Johannesburg - In his only public speech this year,
Joseph Kabila, president of the Democratic Republic of Congo, was defiant about
his refusal to hand over power when his final term ends on December 19. “I
cannot allow the republic to be taken hostage by a fringe of the political
class,” he told parliament last month as members cheered.
His presidency had brought peace and economic growth to
Congo, the 45-year-old said, outlining reforms he’d made in telecommunications,
mining, energy and banking. What he didn’t say is how some of his own family
members are among the biggest beneficiaries of those changes—including his
sister Jaynet and brother Zoe, who both listened from the front row as elected
members of parliament.
Together the Kabilas have built a network of businesses
that reaches into every corner of Congo’s economy and has brought hundreds of
millions of dollars to the family, a Bloomberg News investigation has found. The
sprawling network may help explain why the president is ignoring pleas by
the US, the European Union and a majority of the Congolese people to hand over
power next week, though his advisers dispute this.
Kabila’s refusal to step down threatens to thrust his
country back into the kind of chaos that cost millions of lives after his
father took power nearly two decades ago. It could also destroy the tenuous
stability that attracted international investment—mainly from mining giants
like Freeport-McMoRan and Glencore —and turned Congo into Africa’s biggest
producer of copper, tin and cobalt.
In February, S&P Global Ratings lowered Congo’s
investment outlook to negative amid rising political tensions. It affirmed that
view in August. The last civil war destroyed the country’s copper industry,
cutting production more than 96 percent by the time the conflict ended in 2003.
Since then, foreign investment has helped generate more
than 100 000 jobs in mining and oil alone, tripled the size of the economy—and
allowed the family’s empire to flourish. Over that period, Kabila and his
siblings have assembled an international business network stretching across at
least 70 companies, according to a Bloomberg News analysis of thousands of
company documents and court filings as well as dozens of interviews with
bankers, businessmen, miners, farmers and former government officials.
Massive archive
While Congolese law doesn’t prohibit politicians or their
families from having business interests, the scope of that empire has only
recently become visible, in publicly available corporate and government
records that Congolese regulators have computerised and made searchable in just
the past few years. Bloomberg News, with support from the Pulitzer Center on
Crisis Reporting, traced the Kabilas’ interests by amassing an archive of
hundreds of thousands of pages of corporate documents that shows his wife, two
children and eight of his siblings control more than 120 permits to dig
gold, diamonds, copper, cobalt and other minerals.
Two of the family’s businesses alone own diamond permits
that stretch more than 450 miles across Congo’s southwestern border with
Angola. Family members also have stakes in banks, farms, fuel distributors,
airline operators, a road builder, hotels, a pharmaceutical supplier, travel
agencies, boutiques and nightclubs. Another venture even tried to launch a
rat into space on a rocket.
President Joseph Kabila arrives for a southern and central African leaders' meeting to discuss the political crisis in the Democratic Republic of Congo in Luanda, Angola. File photo: Kenny Katombe/Reuters
In Congo’s largely informal, cash-based economy where the
family stakes are almost all in privately held companies, the exact value of
the businesses isn’t known. The few figures available in publicly accessible
documents show investments worth more than $30 million in just two companies.
Estimated revenue for another company exceeds $350 million over four
years—in a country where World Bank data show that nearly two-thirds of the 77
million people live on less than $1.90 per day.
While some of the businesses are owned directly, the
family also has dozens of joint ventures and shell corporations through which
it holds stakes to varying degrees in all manner of industries. That creates a
system so pervasive that even seemingly innocuous payments—such as rent paid by
the UN for a police station—end up finding their way to the Kabila family, an
analysis of the network shows. It can be a ham-handed operation: Perhaps in its
eagerness to tap the country’s resource wealth, the family has sometimes driven
away outside investment that would have made some of its members even more
money.
Government spokesman Lambert Mende said he couldn’t
comment on issues concerning the president's family, which he considered a
private matter. When asked how Bloomberg News could direct questions to Kabila,
he said the president does not talk to Western media. Theodore Mugalu, who
handles the family’s personal affairs, didn't respond to a series of phone
calls and text messages requesting comment.
Second term
Kabila’s second term as president ends on December 19,
and the constitution bars him from running again. But the country’s electoral
commission has delayed elections until at least April 2018, and a
constitutional court that Kabila created last year has ruled he should stay on
until a vote is held.
Publicly, Kabila says the delay has nothing to do with
him and that an election will be called once voter-registration rolls are
complete. Privately, he tells associates he’s staying put, says Francis
Kalombo, one of his closest allies until he broke ranks last year. “He’s not
going to do all that he’s doing, make all this effort, for one more year,”
Kalombo said. “For him, it’s for life.”
