The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth

The Congolese people were not the only losers in the SMKK deal. ENRC’s would seem to have suffered too. When it bought the first 50 per cent of SMKK, ENRC had also acquired a right of first refusal should Gécamines decide to sell the other half.69 That meant that ENRC could have bought the stake when it was offered to Dan Gertler’s company for $15 million. Instead, it paid $75 million a few months later, once the stake had first passed to Gertler’s offshore vehicle. ENRC has not disclosed the terms of its right of first refusal and did not reply to my questions about it. Perhaps there was some stipulation in it that meant buying the stake directly from Gécamines would have been more expensive for ENRC than buying it via Gertler. But based on the details that have emerged, it is hard to see how the oligarch founders of ENRC thought the SMKK manoeuvre was in the best interests of the rest of the investors who had bought shares in the company when it floated in London.

ENRC was a member of the FTSE 100, the prestigious list of the UK’s biggest listed companies, in which pension funds invest savers’ money. Investors who bought shares when ENRC listed some of its stock in December 2007 paid £5.40 a share, raising £1.4 billion for the company. Over the six years that followed, ENRC’s boardroom was a scene of unceasing turbulence, as the oligarch founders continued to exert their influence over a company that was supposedly subject to British governance rules for listed corporations.70 ENRC snapped up assets in Africa, including SMKK, and struck other deals with Gertler in Congo. The Serious Fraud Office was in the middle of an investigation (still active at the time of writing) into ENRC’s activities in Africa and Kazakhstan – and its share price was sliding precipitously downward – when the oligarchs announced that they planned, with the help of the Kazakh government, to buy back the stock they had listed in London, thereby taking the company private again.71 The offer was valued at £2.28 a share – less than half of what investors who bought in at the start had paid for them.72

If some British pension funds and stock-market dabblers felt burned by their investments in ENRC, their losses were relatively easy to bear compared with those that Gertler’s sweetheart deals have inflicted on Congo. The best estimate, calculated by Kofi Annan’s Africa Progress Panel, puts the losses to the Congolese state from SMKK and four other such deals at $1.36 billion between 2010 and 2012.73 Based on that estimate, Congo lost more money from these deals alone than it received in humanitarian aid over the same period.74 So porous is Congo’s treasury that there is no guarantee that, had they ended up there, these revenues would have been spent on schools and hospitals and other worthwhile endeavours; indeed, government income from resource rent has a tendency to add to misrule, absolving rulers of the need to convince electorates to pay taxes. But no state can fulfil its basic duties if it is broke. Between 2007 and 2012 just 2.5 per cent of the $41 billion that the mining industry generated in Congo flowed into the country’s meagre budget.75 Meanwhile, the shadow state flourishes.

Since at least 1885, when Congo became the personal possession of Belgium’s King Leopold II, outsiders have been complicit in the plunder of Congo’s natural wealth. King Leopold turned the country into a commercial enterprise, producing first ivory then rubber at the cost of millions of Congolese lives. In 1908 Leopold yielded personal ownership of Congo to the Belgian state, which, keen to retain influence over the mineral seams of Katanga following independence in 1960, encouraged the region’s secessionists, helping to bring down the liberation leader Patrice Lumumba in a CIA-sponsored coup that ushered in Mobutu, who became one of the century’s most rapacious kleptocrats.76 Richard Nixon, Ronald Reagan and George H. W. Bush welcomed him warmly to Washington. Only once his usefulness expired after the end of the Cold War did the United States abandon Mobutu to flee from Laurent Kabila’s advancing rebels.

