Congo Fails to Account for Infrastructure Loans, Group Says

KINSHASA (Capital Markets in Africa) – The Democratic Republic of Congo’s government failed to account for more than half a billion dollars of infrastructure loans received from Chinese institutions over a six-year period, according to the Carter Center.

Sicomines, a Chinese-Congolese copper-mining venture, received $1.163 billion in loans between 2008 and 2014 to spend on infrastructure, but disbursed only $478 million, the Atlanta-based advocacy group said in a report published Nov. 3. Its findings are based on data provided by the Congolese department that oversees the loan program, the Office for Coordination and Monitoring of the Sino-Congolese Program, known by the French acronym BCPSC.

“BCPSC did not provide an explanation of the discrepancy or the allocation of the remaining $685 million,” the Carter Center said. The BCPSC rejected the report’s findings without providing alternative figures.

Sicomines is a $3.2 billion-dollar mining project on a 6.8 million metric-ton copper deposit in southeastern Congo. It’s a key part of a multibillion-dollar minerals-for-infrastructure deal struck between Congo and China in 2007, under which Chinese companies build facilities including roads and hospitals financed by Chinese banks in return for copper and cobalt. Congo is Africa’s biggest producer of copper and the world’s largest source of cobalt.

Sinohydro Corp. and China Railway Construction Corp., both based in Beijing, own 68 percent of Sicomines, while the rest is owned by two government-owned Congolese companies, including state miner Gecamines. The Carter Center report also found that $750 million paid by international mining companies to Gecamines over a three-year period is missing.

‘Surprise’ Number
BCPSC Executive Secretary Moise Ekanga said he was “surprised” to learn that Sicomines received $1.16 billion in the six-year period because Sicomines limited its first phase of infrastructure financing to $1.05 billion.

“I don’t know from where the center pulled this information, but it has no foundation,” he said in an emailed response to questions. Henri Kabeya, a BCPSC official, said in an email on Nov. 7 he was verifying the information and would respond “as soon as possible.”

The Carter Center received the latest dataset from the BCPSC in letters dated Aug. 7 and 14, 2017, Daniel Mule, who advises the Carter Center, said by email on Nov. 7.

Sicomines’ profit is used to repay the loans, which are capped at $3 billion, and the mining project is tax exempt until they are paid off, according to the Carter Center report.

“Since these loans are earmarked for the country’s much-needed infrastructure development, it is essential that the BCPSC provides clarity on how the remaining $685 million has been allocated and spent,” Mule said.

IMF Data
Bloomberg was unable to contact Sicomines Director-General Sun Ruiwen. Jean Nzeng, who was Sicomines deputy director-general until last month, said by phone he was no longer working for the company and had forwarded Bloomberg’s request for comment to Sicomines and Ekanga. China Railway & Power Construction Co. of China, which owns Sinohydro, didn’t respond to emails seeking comment.

The BCPSC provided data to the IMF in 2014, indicating that Sicomines spent $98 million on infrastructure in 2009 and $257 million in 2010, while information obtained in 2016 showed the venture had disbursed $226 million in 2009 and $127 million the following year, according to the report.

The International Monetary Fund and World Bank “faced considerable challenges in understanding these revenue flows,” the Carter Center said. “The different files the IMF has received over time do not match from one version to the next.”

The IMF’s current and former Resident Representatives in Congo, Nicholas Staines and Oscar Melhado, and the World Bank’s country director, Ahmadou Moustapha Ndiaye, all declined to comment.

Source: Bloomberg Business News