1. MONUC Global Forum V Hot spots: non state sectors vulnerable to corruption

2. The DRC Context –History of colonial exploitation and dictatorship; –Emerging from/struggling with conflict; –fledgling democracy; –Weakened and dysfunctional institutions and limited extension of state authority, in a vast geographic territory ( ; –Weakened and dysfunctional institutions and limited extension of state authority, in a vast geographic territory ( 2,345,410 sq. km bordering 9 countries) ; –Collapsed justice system –Extensive natural resource wealth.

3. Natural Resources in the DRC Natural Resources:  cassiterite)  Coltan (cassiterite), copper, gold, silver, diamonds, niobium, tantalum, zinc, manganese, tin, uranium  50% of Africa’s hardwoods  10% world’s hydro-electric capacity (Source: UN Reports) Mining:  1980 – generated 66% budgetary receipts  1990 – export receipts = 1 billion USD –465,000 tonnes of copper  Today – no significant contribution to budget –20,000 tonnes of Copper (2006) (source: Programme du gouvernement 2007-2011)

4. Extractive industries in the DRC “IF THE DRC IS TO EMBARK ON A PROCESS OF RECOVERY, IT WILL HAVE TO RELY ON THE GENERATION OF STATE REVENUES FROM EXTRACTIVE INDUSTRIES” (s/2007/68)

5. Extractive industries - challenges  Limited extension of state authority creates vacuums (imposed “taxes”)  Corporate entities engage “protection forces” who extort payments from local populations  Government troops at border often complicit (note: many elements of the FARDC are not paid on a regular basis and only receive minimal salary)  Limited technology/investment required and desperate, unskilled labour easily exploited  Parallel systemic corruption

6. Extractive industries - challenges  Formal sector undermined by vulnerability to interference from military elements, rebel groups, foreign interests and unscrupulous traders – allegations of protection by DRC personalities;  State mining companies unable to protect concessions, enabling unregulated diggers  Vast wealth both a source of financing for armed groups, and also a motive to continue  Corruption and mismanagement – resulting in large majority of sales and exports outside authority of state  Legitimate, conscientious mining companies, comptoirs, négociants, find it impossible to compete

7. Illegal Exploitation of Natural Resources: Non-State Actors Artisanal miners _____________________________________ Economic operators violating Congolese law: (potential targets of UN sanctions)  Middlemen – buyers and traders engaged in fraudulent activities (subcontractors, négociants, comptoirs/ exporters)  Mining companies _______________________________________

8. Artisanal Miners  2 million artisanal miners  Subsistence income at best – often in debt  Required to pay string of charges – i.e. local chief, unintegrated FARDC elements, mining police, de facto authorities  Subjected to intimidation and violence (armed gangs – suicidaires – 38 deaths registered by HR in Kasai Oriental 2006)

9. Other non-state actors Fraudulent exporters or comptoirs – buy most cassiterite at prices legitimate exporters cannot afford – buy most cassiterite at prices legitimate exporters cannot afford –Cassiterite exports undervalued by 50-60-% –control of cassiterite estimated 70-75% or more –None contribute to the building of formal sector –80-90% of gold exported fraudulently (8 million USD/month) –40% diamonds exported illegally; large portion sold by négociants with no fees paid –Hire and exploit children –Tax evasion –Corrupt payments (Source: estimates quoted in S/2007/60)

10. Corrupt economic operators illegal activities –Fraud –Use of armed groups to secure access to concessions and/or to extort payments from miners –Tax evasion –Corrupt payments to officials –Smuggling

11. IS THERE JUSTICE IN THE DRC ?

12. ACCESS TO CIVILIAN JUSTICE  60 of 180 required first instance courts are yet established  Less than half of the required 5000 magistrates  Total dilapidation of existing court, prosecution- and detention premises, especially in the interior of the country

13. ADMINISTRATION OF JUSTICE CIVILIAN & MILITARY Courts Existing critical mass of competent jurists, desiring reform, retraining Lack of basic equipment Absence of case tracking leading to excessive detention, archives, case law Interference/ pressure from government officials Alleged corruption – lack of confidence of population Need for national training capacity