Kabila’s chief diplomatic adviser, Barnabe Kikaya Bin
Karubi, called the accusation false. “To say that he wants to stay in power
because he wants to protect all these business deals, I think, is not proper,”
Kikaya said in an interview in Paris. “He has said time and again what he wants
to leave as a legacy to the Congo: a democratic process.”
Democratic Republic of Congo President Joseph Kabila and his wife Olive.
Kikaya, who said he couldn’t comment on behalf of the
president about his family’s affairs, nevertheless defended their right to
conduct business. “The Congo is their country—they have to live, they have to
have an income,” he said. “Whether their position as the first family makes
things easy for them I think is normal. It’s normal, provided no laws are
broken.”
For most Congolese, the economy isn’t booming anymore.
The government has had to revise down its growth forecast three times this year
due to weak commodity prices. It’s now at 4.3 percent from an initial goal of 9
percent in the 2016 budget.
Killings
In September, Kabila’s security forces shot, hacked and
burned pro-democracy protesters in Kinshasa, the capital, killing more
than 40, a UN investigation into the events found. They poured gasoline onto
the headquarters of the main opposition party, set it alight and threw
fleeing civilians into the flames, the UN said.
On December 12, the US sanctioned Congo’s interior
minister and its national intelligence agency administrator, saying that the
Congolese government was undermining democratic processes and putting the
long-term stability and prosperity of the country at risk. On the same day, the
European Union imposed sanctions on seven police and military officials for
their role in September’s violence and for “allegedly trying to obstruct a
peaceful and consensual solution to the crisis in the DRC.”
Further violence and unrest could spill over Congo’s nine
borders, drawing in neighbouring countries as it did in wars between 1996 and
2003. And it would squander the $40 billion that international donors, led by
the U.S., have spent in Congo in the last 16 years, mostly on a UN mission,
humanitarian and development assistance, and debt relief.
“We’re heading for a big, slow-motion crisis,” said
Jean-Marie Guehenno, head of the International Crisis Group think tank, who
knows Kabila from his eight years as the UN’s head of peacekeeping. “Why is he
refusing to go? For the sake of power? To protect the family business? Probably
a bit of both.”
Read also: Leaked papers catch Kabila family with Vodacom stake
Joseph Kabila grew up with his siblings in exile in
Tanzania, the children of Laurent-Desire Kabila. Their childhood was modest but
full of intrigue, as their heavyset, charismatic rebel father moved from
country to country using fake passports and trying to gin up support for his
fight against the US-backed dictator Mobutu Sese Seko.
Laurent-Desire fathered at least 25 children with
seven different women, according to a biography published by Belgian researcher
Erik Kennes in 2003. Joseph, Jaynet and younger sister Sissy were born in
Congo; Zoe, sisters Cecylia and Josephine in Tanzania; and younger brother
Masengo and sister Gloria in Uganda, according to their declarations in
corporate filings. Another brother, Francis Selemani Mtwale, was adopted as a
child.
After their father became president in 1997 by
overthrowing Mobutu with the help of a coalition of African governments, he
immediately set about making money for his government—and for family and
friends, according to Kennes’s biography.
Developing economy
The places he’d fought in the bush as a young rebel
became the names of commercial interests. Hewa Bora, the rebel base where
his twins Jaynet and Joseph were born, became an airline, a fuel station, a
farm and a mining site. Wimbi Dira, another rear base, gave its name to a
second airline.
But Laurent-Desire’s shakeup of the old economic and
political order made enemies, and in 2001 he was assassinated by his own
bodyguard. Within weeks, Joseph, Congo’s army chief at the time, was chosen as
his successor. He was only 29.
Since then, the Kabila family’s businesses have grown
with Congo’s developing economy. And they now enjoy a perk of
presidential power: the protection of the Republican Guard, an elite army unit
that is supposed to protect Kabila himself. In July 2015, guard members
accompanied his wife, Olive, after she had bought a cattle farm in the
grassy hills of North Kivu. According to three labourers who were displaced,
she demanded they remove their makeshift homes or watch soldiers destroy them.
Olive didn’t respond to multiple phone calls and text messages sent to her
assistant.
Many of the companies are run by Jaynet, Joseph Kabila’s
twin sister. After their father’s death, documents show, she set up
companies across Congo, as well as in the US, Panama, Tanzania and on the
South Pacific island of Niue. Company filings show she is or has been a
shareholder or director in at least 28 companies. In some, she controlled a
majority of shares while in others she held minority stakes, the filings show.
It’s unclear how many of those companies are still active.
The lack of transparency in some of the family’s dealings
has hurt Congo’s economy. In 2012, the International Monetary Fund cut its
half-billion dollar loan program with Congo after the government declined to
publish contracts related to a 2011 deal for a copper mine known as Comide. One
of the companies involved in the deal, Goma Mining, was at least 10 percent
owned by the family and chaired by Kabila’s sister, Josephine, according to
court records from 2013.
