Global Witness (London)

29 June 2012

Congo-Kinshasa: News Over Ownership of Congolese Oil Blocks Raises Further Corruption Concerns

press release

The article, published on Monday, follows the publication of Global Witness briefings highlighting corruption risks associated with offshore companies that have gained access to lucrative Congolese mining assets in opaque deals. Many of the offshore companies concerned are linked to Mr Gertler. Global Witness has called for full transparency over the deals and their beneficiaries to guard against corruption risks.

The Financial Times quotes Congo's oil minister, Crispin Atama Tabe Mogodi, as saying that Mr Gertler is "in the team of Caprikat", one of two offshore companies that obtained blocks 1 and 2 in Congo's Lake Albert basin in 2010. The two companies, Caprikat and Foxwhelp, obtained their licences after the government cancelled licences for the same blocks that had been attributed to other firms. Caprikat and Foxwhelp have no known track record in the oil industry. Registered in the British Virgin Islands, a tax haven, the "beneficial" (or real) owners and directors of the companies are secret.

Global Witness has raised a number of concerns related to Mr Gertler's involvement in the secret sales of prize mining assets in Congo, and his business relations with FTSE-100 mining companies Glencore and ENRC. Focusing on deals done since early 2010, Global Witness has pointed to what it regards as danger signs of possible corruption, including that mines were sold off in secret without tenders and that they were sold at far below commercial valuations. Global Witness is also concerned that Mr Gertler may have benefitted from his friendship with President Joseph Kabila to obtain the mining assets.

Glencore, ENRC and a spokesman for Mr Gertler, have all strongly denied any involvement in corruption. A spokesman for Mr Gertler's companies has also said that his friendship with the Congolese president has "put more liability on us and we never enjoyed free rides". On Tuesday, the oil minister said in a statement that development of the oil blocks controlled by Caprikat and Foxwhelp "is at its planned stage" and that the two companies "have made significant investment into R&D and seismic investigations and have invested heavily in social welfare projects in the area".

The revelations in the Financial Times highlight that potential corruption risks in Congo extend beyond the mining sector. Global Witness believes the secretive and controversial nature of the deals done by Caprikat and Foxwhelp demonstrate similar danger signs that could mean they have obtained their assets via corrupt means. Although Caprikat and Foxwhelp were attributed the assets through a presidential decree published in the country's Journal Officiel on 22 June 2010, it is unclear why previous licences to the blocks were cancelled and why these two previously unknown companies were chosen as the new licence-holders (see "notes to editors", below).

A spokesman for Mr Gertler declined to comment on the content of the Financial Times article and said inquiries regarding Caprikat and Foxwhelp should be addressed to the company operating their oil blocks, Oil of DR Congo. By the time this statement was published, Oil of DR Congo had not replied to e-mailed questions from Global Witness.

Global Witness believes that there must be full disclosure of the beneficiaries of Caprikat and Foxwhelp to address concerns over possible corruption. Comprehensive details about how and why they were awarded blocks 1 and 2 should also be released. In the absence of the provision of these details, the possibility that the blocks were obtained by corrupt means cannot be ruled out. On this basis, it also cannot be ruled out that corrupt officials could benefit from any onward sale of these assets.

Given these concerns, Global Witness believes that companies should refrain from doing business with Caprikat and Foxwhelp until there is full disclosure of their beneficiaries and comprehensive details are released about how and why they were awarded their oil blocks.

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