Getting Rich in Poverty-stricken Congo
Congolese-Australian journalist Eric Mwamba went on a search to find the secret behind the riches of the Congolese elite. Many of his witnesses prefered staying anonymous for fear of their lives – which looks like a kind of Congolese omerta. John Vandaele selected Mwamba’s strongest observations and added some personal touches.
“My salary is less than 750 Euros. And yet I can make up to 225,000 Euros per month”, a forty-year-old man tells us in Kinshasa. He’s wearing a diamond watch and glasses of pure gold. Between 2006 and 2011 the man was counsellor at the Ministry of Economics, during the Gizenga and the Muzito administrations. He is willing to confide to us how you can get rich through the Congolese state, on the condition that we don’t get him into any trouble. If he is mentioned by name or if pictures of his villa are published, he would have to fear for his life.
He owns a marble, three-storied villa in Mont-Fleury, one of Kin’s better neighbourhoods. The car park is full of big cars. A month later we meet him in Sandton, an uptown area in Johannesburg, South Africa, where his family has been living for five years. Again: a marvellous villa, bathing in a sea of green. His three children, who go to an expensive American school, are at the pool. It’s obvious: this is a family that does not in the least share the same concerns as do the average Congolese. And it isn’t the only one: a small group of lucky few are able to squander massive amounts of money, despite the country’s general poverty. What makes the issue even more sensitive is that the average annual per capita income in Congo is less than 150 Euros – one of the lowest in the world. Moreover, people have to pay for every service they want to make use of, due to the country’s very weak public facilities.
There are different ways for the elite in charge to increase their wealth.
One of the basic strategies is to successfully prevent any government improvements. Our man, who worked with three ministers of Economy, states that most ministers and people in charge of state companies just don’t want there to be any reforms towards good governance. Even if the council of ministers, often pressurised by Western partners, decides to improve governance in any way, that decision is thwarted by bribery. An example. A Congolese responsible of a World Bank project explains that his institution had started, after being suggested to do so by the government, a computerisation project of public expenses in order to reduce corruption. However, the project could not be executed, because the people who were capitalising on the existing system didn’t want it to. To stop the development of such a project, the ministers who don’t want it to be executed will bribe the colleague responsible for the project. It is with this kind of operations that our man with the gold glasses made a lot of his money.
He says that other ministers’ employees would sometimes approach him with amounts of money that he thought were too low. He would push for more. “In one case, the assistant of another minister offered me 110,000 Euros. I had it raised to 520,000.” A part of which he kept for himself of course.
That way of working is the reason why it is hard to determine exactly how many people work for the different ministries in Congo – despite multiple attempts to do so, often financed by other countries. There will always be someone who manages to thwart a waterproof count in order to capitalise on the confusion by keeping part of the paid out salaries for himself.
If you know the reality, you understand just how cynical it now sounds to hear how Alphonse Muzito, Congolese Prime Minister from 2008 to 2011, said on 29 September 2011 that the problem is that “we don’t have enough money to pay for the basic infrastructure needed to attract private investments.”
Undersell and collect under the table
The money that the governmental elite pockets, comes from all kinds of development aid, the jumble of formal and informal taxes lots of government services charge and the money flows that the natural resources – which Congo has in abundance – generate. Those natural resources, in particular, could offer Congo a unique opportunity for development, if the country would manage it sensibly. The Extractive Industry Transparency Initiative (EITI) is an attempt to make that happen, but it has to contend with major difficulties in Congo. It wants to fight corruption by urging companies to make public the amounts of taxes they paid, after which the government services receiving the taxes make public what they have received. The last EITI report shows that both in 2008 and in 2009 there was a significant difference between what both sides declared: the companies stated having paid a much higher amount in taxes than what the different government services claimed to have received.
Through the years the Congolese Parliament published various critical reports on the subject. In 2009 the Senate came out with a report on mismanagement in the mining industry. The report denounced that the country collected a mere 68 million Euros from the mining industry, while it missed out on 337 million Euros because of underbilling, tax evasion, smuggle, fraudulent contracts and bad bookkeeping.
The president of the commission in question, David Mutamba Dibwe, stated that the majority of the mining exports are not declared and that the badly equipped tax authorities are not capable of tracking the transactions. Critical reports like this one do appear from time to time, but fail to lead to any big changes.
At the end of 2011 British MP Eric Joyce denounced that the Congolese state had missed out on 3.75 billion Euros. Congo had sold four mines to four companies registered on the Virgin Islands for a price much under market value. The companies were owned by Israeli businessman Dan Gertler, who was – and is – a good friend of Congolese president Joseph Kabila and his number two, the deceased Katumba Mwanke.
It speaks for itself that Kabila and his men received a royal compensation under the table for underselling the country’s resources. That strategy is without doubt one of the most lucrative in the gamut. An insider confides that it “happens less often now than, say, five years ago, but there is still a long way to go.”
