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Canadian mining group Ivanhoe accused of ‘gaming’ DRC’s corrupt body politic — report

Canadian mining group Ivanhoe accused of ‘gaming’ DRC’s corrupt body politic — report

Canadian mining group Ivanhoe has been accused of corruptly obtaining a prized Congolese copper asset by ‘gaming’ a state that has all the hallmarks of a mafia-run casino, according to a damning report published Thursday by The Sentry, an investigative organisation focused on corruption.

The report could spell big trouble for Ivanhoe and its US-born boss and founder Robert Friedland as investors increasingly want untainted returns from their capital while Ottawa takes a dim view of foreign corrupt practices, placing the company in the cross-hairs of the Canadian police. The saga also comes in the wake of revelations that mining and commodity trader Glencore engaged in corruption on a grand scale in Africa, highlighting the wicked spell the “resource curse” still casts over the region’s body politic. 

To wit, The Sentry report maintains Ivanhoe — which it says has denied the allegations — gained control of prized assets in the African Copperbelt by cutting in a politically-connected individual, one of the oldest, but most effective, tricks in the book. Meanwhile, the report alleges that the Congolese government broke its own laws to ensure Ivanhoe retained lucrative exploration licenses.

“Evidence examined by The Sentry reveals that the multi-billion-dollar company … arranged to share a potentially lucrative cut of local subsidiaries with a politically connected individual, just as the Congolese government took apparently illegal actions allowing Ivanhoe to maintain exploration licenses. According to The Sentry’s analysis, those licenses by law should have been surrendered by Ivanhoe years ago,” The Sentry said. 

The prize at stake here is Africa’s largest copper discovery to date, “a project poised to become the world’s third-largest copper producer by 2024 and the second-largest thereafter, with the highest grades of ore in the world.” The licences refer to an area covering covering roughly 2,400-square-kilometers (about 925-square-miles) that the company refers to as its “Western Foreland Exploration Project”. The area is adjacent to the company’s existing Kamoa and Kakula copper mines in the DRC copperbelt.

Copper has been rebranded as a “green metal” as it is seen as crucial to the global energy transition from fossil fuels. This means the sky is limit for future copper demand.  

The Sentry report also flags a previously unreported detail in Ivanhoe’s 2012 annual report disclosing the discomfiting fact that Canadian police conducted a search warrant at the company’s headquarters on the basis of “probable cause” that Canada’s foreign bribery statute had been violated.

“Hidden camera videos published this September apparently show Vidiye Tshimanga, then a close advisor to DRC President Félix Tshisekedi, claiming to hold 20% of an unidentified Ivanhoe Mines subsidiary and telling unidentified people he believed to be prospective investors that they could pay him off using concealed business arrangements, including channelling payments to political parties by tendering contracts to well-connected service providers, all with the approval of the president,” The Sentry said. 

“Tshimanga, who has denied wrongdoing, subsequently resigned and is facing prosecution, claiming he was entrapped by malicious actors operating on false pretences, and the presidency has said that any advisor found to be in violation of legal or ethical duties would be held to account. Neither Tshimanga nor an attorney representing him responded to questions from The Sentry.”

 


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The Sentry said it had also reached out to Ivanhoe.

“In response to The Sentry’s request for comment about the findings in this report, Ivanhoe Mines said its operations were subject to strict corporate anti-corruption policies and internal controls and that any inference of corruption or malfeasance was ‘simply incorrect.’ The company declined to offer detailed responses to most of The Sentry’s questions.

“Ivanhoe Mines told The Sentry that it is cooperating with Canadian authorities and that materials seized by police last year were currently subject to a review to identify materials protected by legal privilege. The company also said that at this point it has not set aside funds in anticipation of any monetary penalty and had no further comment on the matter,” The Sentry added. 

The full report can be read here:  https://thesentry.org/reports/gaming-the-system/ 

One of Ivanhoe’s peers that has recently set aside money related to fines for malfeasance is Glencore, whose corrupt past in Africa has been painfully exposed. 

In November, Glencore was ordered by a UK court to pay a record fine of £276-million in fines, confiscated profits and costs for “endemic” corruption flowing from its Africa oil trading desk. This included Glencore employees using private jets to carry cash bribes to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan — another old trick. 

In May, Glencore agreed to pay a fine of over $1.1-billion after pleading guilty in the Southern District of New York to violations of the Foreign Corrupt Practices Act and engaging in a commodity price manipulation scheme.

Glencore maintains it has cleaned up its act but its past behaviour and the allegations against Ivanhoe raised by The Sentry add to the perception that the extractive sector in Africa remains a fundamentally ugly business and that resource wealth in developing economies is often a curse rather than a blessing. 

“In effect, the company appears to have acquired the power to disregard domestic laws and regulations intended to maximise the value the Congolese people receive for the sale of their country’s mineral wealth, thereby helping entrench elite capture of the DRC’s natural resources and hampering the rule of law in one of the world’s poorest nations,” The Sentry report says of Ivanhoe. 

This is deeply troubling, not least because the DRC is rich in commodities including cobalt that are seen as essential to the unfolding green energy revolution. Cleaning up energy supplies to power the global economy may still be rooted in dirty sources, tainting de-carbonisation efforts with the stench of the criminality and corruption that keeps poor countries impoverished. 

Eskom’s out-going CEO André de Ruyter told Daily Maverick’s The Gathering last month that, unlike coal, the sun and wind cannot be stolen by “sophisticated crooks.” But the metals needed to utilise renewable sources of power are fair game. DM/BM

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