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DRC: RAID submits complaint against World Bank for not requesting compensation after corruption on its investments

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17 September 2019

IFC Forfeits Compensation in DR Congo Corruption Case

Author: Rights and Accountability in Development (RAID), UK

....the International Finance Corporation (IFC-World Bank), forfeited its right to an estimated $50 million in compensation following corruption on its investments in the Democratic Republic of Congo by notorious Israeli businessman, Dan Gertler. UK corporate watchdog, RAID, today submitted a detailed official complaint to the World Bank Integrity Vice-Presidency, an independent unit within the World Bank Group that investigates and pursues sanctions related to fraud and corruption. The unit has the power to commence investigations that may result in blacklisting of individuals and corporate entities. RAID criticized IFC for failing to publicly denounce the corruption on its investments over a decade ago and for giving up its rights to compensation...

“IFC projects were targeted by Gertler and his cronies in Congo yet officials did not denounce those who were responsible, did not refer anyone for blacklisting or take legal steps to recover losses,” said Anneke Van Woudenberg, the Executive Director of RAID. “The Bank could have recovered millions for new development projects in Congo to rectify the wrongs, but instead IFC officials stayed quiet and failed the Congolese people when they needed them most.”...

On August 29 a United States court confirmed the former shareholders of Africo Resources Ltd, a company in which IFC had invested in November 2007, were “victims of crime” as a result of the corruption and should be entitled to a restitution award. IFC was conspicuously absent from the legal action, having passed its right to compensation, known as restitution rights, to a third party in an opaque transaction. The possibility of restitution rights only arose in 2016 after the US Department of Justice successfully took legal action under the Foreign Corrupt Practices Act (FCPA) against another co-conspirator in the corruption scheme, American hedge fund Och-Ziff (recently renamed Sculptor Hedge Fund)...

According to the Africa Progress Panel, between 2010 and 2012, Congo lost over $1.36 billion in revenues from the under-pricing of mining assets that were sold to offshore companies linked to Gertler.

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16 September 2019

DR Congo: The Forgotten Victims of Dan Gertler’s Corruption

Author: Rights and Accountability in Development (RAID), UK

 Ten years ago, 700 workers at the Kingamyambo Musonoi Tailings (KMT) mine in Kolwezi, Democratic Republic of Congo, were ordered to stop their work...the cobalt and copper mine was being forced to close. The Congolese government had unlawfully stripped First Quantum Minerals...which owned the mine, of its license. The workers no longer had jobs...And in violation of Congolese employment law, the workers received little or no compensation...

The workers lost their jobs for one simple reason: corruption...Dan Gertler had his eye on the lucrative mine. Working alongside his Congolese partners...and the American hedge fund Och-Ziff, he was awarded the rights to the mine for a mere US$60 million within months of its closure. In the years that followed, it was sold on to the Kazakh multinational mining company Eurasian Natural Resources Corporation (ENRC) for an estimated US$685 million. Both sales were far below commercial valuations of the mine...The details of this corrupt scheme were set out in detail in papers released by US judicial officials in 2016 when the hedge fund Och-Ziff (now called Sculptor) admitted violating the Foreign Corrupt Practices Act. Its subsidiary, OZ Africa, pleaded guilty to criminal charges...

 For the next 10 years local residents saw no improvements, abandoned by investors and their own government. The new owners, ENRC, faced further scandal... and corruption, bribery and bad governance...the UK Serious Fraud Office (SFO) opened a criminal investigation into ENRC, including examining what had occurred regarding the KMT mine...

Congolese victims of this corrupt scheme are forgotten and have received no compensation...But there is some hope...[with the Compensation Principles law adopted byt the British government in 2018].


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