent announcement that the Democratic Republic of Congo will begin renegotiating critical mining contracts in mid-July[i] without policy or procedures to guide this process or indication of whether requisite expertise will be secured.
"We support the need for renegotiations wholeheartedly," said John Stremlau, vice president for peace programs at The Carter Center. "But not without publicly disclosed measures to ensure the integrity of the process."
The announcement of renegotiations follows four months of official silence on the contract review process. In March, the government published the report of the inter-ministerial "Revisitation" Commission established to review upwards of 60 mining contracts, along with letters addressed to companies on the basis of the report. It also announced a ministerial-level Task Force that would provide overall guidance to the next phase of the contract review process.[ii]
The Carter Center welcomed these steps as a good faith demonstration of the government's commitment to uphold international standards as it pursues the next phase of the process, which includes renegotiating and terminating contracts. Unfortunately, the Task Force has not met the goal of providing direction for the next phase.
The Carter Center's concerns include:
? The apparent lack recognition of the urgency of the matter by the Task Force, which has held only one or two substantive meetings since its announcement four months ago.
? Lack of indication from the Task Force or any agency of government of how renegotiations will be conducted, whether the necessary expertise has been retained, and whether funds have been secured for this purpose.
? Lack of public statements by the Task Force as to which contracts will be renegotiated and in what order of priority, and what terms will be renegotiated, or whether contracts will be terminated, and on what grounds.
? The lack of transparency in new deals announced with the Chinese government and with individual companies whose contracts are under review, which erodes public confidence in the contract review process.
"In the absence of publicly announced measures to address these problems and to ensure the integrity of the process, renegotiation is unlikely to result in any improvement, which would be a tragedy for the Congolese people who have so much at stake," said Stremlau.
The Vice Minister of Mines has informed The Carter Center that the government of the DRC is aware of the problems caused by the delays and shares many of the Center's concerns. According to the Vice Minister, the government is seeking to address a number of these problems. In this light, The Carter Center urges the government to:
· Take immediate steps to reform the operation of the Task Force to ensure that it can provide effective political direction for the next phase,
· Determine and publish the criteria that will guide the next phase of the contract review,
· Publish the procedures that will be followed in the next phase,
· Identify the team that will have operational responsibility for the renegotiation and termination of contracts, and establish clear rules for the division of responsibility between this team and the political authorities that will guide the process,
· Retain the expertise requisite to the next phase of the process, including professionals with demonstrated expertise in relation to mining economics, and international and DRC law,
· Meaningfully involve civil society at all stages of the process, and
· Publish all agreements relating to the grant of concessions to China as compensation for loans.
Successful completion of the mining review depends on the support of all parties, including mining companies, multilateral organizations and foreign governments (see past recommendations made to all parties by The Carter Center).[iii] The Carter Center urges all parties to make a sustained and good faith effort to achieve a fair and sustainable result as expeditiously as possible.
Background
Billions of dollars' worth of mining investment contracts were concluded by the DRC during its years of conflict, before an elected government was in place to lend them legitimacy. Investigations and analyses by, among others, a Congolese parliamentary commission, law firm Duncan & Allen, and accounting firm Ernst & Young have detailed significant irregularities in the award of the contracts, shortcomings in the contracts themselves, and material default in performance. As The Carter Center confirmed in its own review, many of the contracts lack basic provisions to ensure that mining companies fulfill their limited obligations, including provisions protecting against pricing practices that would allow mining companies to reduce amounts paid to the government. They also lack provisions to ensure that windfall profits, earned by companies due to current elevated resource prices, are shared equitably.
The review and renegotiation of mining contracts was a critical issue in the democratic elections that brought to an end a decade of war in the Congo. In February 2007, Congo's new government, under President Joseph Kabila and Prime Minister Antoine Gizenga, issued a 'Governance Contract,' laying out its priorities and commitments, including the review of mining contracts.
In April 2007, the Ministry of Mines announced the creation of an inter-ministerial commission on "Revisitation" to effect this review of contracts. When he inaugurated the Commission in June, the Minister invited The Carter Center to "accompany" the process, which The Carter Center accepted.[iv]
The Carter Center welcomed the creation of the Commission and applauded the government's nearly unprecedented publication of contracts under review. There were significant shortcomings in this phase of the review, including the unrealistically short period afforded to the Commission, the lack of certain essential expertise, and the lack of transparency in relation to its mandate and deliberations. Nevertheless, The Carter Center believes that the Commission made a valuable and important contribution to the process.
The Ministry published the Commission's report in March 2008. At that time, it announced that renegotiations would be based on the Commission's report, together with other analyses, including those provided by The Carter Center. The Ministry also announced the creation of a ministerial-level Task Force with responsibility for guiding the next phase of the contract review process.[v]
Shortly thereafter, the Ministry of Mines initiated contact with international donors to discuss the possibility of obtaining their financial support to retain international experts. However, the Ministry did not pursue the discussions.
During this period, members of the Ministry of Mines met with lawyers provided by The Carter Center to outline options and strategies for the next phase of the contract review process. The Center recommended procedures to the government that aim to achieve consistency and coherence in this next phase. While the recommendations were welcomed by the Ministry, but there has been no recent engagement with the lawyers provided by The Carter Center.
On April 4, former U.S. President Jimmy Carter wrote to President Kabila expressing his support for the contract review process and his appreciation of the challenge presented by its next stage. He encouraged President Kabila to play a leadership role in supporting a fair and open process that would meet international standards and the aspirations of the Congolese people.
The Carter Center remains committed to working with all interested parties to help implement a successful process for the review of the mining contracts.
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A not-for-profit, nongovernmental organization, The Carter Center has helped to improve life for people in more than 70 countries by resolving conflicts; advancing democracy, human rights, and economic opportunity; preventing diseases; improving mental health care; and teaching farmers in developing nations to increase crop production. The Carter Center was founded in 1982 by former U.S. President Jimmy Carter and his wife, Rosalynn, in partnership with Emory University, to advance peace and health worldwide.
[i] See Joe Bavier, "DRC mining contract re-negotiation talks to start next month", Reuters, 13 Jun 2008.
[ii] "Publication date announced for Revisitation Commission report on DRC's mining contracts", 18 March 2008.
[iii] "Carter Center Urges International Community to Support Congo Mining Review Efforts", 10 March 2008.
[iv] The acceptance of the Carter Center was subject to three conditions: (i) public disclosure of all contacts in the sector; (ii) regular communication between the Commission and the public regarding the process, including an opportunity for civil society to submit its advice and have it considered; and (iii) the full disclosure of the results of the Commission's work at its conclusion. The Carter Center also insisted on complete independence in all aspects of its work.
[v] Supra note ii.
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