In the era of globalization the foreign protagonists in Congo’s looting machine are not monarchs or imperial states but rather tycoons and multinationals. As well as the likes of Dan Gertler, there are the companies that do business with him. ENRC is one. Another is Glencore, the giant commodity trading house based in the Swiss town of Zug, which listed its shares on the London Stock Exchange in 2011, immediately becoming one of the UK’s biggest listed companies. In 2010 and 2011 Glencore was involved in transactions in which, according to calculations by Kofi Annan’s Africa Progress Panel, the Congolese state sold mining assets to companies connected to Gertler for hundreds of millions of dollars less than they were worth.77 (Both ENRC and Glencore insist there has been nothing improper in their Congolese dealings.78)

From multibillion-dollar copper deals in Katanga to smuggling rackets shifting coltan out of the East, Congo’s looting machine extends from the locals who control access to the mining areas, via middlemen to traders, global markets and consumers. During the war UN investigators described companies trading minerals as ‘the engine of the conflict’.79 A senior Congolese army officer remembered Viktor Bout, a notorious KGB agent turned arms dealer who was implicated in the illicit coltan trade – and whose exploits inspired the 2005 film Lord of War – dropping in to do business.80 ‘He did terrible things here,’ the officer told me.81 The trade in minerals from eastern Congo spans the globe. In 2012, according to official records, North Kivu’s declared exports of raw minerals went to Dubai, China, Hong Kong, Switzerland, Panama and Singapore.

When Wall Street nearly imploded in 2008, triggering economic havoc far beyond Manhattan, the world was reminded of the extent of the damage that a complex cross-border network combining financial, economic and political power can do. The reforming legislation in the aftermath of the crisis dealt mostly with the financial quackery that had grown rife in US banks. But toward the end of the 848-page Dodd–Frank Act of 2010 was an item that had nothing to do with subprime mortgages or liquidity ratios. ‘It is the sense of Congress that the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo,’ read a clause in the Act that responded to years of pressure from campaigners. In the future companies using coltan and other resources from Congo in their products would have to submit to US regulators a report on their supply chain, signed off by an independent auditor, demonstrating that they were not funding armed groups. Some six thousand companies would be affected, among them Apple, Ford and Boeing.82

Few could fault the sentiment. But the legislation was drafted in Congress, not Congo. It backfired. For one thing, the definition of ‘armed groups’ left out the Congolese army, which has been responsible for looting and wanton violence. Then there was the practical difficulty of tracking supply chains in a war zone. When the Dodd–Frank Act passed, many buyers of Congolese minerals simply took their business elsewhere, reinforcing a temporary ban on mineral exports imposed by Joseph Kabila in response to pressure to curtail the turmoil in the East.

A score of ‘conflict-free’ certification schemes have sprung up, some connected to Dodd–Frank, some to Congolese initiatives, and some to industry efforts to wipe the stigma from their products. In April 2013 an independent German auditor who had spent five days at Edouard Mwangachuchu’s coltan mines concluded that ‘with the evidence presented there was no indication that there are armed groups involved in mining’.83 The bigger militias had pulled back from Mwangachuchu’s corner of North Kivu; M23, the most threatening armed group of the day, was camped close to the Ugandan border, away from the main mining areas.

I wanted to see for myself whether the link between eastern Congo’s minerals and its conflict was loosening. I asked to visit Mwangachuchu’s mines. He was out of town, and his company declined to grant me access. But I knew that a cooperative of informal miners was also mining the area, the subject of years of dispute with Mwangachuchu. On the three-hour drive from Goma we passed a settlement nestled in a bend in a valley that had served as the base for Laurent Nkunda’s CNDP rebels. Further along was a camp for refugees displaced by the M23 conflict. At the metal barriers marking the entrance to each village, young men flagged us down and suggested they might be due payment. Children, no older than five, had imitated their elders and crafted a makeshift roadblock of rocks and half a yellow water-canteen. They scampered from the road as approaching vehicles failed to slow.

Another refugee camp marked the start of Rubaya, the mining town at the foot of the hills that Mwangachuchu and the informal miners exploit. Toddlers with bloated bellies, the signature of malnutrition, tottered at the road’s verge. The town itself boasted more robust dwellings than the makeshift tents of the displaced. Mining money had even allowed the construction of a few sturdy wooden houses. Rows of cassava tubers lay whitening in the sun. The whole town sounded as though it were wailing, so numerous were its infants, a chorus pierced by the occasional squawk of a cockerel. A tattered Congolese flag flapped from a skinny tree trunk.

After an hour waiting to pay our respects to the town administrator – during which, a local activist whispered in my ear, the mining bosses were checking that there were not too many children at work for their visitor to see – my Congolese companions and I began our ascent to the summit. Red dust devils swirled around us as we climbed. A local man who worked to get children out of the mines pointed across a valley to the village where he had been one of the few survivors of a revenge massacre of Hutus by Rwandan invaders in 1997.