Congolese soldiers manhandle a civilian protesting against the government’s failure to stop the killing and interethnic tension in the town of Butembo, in North Kivu province of the Democratic Republic of Congo, in August. Reuters
The family’s involvement in mining—diamonds,
cobalt and copper—comes in part through a company called Acacia, which was
majority-owned by Jaynet; younger brother Masengo; Joseph Kabila’s 16-year-old
daughter, Sifa; and his financial assistant, Emmanuel Adrupiako, based on
corporate records from September 2014.
Remote town
In the remote southern town of Tembo, people haven’t
heard of Acacia or another family-controlled company called Kwango Mines that
together hold 96 mining permits. But they seem to know who controls the
diamonds in the river. “All the documents for this project are now in the hands
of Jaynet Kabila, the twin sister,” said diamond trader Jauvin Manzaza,
pointing to the wide Kwango River that tracks the border with Angola.
Kabila-controlled companies first arrived here in 1998,
Manzaza said, armed with tractors and machinery to dig for diamonds 15 miles
south of the town. In 2003, a company controlled by Selemani and Kabila’s
younger brothers Zoe and Masengo sold more than $12 million of gems, export
data show. Diamonds accounted for three-quarters of Congo’s export revenue that
year, which also marked the end of the country’s civil war, attracting
international diamond companies.
Once there, those firms found they had no choice but to
negotiate with the Kabila clan, said Mike De Wit, head of exploration in Congo
from 2003 to 2007 for the world’s largest diamond producer, De Beers. In 2006,
De Beers signed an agreement to explore with permits belonging to a company
controlled by Olive Lembe, a few months before she married the new president,
De Wit said. That company is now called Olive Sifa Laurent, or Osifal for
short, named after its shareholders: Olive, the couple’s daughter, Sifa, and
8-year-old son, Laurent-Desire.
“When Kabila came to power, he looked like an honest guy
and business was actually doable, so that’s why De Beers went into there,” De
Wit said in an interview. “With time, it became obvious that that wasn’t the
case.“
De Beers confirmed the arrangement with Osifal in an
e-mail, adding that it was terminated in 2008 because “there was no potential.”
De Beers left Congo entirely in 2009 after it “concluded that the business
operating environment was not one in which De Beers would be comfortable to
operate in.”
Negotiations
Later, as the head of exploration for Toronto-listed
Delrand Resources (then known as BRC Diamond Core), De Wit had to negotiate
with the family again. BRC had an option to pay approximately $350 000 for 55
percent of the rights to develop six Acacia licenses along the Kwango River and
farther west. Then, according to De Wit, Jaynet decided to renegotiate.
“In one meeting they said, ‘Maybe we want $2 million’ and
in the following meeting said, ‘Well, actually it’s worth $10 million,’ ” De
Wit said of the negotiations.
Jaynet made it clear that she set the rules in Congo and
wanted a contract where she was earning “big dollars,” De Wit recalled. “It was
never enough,” he said. Delrand walked away from the agreement in 2014,
recording a $3.1 million loss over the project.
Jaynet didn’t respond to multiple telephone calls and
text messages requesting a response. Delrand Chief Executive Arnold Kondrat
didn’t reply to voicemail messages requesting comment.
Adrupriako, Kabila’s financial assistant, said in a
telephone interview that Acacia couldn’t agree with Delrand over the ownership
of the mining venture, and the project was abandoned. He said he hasn’t
been involved with Acacia since 2005.
Today near Tembo, hulking machinery rusts in the tropical
heat. Without major mining company investment, artisanal miners
instead dig in the riverbed in search of diamonds.
“We stopped working the concession but we still control
it,” said Major Freddy Kakudji, the ranking officer in the small group of
Republican Guard soldiers left behind to patrol the river.
Thirty miles to the south, men in restitched wetsuits
dive for diamonds off the edge of a flotilla of 20 multicolored dinghies,
scraping gravel from the riverbed. When Republican Guard soldiers come by, the
divers hand over buckets of potentially gem-filled gravel as an informal
tax.
Opposition supporters chant slogans during a march to press President Joseph Kabila to step down in the Democratic Republic of Congo's capital Kinshasa, last month. (Photo: Kenny Katombe/Reuters)
It’s unclear how much revenue diamonds generate for
Kabila family businesses today. Congo’s diamond production has halved since
2005, overtaken by copper, cobalt and gold.
Acacia turned its attention some 500 miles southeast of
Tembo in 2010, when the prices of copper and cobalt, now Congo’s biggest
exports, surged. The region, known as Katanga, is bursting with copper and
other metals. Hundreds of thousands of men, desperate for work, use spades,
picks and hammers to scrape ore out of the bottom of tunnels that at times
descend more than 130 feet below ground.
