- Payoffs Through "Piggy Bank" for Ex-President's Inner Circle Cleared Path for Multibillion-Dollar Mining Project Meant to Fund National Infrastructure
- Dirty Money Flowed Through International Banks
A massive deal between Chinese state-owned engineering firms and the Democratic Republic of Congo (DRC) to trade mineral wealth to fund urgently needed infrastructure projects concealed a multimillion-dollar embezzlement and bribery operation, according to a new investigative report by The Sentry.
Released today, The Sentry's 90-page report "The Backchannel: State Capture and Bribery in Congo's Deal of the Century" details how critical funds meant to rebuild roads, hospitals, and schools wound up in the pockets of former DRC President Joseph Kabila's inner circle in a scheme orchestrated by David Du Wei, a middleman with high level connections in DRC and China.
Du Wei moved $65 million through his shell company's accounts at BGFIBank DRC with help from a tight network of individuals representing private industry and government. Du's million-dollar payments were subsequently routed through the global financial system via correspondent banks - including Citibank and Commerzbank.
John Dell'Osso, Senior Investigator at The Sentry, said: "When unscrupulous corporations want to secure lucrative projects and make obstacles disappear, they sometimes outsource their dirty work to middlemen. These are the shady agents who deliver the proverbial sacks of cash to pay off local officials. Our investigation uncovered such a middleman, David Du Wei, and details every step of his corrupt operation to keep a multibillion-dollar mining deal on track. The deal was meant to help rebuild critical infrastructure in the DRC, improving the lives of everyday citizens. Instead, the massive Chinese firms behind the deal were all too willing to pay off Congolese powerbrokers who happily pocketed the cash, all while the infrastructure work has been plagued by delays and shortfalls."
Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: "The report demonstrates the consequences of allowing the politically-connected to run a financial institution like their own piggy bank. To prevent such failures from occurring again, the Congolese Government needs to prioritize rooting out corruption and political influence from its banking sector – and the international community, in particular global correspondent banks, need to help."
Douglas Gillison, Senior Investigator at The Sentry, said: "When leaders steal from their impoverished people, they are abetted by banks and purveyors of financial secrecy who have channeled dirty money across the globe for far too long. The Congo Hold-up leak is a once-in-a-generation opportunity to peer into this world, expose its actors, and demand urgent reforms."
The Sentry's findings add to an array of investigative reports released in the "Congo Hold-up" series by an international consortium of non-profit organizations and media outlets. The millions of leaked bank records obtained by the Platform to Protect Whistleblowers in Africa (PPLAAF) and the French news group Mediapart and shared with The Sentry and other consortium partners by PPLAAF and European Investigative Collaborations (EIC) represent the largest confidential data leak in African history.
J.R. Mailey, Director of Investigations at The Sentry, said: "One of the biggest deals in the history of the Democratic Republic of the Congo is also one of the dirtiest. With access to billions of dollars' worth of mineral wealth at stake, two Chinese companies pumped millions into accounts controlled by the president's family. The scheme involved a web of shell companies and a shadowy middleman, but at the center of it all was a bank hijacked by the DRC's ruling family. Money laundering controls and compliance regimes might sound esoteric, but when they fail, dangerous things happen. It's time to shut down the laundromat, freeze and return the assets that have been stolen, and prosecute those responsible."
John Prendergast, Co-Founder of The Sentry, said: "The DRC is held hostage by a kleptocratic system that has looted billions from one of the world's poorest countries. Global banks, government regulatory bodies, and law enforcement agencies should act on this new evidence to take decisive action."
None of the companies behind the minerals-for-infrastructure deal responded to requests for comment, nor did former President Joseph Kabila or any members of his family. Furthermore, the bank at the center of the leak - BGFIBank DRC - did not respond to detailed questions about the matters discussed in this report.
Selected excerpts from the report:
- The Sentry's investigation has found clear evidence of corruption showing that Chinese corporations colluded with power players in the DRC to secure access to billions of dollars' worth of natural resources—all with an assist from the world of global high finance.