Anyway, Eric Joyce thought that the International Monetary Fund (IMF) did not force Congo enough to comply with the transparency conditions it was supposed to respect in exchange for support from the IMF. In 2004 the IMF saw that the government revenue from the mining industry amounted to only 0.18 percent of the national income, whereas in Botswana it was 22 percent. “So there is room for improvement”, the IMF concluded hesitantly.
There has been some improvement since then. “In 2011 government revenue collected by the three most important tax authorities made up almost 2.3 percent of the GNP. The total revenues from all the different kinds of natural resources (also wood and oil) amounted to five percent of the GNP”, says Oscar Melhado, the local representative of the IMF in Congo.
That doesn’t mean that everything is all good for the IMF. In December 2012 the IMF refused to extend its credit facility for Congo because the Congolese government had published too little information on the transfer of assets from public mining company Gécamines to the company Comide. Melhado: “The authorities said that there was no real contract for the transaction. But what they did make public, did not contain enough information about the transaction, so the IMF decided not to extend its credit facility.”
Melhado claims that at the moment 26.5 percent of government revenues come from natural resources. According to an IMF report that is less than in Botswana (31.5 percent) and much less than in Nigeria (72 percent) and Congo-Brazzaville (88 percent).
Melhado had rather not say that Congo does not get enough government revenues from its natural resources. He prefers a more positive phrasing: “There is potential for an increase of the mining revenues. Efforts are made to improve the income flow in the mining industry. The IMF is offering technical assistance to enhance the management of public finances, the tax authorities and the taxation policy.”
Another way for certain people to amass riches is by acquiring public grounds and buildings in an illicit way and at much too low a price.
“We don’t accept houses being built on hospital grounds”, Pascale Nkelenge shouts, surrounded by other inhabitants of Kintambo district in Kinshasa. About ten houses of ‘untouchables’ are located on the grounds of Kintambo public hospital, behind corrugated iron fencing guarded by police officers with Kalashnikovs.
The land register administration refuses to release the names of the people commissioning the illicit construction works. “Ministers and members of the army’s higher management are among the people building on these grounds”, stated Jacques Bakabi, who works at the information office of the so-called Fast Intervention Police. “In the end, the president himself stopped construction because the incessant protests from the local inhabitants started to become an embarrassment.”
Mostly, however, things don’t end that way. Laurent Simon Ikenge, minister of Urbanisation and Housing in the Gizenga administration from 2006 to 2008, claims that “not a day goes by without public real estate is undersold to private persons, without any regard to the regulations.” The former minister regrets that all recommendations made in different reports had no effect.
SOS-Kinshasa, a not-for-profit organisation carrying the slogan ‘Touche pas à mon école’, has made the fight against the appropriation of school grounds into its core business.
Leny Ilondo Ye Nkoy, president of the organisation, calls the judicial system the weak spot of the Congolese democracy. Since 2008 the organisation has compiled a list of seventy schools that have fallen prey to the appropriation of grounds, and that’s just schools in Kinshasa. Countless complaints have been filed with the public prosecutor of Kinshasa, but “justice hasn’t set up a single investigation yet”, says Ilondo.
Does the president set the right example?
Everyone who stays in Congo for a while knows that civil servants on all levels try to line their pockets. “It cost us fourteen months to transport water tubes from Matadi port to the Kasai region, just because we were not sufficiently prepared to bribe people”, someone from the Belgian development cooperation testifies. That lower-ranked civil servants try to enrich themselves is understandable because they are often badly paid. But that doesn’t mean that it doesn’t have any consequences. There are few countries in the world where the state is trying so hard to tax away citizens’ initiative, be it a fishing pond or an imported container. The dysfunctional state thus becomes a predator as far as development is concerned. The top plays an important role in bringing about a change, but very little evolution is happening.
An inspector of the economical police discusses work conditions in his department when it concerns companies and friends of president Kabila’s. “Take Mazar Rawji and his brothers’ groups Beltexco and Marsavco. Even though we disposed of various well-documented notes on irregularities, we were formally forbidden to investigate those companies. Even the lowest-ranking police officer of our team knew that it touched upon the president’s interests.”
The least you can say is that president Joseph Kabila likes ranches. He doesn’t just own an ultramodern ranch in Kingakati village, at 130 kilometers from Kinshasa, he also has one in the suburbs of Lubumbashi and one in North-Kivu near Beni. “If the ranches were to offer meat and food to the locals, Kabila and his entourage would be quite popular”, says a member of the ministry of Agriculture in Lubumbashi. “Instead, the ranches are nothing more than vessels to recycle the millions of Euros that he garnered through shady operations.”
The president also collects cross motorcycles and SUVs. A source at the state protocol adds that the president “spends without counting” while on official visits, because he leaves with a crew of over two hundred people for inland trips and about a hundred for international visits. During the 67th session of the UN General Assembly in New York, September 2012, Kabila and his crew stayed in the Waldorf Astoria on Park Avenue. Many of the rented rooms cost up to 4,000 Euros a night.