Porters with white sacks on their heads cascaded down the unpaved paths from the peak, throwing up clouds of red-brown dust. Each sack contained up to 25 kilograms of rock hewn from the mountain. The porters’ haste was a matter of economics: they were paid 1,000 Congolese francs per trip (about $1) and had to wash and sift their cargo in the stream at the bottom before it began the long trip toward the border or the buying houses of Goma.

Most of the incipient certification schemes for Congolese minerals work by tagging sacks of ore as they emerge from the mine to certify their provenance, imitating the Kimberley Process, which was designed to stem the flow of ‘blood diamonds’. The idea is to prevent belligerents getting around embargoes by passing off their minerals as originating from another mine or smuggling them across borders to allow Congolese coltan to be branded as Rwandan or Angolan diamonds as Zambian. But on this hillside there was not a tag in sight. One local, a peace campaigner who had come along for the climb and who kept his distance from the mining bosses leading the ascent, told me that some of the coltan extracted here was crossing the nearby border into Uganda clandestinely. That took it right through the territory of M23 rebels.

The slope grew steeper. The earth underfoot gave way like a sand dune. Finally a peak of jagged rock emerged, a giant fossilized sponge of warrens that the miners had dug by hand. About two thousand miners, all in Wellington boots, many bearing spades and picks, swarmed among the pits and trenches, some delving as deep as 15 metres into the ground with only rudimentary props to keep the sides from burying them alive. Some looked decidedly younger than eighteen. One was clearly baffled by the white-skinned visitor whose hair was longer than the standard Congolese buzz cut. ‘He has the voice of a man,’ the young miner intoned with consternation to one of my companions, ‘but the hair of a woman.’

On the next hill over we could make out Mwangachuchu’s mine. All this territory lay under his concession, but the informal miners had enough political clout to carry on regardless of his protests, in part thanks to ethnic manoeuvring by the cooperative’s Hutu leadership against the Tutsi Mwangachuchu. The cooperative had resisted Mwangachuchu’s repeated attempts to turf them off his land, challenging the validity of his claim. Mwangachuchu has countered by trying to oblige the informal miners to sell all their production through his company, without which it would be impossible for him to prove that minerals from the concession were not funding militias.

The chief miner, Bazinga Kabano, a well-dressed man with a long walking cane and a penchant for bellowing at his subordinates, told me that when the CNDP controlled the area the miners’ association used to pay the rebels a $50 fee to be allowed to dig. But he was keen to paint his industry not as an engine of war but as a path to betterment. He explained that some of the miners graduated to be négociants, the intermediaries who buy coltan at the mine and sell it on to the comptoirs that export it. Surveying the teeming hilltop, he declared, ‘We are helping them to live their dreams.’

I wandered off to talk to some miners out of earshot of the boss. Kafanya Salongo bore a passing resemblance to a meerkat as his blinking head popped out of a hole in the ground. He was short, slim and strong, ideal for a human burrower. He churned out one hundred sacks worth of rock a day, and that brought in $9. From that he had to find the $25 each miner must pay the bosses every month for the privilege of digging. ‘It’s not enough for the family,’ he told me. ‘I can afford some food and some medicine, but that’s it.’ At thirty-two, he had a wife and two sons. He laughed in the face of danger. ‘Yeah, it looks dangerous, but we know how to construct the shafts, so it’s fine.’

It is easy to scoff at the boss’s notion that these miners are digging toward their dreams. The work is gruelling and perilous. The official statistics recorded twenty deaths in mining accidents in North Kivu in 2012, six of them at an adjacent mine worked by the cooperative. The authorities noted that it is ‘very possible’ that not all deaths were reported. But by local standards the miners’ wages amount to big bucks. Some splash their pay on booze and hookers; some build better houses.