14. ADMINISTRATION OF JUSTICE Prisons  Starvation deaths - 1/145 prisons has budget for food  No high security facility  Abuse of authority leading to unlawful detention  Crumbling and non-existent walls, inadequate surveillance, resulting in: escapes regular assault and rape overcrowding inability to accommodate serious offenders risk of creating flash-points for violence  Children, women, military, militia, all detained in the same facilities

15. URGENT NEEDS   Legislation   High security military detention facilities   Court and prison facilities (infrastructure)   Food for prisoners   Increase number and rank of military prosecutors and judges   Increase in support staff   Technical assistance (material needs and expertise) to provide immediate national capacity required to investigate, prosecute and administer justice, including in regard to serious human rights abuses   Support for development of independent “watchdogs” (counterbalances), i.e. regulatory bodies, media, independent NGO’s, etc)   Support for the development of state capacity to provide intra-governmental human rights guidance and sensitization (i.e. Ministry of Human Rights)   Support for development of sustainable national training programme and institution(s)

16. Extractive Industries - Reports NATIONAL Lutundula Commission (February 2006) INTERNATIONAL  UN Panel of Experts– reports on illegal exploitation of natural resources (2001-2003)  UN Group of Experts monitoring the arms embargo – report to Security Council on feasible and effective measures to prevent illegal exploitation financing armed groups (res 1698 of 2006)  UN Secretary-General – report to Security Council (8 February 2007, pursuant to res 1698 of 2006 – currently the subject of informal debate)

17. Lutundula Commission  Set up by the peace accords of 2003  Lutundula Commission included representatives from all major parties to the conflict  Highly controversial: allegations of withdrawing names, not dealing with important actors, certain sectors not included – no follow-up (electoral period)  Sent a signal to companies that they could be exposed – naming and shaming

18. Lutundula Report  Investigated 50 mining contracts signed during the conflict  Found that dozens of contracts were either illegal or of limited value for the development of the country  Recommended that 16 contracts be ended or renegotiated  Recommended that 28 Congolese and international companies be investigated for violation of Congolese law  Recommended that 17 persons be prosecuted for crimes including fraud and theft.

19. Implications of sanctions in extractive industries  On armed conflict – financing armed groups  Artisanal miners – sanctions likely to affect them most severely – livelihood security issues  Impact on/of existing (corrupt) trading system – mushroom effect (cut one, another grows in its place) Conclusion: Sanctions may not be the answer (under consideration)

20. Addressing illegal exploitation Recommended governmental reform initiatives:  Reinforce/build institutions capable of promoting legitimate trade, reducing criminal involvement and raising public revenues (regulatory bodies, security sector)  Extractive industries transparency initiative  Extractive industries transparency initiative (Min of Plan supporting technical committee with a view to implementation) Recommended non-state initiatives:   Organize producers to create mechanisms to promote social development   Engagement to respect best practices through voluntary principles, code of conduct, and respect for rule of law Recommended regional initiative: a cross-border commission to stem fraudulent exports (requires viable national counterparts, i.e. justice)

21. Attacking Corruption  Culture: Integrity vs. Corruption – long-term vs. short-termIntegrity vs. Corruption – long-term vs. short-term Regaining public trust through participation, consultation - fostering perception of integrityRegaining public trust through participation, consultation - fostering perception of integrity  Political will: Creation of personal and corporate risks to engage in corruption – judicial, administrative, regulatory, financial, and economic sanctionsCreation of personal and corporate risks to engage in corruption – judicial, administrative, regulatory, financial, and economic sanctions

22. What future? DRC Government Programme 2007-2011  JUSTICE AT THE FOUNDATION OF REFORMS – SINE QUA NON –Calls for restructuring public enterprises and a mechanism for monitoring the execution of mining contracts –Proposes reform that will include transparency, increasing revenues, as well as environmental and social sustainability –Recruitment and deployment of consultants to assist DRC mining officials to conduct inspections –Publication of key elements and analyses of partnership agreements, and the renegotiation of agreements as required –Adoption of a business plan and reform programme for Gecamines and short-term reform programmes for other public enterprises; –Adoption of transparent procedures for awarding mining rights (exploration or exploitation) –Political will, including justice reform, together with private enterprise support are key for executing the government’s plans.