- A generational investment in the DRC's potential, one meant to help heal the wounds from decades of mismanagement and successive wars, in fact served another purpose all too prevalent in the world's resource-dependent economies: lining the pockets of the powerful with the wealth buried beneath the impoverished population's feet.
- Du Wei, who often used the Western name "David," came from Liaoning province in China's industrial northeast and promoted his own expertise in protecting Chinese investments in Africa. A thirty-something Chinese scholar and businessman, Du freely advertised his expertise in safeguarding the African assets of Beijing's state-owned enterprises, particularly through "countermeasures" to ward off political risk.
- By all appearances, Du was an ideal intermediary to ensure the success of the high-risk Sino-Congolese minerals-for-infrastructure project. But records contained in the Congo Hold-up leak and reviewed by The Sentry show that Du favored less-than-legitimate means to advance the Chinese enterprises' cause: moving millions of dollars through Congo Construction Company (CCC), a shell company, with phony justifications and sometimes even using apparently forged consulting agreements and invoices. The leaked banking records show that Du also apparently made use of a blunt instrument: bulk cash. This coincided with efforts to keep the deal on track. Several years and millions of dollars later, when international banks finally began asking questions, it was already too late.
- The leaked files show that the shell company at the center of the scheme—Congo Construction Company (CCC)—received $55 million from foreign sources apparently intended for Kabila and his entourage. CCC later funneled $10 million back out to safety as the Kabila family faced losing both political power and control over the bank.
- All these funds transited the international financial system, flowing through major financial institutions like Citibank and Commerzbank to and from a country plagued by corruption, doing so under false pretenses and with little to no documentation, exposing how financial giants whose market values can dwarf the entire Congolese economy fail to protect the world's poor from kleptocracy.
- By right, the Congolese people own many of the strategic mineral deposits driving the world's latest wave of industrialization, enriching mining companies, engineers, and manufacturers while greatly benefiting end consumers of electric vehicles, mobile phones, and laptops. But Kabila's ruling clique captured the institutions that were supposed to represent the Congolese people's interests writ large, and the same individuals also captured the crucial element needed to secure their ill-gotten gains: a bank.
Overview of recommendations in the report (Read the full text of these recommendations in "The Backchannel" report):
- Global financial institutions and Congolese banks should investigate the activities outlined in this report and institute measures to prevent a repeat. In particular, global and Congolese banks should work together to enhance customer due diligence standards, investigate the findings in this report, and generally improve monitoring of transactions related to the DRC that may present a high risk for illicit financial activity.
- The United States, European Union, and United Kingdom should investigate whether activities outlined in this report constitute violations of law; issue public advisories concerning the money laundering risk associated with the DRC and complex infrastructure financing deals linked to certain Chinese state-owned enterprises; and, where appropriate, impose targeted sanctions on key individuals and companies named in this report.
- The government of the DRC should institute a range of measures to identify any violations of law connected to the activities in this report, redouble the independence of key oversight agencies, bolster monitoring of potentially risky transactions, use robust asset declarations and information-sharing between government authorities and commercial banks, and generally make it more difficult for officials to violate public trust.
- Read "The Backchannel" report: https://thesentry.org/reports/backchannel
Visit the Congo Hold-up coalition hub: https://congoholdup.com. For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, email@example.com
About The Sentry
The Sentry is an investigative and policy team that follows the dirty money connected to African war criminals and transnational war profiteers and seeks to shut those benefiting from violence out of the international financial system. By disrupting the cost-benefit calculations of those who hijack governments for self-enrichment, we seek to counter the main drivers of conflict and create new leverage for peace, human rights, and good governance. The Sentry is composed of financial investigators, international human rights lawyers, and regional experts, as well as former law enforcement agents, intelligence officers, policymakers, investigative journalists, and banking professionals. Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice. Learn more at www.TheSentry.org