Kabila’s mining ban and the boycott prompted by the Dodd–Frank Act pitched thousands of eastern Congolese miners out of work. The World Bank has estimated that 16 per cent of Congo’s population is directly or indirectly engaged in informal mining, which accounts for all but a fraction of the industry as measured by employment;84 in North Kivu in 2006 mining revenue provided an estimated two-thirds of state income.85 But revenues to the provincial government’s coffers fell by three-quarters in the four years before 2012, in part because of what officials called the ‘global criminalization of the mining sector’ of eastern Congo. The state’s loss is the smugglers’ gain: when the official routes are closed, the clandestine trade picks up the slack.

By the middle of 2013 Kabila’s ban had been partially relaxed, and previously blacklisted comptoirs in Goma had reopened. A dozen mines in North Kivu that the government deemed to be unconnected to armed groups had been ‘green-lighted’ to export. But Emmanuel Ndimubanzi, the head of North Kivu’s mining division, told me that not a single mine was tagging its output so that buyers could identify the mine at which it had originated. ‘Tagging is very expensive,’ he said. ‘We don’t have the partners to pay for it.’ In what might have been a line from Catch-22, he added, ‘Certification can only happen with better security.’

Regional initiatives are increasingly tracking shipments of coltan and other ores, even if North Kivu is lagging behind. Some campaigners have welcomed what appears to be a significant reduction in the documented connections between militias and mining sites as a result of certification efforts and a UN-backed offensive against the armed groups.86 Gradually Western-based electronics groups are drawing up lists of approved smelters that can demonstrate that their metals come from mines that do not benefit Congolese militias, although the campaign group Global Witness warned in 2014 that the first supply-chain reports, which US companies buying Congolese minerals are now required to submit to regulators, ‘lack substance’.87 The German Federal Institute for Geosciences and Natural Resources has developed ‘fingerprinting’ technology that can trace a shipment of ore back to the mine from which it was extracted. This technology could, if comprehensively applied, prevent the entry into the international market of minerals from militia-controlled mines, provided that it were matched with an intelligence-gathering programme to keep tabs on all the militias’ mining operations.

It appears unlikely that the certification schemes will ever reliably cover the whole of eastern Congo’s mining trade. Clean miners have been squeezed, as the retreat of Western buyers has let Chinese comptoirs gain a near-monopoly on Congolese coltan, allowing them to dictate prices. The efforts to impose some control on the mineral trade might trim the income of the armed groups, but it does so at the cost of weakening the already precarious livelihoods of eastern Congo’s diggers and porters and their dependents. In a land ruled by the law of the roadblock, such initiatives can look quixotic. As Aloys Tegera of Goma’s Pole Institute, one of eastern Congo’s most astute commentators, writes, ‘Without a Congolese state capable of playing its role in controlling and running affairs, how can the minerals of Kivu be de-criminalised?’88

In the run-up to the 2011 elections and during the months that followed, the SMKK transactions and other similar ones effectively transferred hundreds of millions of dollars from the state to a close personal friend of a president. Dan Gertler has doubled as an emissary for the president, conducting diplomatic missions to Washington and Rwanda. ‘The truth is, during our very difficult times, there were investors who came and left and others who braved the hurricane,’ Kabila has said of Gertler.89 ‘He’s one of those.’ Kabila might have added that some of those who left did so when their assets were confiscated – and, in some cases, handed to Gertler.90

Gertler maintains that, far from being a predator, he is among Congo’s greatest benefactors. He and his representatives point out, with some justification, that unlike the most egregious asset-flippers, who do nothing beyond using bribes and connections to win mining rights before selling them on, Gertler’s operations in Congo actually produce minerals, and lots of them. His company, the Fleurette Group, says it has invested $1.5 billion ‘in the acquisition and development of mining and other assets in the DRC’, that it supports twenty thousand Congolese jobs, and that it ranks among the country’s biggest taxpayers and philanthropists.91 Gertler himself has said his work in Congo is worthy of a Nobel Prize.92

Katumba’s death sent a tremor through Kabila’s regime. Would-be investors whose only contract was an understanding they had reached with Katumba evaporated after the plane crash. But the president and Gertler, brothers in spirit, have maintained the shadow government that Katumba helped to construct. Gertler has branched out into oil, prospecting promising new sites at Lake Albert. As for Kabila, he must now decide whether to run in the next elections, due in 2016. To do so he would need to induce the national assembly to change the constitution and remove the two-term limit for presidents, then conduct what one election monitor at the 2011 polls told me would need to be ‘a huge rigging operation’ to overcome the electorate’s outrage. To pull off such an expensive task, Kabila would need to ratchet up the looting machine once again.