Below market
prices
Near the town of Luisha, about 4 500 diggers work an area
of six mines that officially belong to state-owned miner Gecamines. Teams of
four diggers each produce an average of about half a ton of copper and cobalt
ore per day, according to a 2014 World Bank-funded report.
Three of the mines are run by Acacia, the 2014 report
said, even though Gecamines has never announced any partnership with the
company. Soldiers on the sites force diggers to sell their minerals only to
Acacia at below-market prices, according to the report, which was written by
French consulting firm Sofreco for a World Bank program on improving governance
in Congo’s mining sector. A Gecamines spokesman declined to comment for this
story.
Inside a one-room, concrete tavern near one of the sites,
two skinny diggers drank Kung Fu energy drinks and talked about the mines where
they say they’ve worked for the presidential family under the supervision of
Republican Guard soldiers. They asked that their full names not be used, for
fear of retribution.
“Kansonga, Kateketa, Kanshinshi, Lupoto, Wisky,” said
William, 37, recalling the names of mine sites. He snapped his fingers at the
last name. “It was so dangerous there.”
At Wisky alone, more than 100 diggers died in cave-ins
during a six-week period in late 2015, according to a report by Belgian
magazine Moustique. William, who was drawn to the site by rumors the ore was
nearly 25 percent cobalt, said the total number of dead was many multiples
of that.
Sophisticated
investment
In the Congolese capital of Kinshasa, behind the
reflecting windows of the BGFI bank, the Kabila family has built its most
sophisticated investment: the country branch of a Gabon-based banking group.
BGFI in Congo is dominated by the presidential family.
When the lender set up in the country in 2010, Kabila’s sister Gloria Mteyu
took a 40 percent stake, then worth $10 million, according to company
registration documents from that year. Gabon-based Groupe BGFI Bank SA, which
has ventures in 11 countries, holds 60 percent.
In 2014, BGFI in Congo recapitalized, raising its share
capital to $38 million, and Gloria maintained her 40 percent shareholding,
according to corporate records from that year, the most recent available. Last
December, the bank had $374 million in assets, making it Congo’s sixth-biggest
lender. Gloria also has a stake in a new banking venture via a stake in Kwanza
Capital, shareholding records show. BGFI loaned Kwanza $3.45 million in April,
according to a term sheet reviewed by Bloomberg.
A 32-year-old fashion designer, Gloria said in a
telephone interview that she returned to Congo in 2012 to launch Kinshasa
Fashion Week after studying in New York, Milan and Paris.
Asked about her businesses, she said she was a
private person and didn’t want to talk about ventures that weren’t related to
fashion. She said she didn’t have a stake in BGFI.
At a November press conference in Kinshasa, though, Abdel
Kader Diop, deputy managing director of the Congo unit, said Gloria was a
shareholder. An outside spokesman for BGFI in Gabon said the chief executive
officer of the bank was too busy to comment for this story.
BGFI’s Gabonese parent hired PricewaterhouseCoopers to
audit BGFI in 2015. The audit found that the Congolese bank had failed to
follow internal controls 19 times and paid middlemen for business without
knowing who would ultimately receive the funds.
Jean-Jacques Lumumba, head of credit at the bank, found
suspicious transactions soon after he started working there in 2014.
Making problems
Lumumba discovered that the nation’s central bank—which
isn’t allowed to make commercial loans—had lent a food distribution company $43
million and transferred the money to an account at BGFI. The food company’s
incorporation documents show that it’s run by business partners of President
Kabila, whose brother Selemani is the bank’s CEO.
Lumumba said he confronted Selemani in his boss’s office,
where he found him sitting in front of a photo of Kabila and another of
Selemani with some of the men involved in the transaction.
Selemani stared at him for a moment, then leaned back in
his chair, allowing his jacket to fall behind the dark hilt of a pistol
protruding from his pants. “Are you making problems for me?” Lumumba recalled
him yelling. “You know I will deal with you if I have to. Just do as I tell
you.”
BGFI said in a statement that it has extended credit to
the company but that the central bank never made such a loan. Reached on his
mobile phone, Selemani hung up before he could be asked any questions. The
central bank and the trading company also said no such loan was made, even
though a record of the transfer is reflected in the bank statements that
Lumumba, 30, took with him when he later fled Congo with his wife and children.
Reflecting on the US penalties against Congolese military
leaders, Lumumba contends they won’t hit those who are really keeping Kabila in
power: the network of people running the private businesses of the family. “The
U.S. is putting sanctions on the generals,” he says. “That won’t make a
difference. If you want Kabila to pay attention, you have to target the financiers.”
—Franz Wild is a Bloomberg News reporter in London,
Thomas Wilson reports for Bloomberg News in Kinshasa. Michael Kavanagh’s
reporting was funded in part by the Pulitzer Center on Crisis Reporting and in
part by New York University’s Congo Research Group.
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