The 50-odd million Euros provided by the state budget for the presidency is but a fraction of Kabila’s income. Underselling the country’s resources undoubtedly contributes the largest part. Furthermore, there are ‘Petit Joseph’s’ friends. To stay a ‘friend’, ‘to be able to keep eating’ as a director of a public service that generates income, you have to give Kabila presents. As a token of loyalty, envelopes are given to the president and donations made to his political party, Parti du Peuple pour la Réconstruction et la Démocratie (PPRD). Whoever fails to do so, risks his job.
In a letter sent on 20 September 2005 the office of the provincial council of the PPRD expresses its delight about the efficient contributions of Gécamines’ and railway company SNCC’s trustees. The people concerned are then recommended to the party’s hierarchy with name and surname. Private companies do not lag behind. The same document states how Belgian entrepreneur “mister George Arthur Forrest and his group stand out because they have supported us step by step in the gradual implanting of the party”. Then there’s the republic’s Sovereign Fund, which is discussed elaborately in a leaked document written by ambassador (and pastor) Théodore Mugalu. He heads the Civil House of the head of state and is part of Kabila’s closest circle. In a document entitled Safety Information for the Attention of His Excellence, Mister President of the Republic, drawn up in August 2010, Mugalu warns for the intentions of Augustin Katumba Mwanke (AKM), the man who had been managing the big economic cases for years, to succeed or replace Kabila.
What is interesting is that, in relation to the report, Mugalu elaborates on the so-called Sovereign Fund, the money of which AKM allegedly wanted to claim illegally. The document describes in detail on which banks AKM deposited some of the Fund’s money. The Banque Générale de Luxembourg is named, account number 0001-61-247-6 registered under the company Katumabu-Transit. The account was opened on 14 June 2009 with an amount of around 30 million Euros, which “AKM uses to control the parliament through permanent bribe”. Among the ‘victims’ of the bribe was Evariste Boshab, who later became the president of the parliament. From July 2009 onward, Boshab allegedly received no less than 256,000 Euros – 32,000 Euros per month – deposited on his Banque et Caisse d’Epargne de l’Etat account LU930030846721570000, in Luxembourg city.
The document also mentions the Bank of Kampala and Uganda, the Credit Bank Limited in Hong Kong, the Ned Bank in South-Africa, Hapaolom Bank in Panama and Tel-Aviv and Rossiyskiy Bank in Moscow.
Whether or not all this information is true, we don’t know. But it does say something about the kind of sums of money that the Sovereign Fund holds, about the bribing of politicians and about how the Congolese elite feel in their element in the world of international banking. It completely allows them to secure their cash. Or better: to hide it, like a needle in a haystack.
Perished in a flurry of bank notes
We’ll probably never know if the accusations against AKM are true. The man lost his life in February 2012 in a plane crash in Bukavu. There is no doubt that he was the Rasputin of the regime. Even though he was not a minister, he managed all big economic cases. That that position paid off is made clear in Pweto, AKM’s birth town in North-Katanga near the border with Zambia.
Pweto carries the marks of the man’s wealth and power. The town, that was hardly accessible in the past, is on the world map now, thanks to the construction of an airport that carries the name of its benefactor Mwanke. While the country suffers a constant dearth of energy, Pweto isn’t just supplied through a special line from Zambia, but also by a hydroelectric power station on the Congolese Luala River. Other conspicuous elements: the many private jets (big cargo as well as small passenger jets), dozens of extremely luxurious houses, a four-star hotel and… a villa à la Beverly Hills – AKM’s infamous LESA residence with a big central staircase to the inside and outside salons. The residence also has a garden at the beach of Lake Mweru. In Pweto, Katumba Mwanke is omnipresent as the Good Samaritan. Plaques reading ‘Don de l’honorable Mwanke’ are everywhere.
One of the businessmen who came down to Pweto very frequently was Israeli Dan Gertler. That’s what one of AKM’s drivers says. “The patron called him Dany. He flew out here in his jet a few times per week. I always went to pick him up from the airport. His visits were unplanned. He really felt at home down here. He gave us money, lots of it, a thousand times more than what I make a month.”
The wildest stories are going round about AKM’s death. One of them that is often repeated, talks about the dollar notes that flurried when the airplane crashed. Allegedly, AKM was on his way to buy Bertrand Bisengimana’s farm on Idjwi Island in Lake Kivu, a transaction that would apparently be paid in cash. The stories add to the obscure myth that surrounds Katumba Mwanke. What is certain is that after Katumba’s death, others started to manoeuvre to filled up the dubious but lucrative gap that he’d left behind. After all, there are very few signs that indicate a change in the system any time soon.
This article was produced with support from the Pascal Decroos Fund for Investigative Journalism.
Translation by Rafael Njotea
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