3

Incubators of Poverty

THE CHIEF OF the border post let out another long sigh. ‘On attend.’ The wait had already lasted hours. Not for the first time I was at the mercy of a temperamental fax machine. I was trying to cross the Nigerian border with its northern neighbour, Niger, where the official language changes from English to French. Someone in the visa section of Niger’s embassy in Nigeria had neglected to send some document or other to headquarters to authorize my visa, and faxing it over was proving complicated. I sat on the stoop of the border post, looking out over the scorched terrain that leads up to the Sahara. Goats, the hungry and the maimed shuffled between breezeblock structures, lashed by the swirling dust. Periodically the chief of the border post would make a call on his mobile phone to check whether I should be allowed to pass. Then he would resume his contemplative silence, speaking only to bemoan ‘this interminable heat’. The sun was melting the horizon to a shimmer. ‘On attend.’

Whiling away the morning beside the taciturn border chief offered me an opportunity to observe one of the few effective institutions in this part of the world: the smuggling racket.1 Dozens of trucks were queuing to cross from Niger into Nigeria. Their contents seemed harmless enough: many contained textiles and clothing bound for the markets of Kano and Kaduna, northern Nigeria’s two main cities.

Weapons and unwilling human traffic cross Nigeria’s northern border covertly. But the flow of counterfeit Chinese-made textiles has grown so voluminous that it would be impossible to keep it secret even if secrecy were required to ensure its safe passage. All the same, most of the shipments go through under cover of darkness. Those who control the trade engage in highly organized ‘settling’, or bribing, of the border officials, smoothing the textiles’ transit.

The Nigerian stretch is just the final leg of a 10,000-kilometre journey. It begins in Chinese factories, churning out imitations of the textiles that Nigerians previously produced for themselves, with their signature prime colours and waxiness to the touch. By the boatload they arrive in west Africa’s ports, chiefly Cotonou, Benin’s biggest city, a tiny country beside Nigeria that has, like Montenegro in Europe or Paraguay in South America, become a state whose major economic activity is the trans-shipment of contraband. At the ports the counterfeit consignments are loaded onto trucks and either driven straight over the land border between Benin and western Nigeria or up through Niger and round to the border post with its taciturn chief. The trade is estimated to be worth about $2 billion a year, equivalent to about a fifth of all annual recorded imports of textiles, clothing, fabric and yarn into the whole of sub-Saharan Africa.2

Smuggling is a long-established profession here. Before colonial cartographers imposed the frontier, today’s smuggling routes were the byways of legitimate commerce. The border marks a delineation of what used to be British and French territory in west Africa, but no natural division of language or ethnicity exists. People on both sides speak Hausa, a tongue in which the word for smuggling, sumoga, strikes a less pejorative note than its English equivalent. The textile-smuggling bosses are the oligarchs of the northern borderlands. For those in their pay, they can be generous benefactors.

Not being a roll of fake west African fabric, I was not a priority for processing. Eventually the border chief’s phone rang. Off we trundled, past trucks with ‘Chine’ daubed on the side, a brazen reference to their cargo’s origin. Another name went unrecorded, that of the trucks’ proprietor. Few dare to speak it openly here. But further to the south, where the truckloads of counterfeit textiles have helped to wreak economic destruction, I had heard it whispered a year earlier.

A country of 170 million people – home to one in six Africans, three main ethnic groups subdivided into hundreds more speaking five hundred languages and bolted together on the whim of British colonial administrators; split between a north that largely follows Allah and a south more partial to the Christian God and animist deities; hollowed out by corruption that has fattened a ruling class of stupendous wealth while most of the rest lack the means to fill their stomachs, treat their ailments, or educate their children; humiliated by a reputation for contributing little to human endeavour but venal politicians and ingenious scams – Nigeria has paid quite a price for the dubious honour of being the continent’s biggest oil producer.