30 01 14 Reuters: Disputed Congo report says miners owe $3.7 billion in tax, fines

By Pete Jones and Bienvenu Bakumanya

Some
companies named in the report questioned the accuracy of its findings.
The head of the customs agency in Katanga also said proper consultations
had not been held with the companies and the report's findings were
exaggerated.
Public Prosecutor
Flory Kabange Numbi declined to comment directly on the report. In a
letter to local rights group seen by Reuters, he said it was too early
to draw conclusions about the outcome of the overall investigation,
which is continuing.
Congo's mining
production has been limited by energy and infrastructure problems, and
the government is under pressure to maximize revenues from the sector if
it is to stand a chance of hauling its 65 million people out of
poverty.

Two government ministers
backed the broader investigation, saying it must be completed and any
cash owed by firms must paid to the government.

The
report, compiled by a team that undertook a 10-day mission to Katanga,
led by Congolese Attorney General Simon Nyandu Shabandu, examined 25
cases of alleged customs infractions. It found that 11 companies were
liable for $741 million in unpaid taxes and fines, including Mutanda
Mining, a copper miner 69 percent-owned by Glencore Xstrata plc.
The
mission's report said penalties were agreed by "all parties" following
talks between the firms and the customs agency. It noted, however, the
experts had not visited Mutanda Mining, pending instructions from
authorities.
Glencore strongly denied any wrongdoing and said the report was inaccurate. It said it had not agreed to any penalties.
"Contrary
to what is stated in the draft document, no contact was made by the
‘mission' with Mutanda mining. Mutanda has no outstanding taxes or
fines," said a Glencore spokesman in an emailed statement.

The
mission said a further 252 alleged cases remained outstanding and it
estimated the total amount owed to the state from these at $3 billion.

Chemaf,
a privately owned Congolese company cited by the report as among the 11
owing taxes, also denied its findings. "We are confirming that Chemaf
does not owe $21.4 million in unpaid taxes," said Chemaf Director
Sebastien Ansel.
Representatives
for Hyper Psaro, United Petroleum and United Oil & Soap – all named
in the report as owing taxes – declined to comment. The companies are
all part of privately owned Congolese fuel, commodities and
transportation conglomerate Hyper Psaro Group.
Other
companies identified as owing money – Comexas, Socimex, Sabot, Marine
International, Frontier, Congo Loyal and Trade Service – either did not
respond to requests for comment or could not immediately be traced.

REPORT CALLS FOR ACTION

International
mining firms have invested billions in Katanga in recent years to tap
into its vast copper and cobalt reserves. Mining made up 15.4 percent of
Congo's gross domestic product in 2012, according to the International
Monetary Fund.
Congo produced 600,000 tons of copper in 2012, making it the world's eighth-largest producer.
Shabandu's
team complained in the report that it was only given 10 days to carry
out its work on the ground in Katanga, adding that firms did not
cooperate fully with investigators, singling out Chemaf as one of the
most uncooperative.
"It is
difficult for us to comment on specifics in the report when the report
has not been shared with us," said Chemaf's Ansel. "Chemaf does
cooperate appropriately with the various Congolese agencies, and we are
not aware of any instances where it has not been the case."
The
report highlighted alleged corruption among officials of Congo's
customs agency (DGDA) in the province, some of whom were accused of
destroying evidence of tax evasion.
"The
contempt of companies with regard to the customs administration
(refusing to answer invitations) and the nonchalance of agents of the
DGDA show an excessive degree of impunity which requires energetic
action to uphold the law," the report concluded.
The
provincial director of the customs agency in Katanga questioned the
accuracy of the figuers in the report, and denied that some meetings
with the companies had taken place.
"There
is an inflation of the numbers, because discussions were not held with
the stakeholders. This inflation of numbers is dangerous," said David
Kalande.
In a letter to ASADHO, a
local human rights group formed in response to widespread violations
under the late former dictator Mobutu Sese Seko, Public Prosecutor Numbi
rejected a demand to publish the report and said it was too early to
draw conclusions from investigations.
"It
is understood that the judicial inquiry in the strict sense remains at
an investigative stage, with the background of the presumption of
innocence," read the letter, which was copied to senior government
figures. "Judicial inquiries do not proceed following the diktat or
cries of alarm of journalists or human rights defenders."
The
investigation was launched following a letter from Communications
Minister Lambert Mende to President Joseph Kabila – copied to Prime
Minister Augustin Matata Ponyo and the public prosecutor – which raised
fears of malpractice in Katanga.
"Sources
close to the (Katanga customs agency) have sent me documents containing
bundles of indications of cases of corruption, misappropriation and
fraud at the (agency)," wrote Mende, who is also the government's
spokesman.
Mende told Reuters that the investigation would be completed at its own speed.
Finance
Minister Patrice Kitebi threw his weight behind the probe. "I support
the process carried out by the Attorney General that aims to recover the
revenues not paid by these traders," said Kitebi.
The
total of $3.7 billion in unpaid duties and fines would be equivalent to
nearly half of the annual budget in Congo, where simmering local
conflicts and rampant corruption have hobbled internationally backed
efforts to pacify and develop the mineral-rich giant. Congo's budget is
expected to be $8.2 billion in 2014.
(Editing by David Lewis, Daniel Flynn and Will Waterman)