1607 Working Group News on Corporate Justice - July 2016

  1.       Illegal Gold Trade in Congo still Benefiting Armed Groups, Foreign Companies

Illegal gold trade in DR Congo is a problem yet to be solved. This practice benefits armed groups in Congo, by illegally taxing artisanal which earns them at least 25,000$ per month. On top of that foreign companies are also contributing to this illegal gold trade. There are reports that a Chinses company paid the armed groups 4,000$ and provided them with heavy weapons. The Congolese Chamber of Mines reveals that every month approximately 400 kilograms of gold leave the South Kivu province illegally.

 

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  2.      The Panama Papers: Connecting Tax Abuses and Human Rights

 

The publication of the Panama Papers induced the international community to consider the impact of tax evasion on human rights. It is thought that illegal financial activities hamper policies promoting human rights because these illicit financial flows facilitate money laundering of international criminals and does not help to eradicate inequalities between rich and poor people.

 

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      3.      Forget the Camerons, the African Giveaway is the real Panama Papers story

 

The Panama papers clearly demonstrate that billions of dollars have been drained out of Africa. Indeed foreign investors have extracted mineral wealth from Africa, of which the proceeds were channelled through tax havens.  Two examples of mining operators concern Dan Gertler in DR Congo and Beny Steinmetz in Guinea. In both cases mineral assets were undervalued and state did not capture reasonable revenue for their resources.In the case of the Congo, Dan Gertler’s companies secured the mining concessions at prices well below the market rate, which cost the Congolese state an estimated 1,4 billion $. In the case of Steinmetz company BSG Resources in Guinea, the company was able to secure a 50 % stake in an iron ore mining concession (Simandou). The only condition to BSG Resources was to invest 165 million $ without to success. However, 2,5 years later BSG Resources sold off the concession with significant profit to Vale for 2,5 billion $. In both cases the African states lost significant revenue that could have been used for health education and infrastructure.

 

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