How a Chinese company gifts guns and cash to armed groups in gold-rich DRC province

A Chinese mining company gave gifts of arms and cash to armed groups in Shabunda territory, eastern Democratic Republic of Congo, according to Global Witness, an organisation campaigning to end the exploitation of natural resources and corruption in the global political and economic system.

In its report titled River of Gold, Global Witness said armed groups made up to $25,000 per month from extorting from local miners during a recent two-year gold boom. “In just one year, up to $17 million of gold produced by Kun Hou Mining, the Chinese-owned company, went missing and was likely smuggled out of Congo into international supply chains,” the report said.

For two decades, Global Witness has been campaigning for full transparency in the mining, logging, oil and gas sectors, so that citizens who own those resources can benefit fairly from them, now and in future. One of the major it has faced so far is the unscrupulous activities of provincial authorities. During the gold rush, the Congolese state lost out on tax revenues on up to $38 million of artisanal gold produced per year, due to smuggling and misconduct by provincial authorities. The gold rush focused on the Ulindi River reached its peak in 2014 and 2015 and continues to this day. Evidence gathered by Global Witness also shows a provincial authority colluded with armed groups in illegal taxation of miners while another altered official export documents so gold looked as though it was coming from legally-operating mines.

While these things happen, revenues which could have been used to address the desperate poverty in Eastern Congo as it sees an uptick in gold production, have instead often funded armed groups and corrupt officials. Most of eastern Congo’s artisanal miners – around 80 percent – work in the gold sector. Recent international reforms have aimed to stop Congo’s mineral wealth funding armed groups. However, much progress would not be achieved if the Congolese government does not hold companies and government officials involved in such abuses to account.

According to Global Witness, Armed groups, known as Raia Mutomboki, received at least two AK-47 assault rifles and $4,000 in cash from Kun Hou Mining, which operates mechanised gold dredging machines along the Ulindi River in Shabunda territory, South Kivu province of eastern Congo. In addition, the armed men taxed artisanal miners operating locally-made dredgers extracting gold along the river. Local authorities also collaborated with the Raia Mutomboki, through a tax sharing deal, with the taxes collected by authorities ending up in private pockets.

“There were over 500 cases of malnutrition reported in Shabunda town in 2014 and yet the significant revenues generated by this gold boom benefitted armed men and predatory companies instead of the Congolese people,” said Sophia Pickles, Senior Campaigner at Global Witness. “The Congolese government must enforce its own laws to ensure that companies in its gold sector do not produce or trade gold that has funded armed groups. Any company breaking these laws must be held accountable for their actions. Provincial mining authorities that fail to properly govern the minerals sector must also be held liable.”

Global Witness’ research shows that almost half a million dollars’ worth of Kun Hou’s gold was exported to a Dubai company through official channels. The rest of the company’s estimated $17 million of gold production is likely to have been smuggled out of the country.

“States have a responsibility to ensure that companies do no harm, including checking supply chains for links to conflict and human rights abuses – Congo and the United Arab Emirates have dramatically failed in this respect,” Pickles says.

Global Witness revealed that Gold from Shabunda’s boom was sold on to a gold trading house in Bukavu that then sold it to their sister company, Alfa Gold Corp DMCC, in Dubai. “Neither firm carried out supply chain due diligence to international standards, which would have revealed that the gold had been obtained in direct contravention of Congolese law and UAE Guidelines,” a statement by Global Witness said. Alfa Gold in Dubai and London did not respond to Global Witness’ request for comment.

According to the not-for-profit organisation, documents show that a French citizen Frank Menard, who worked for Kun Hou Mining, is deeply implicated in the company’s wrongdoing. Raia Mutomboki armed groups wrote to Menard in February 2015 to thank him for the two AK-47 assault rifles and $4,000. Menard also signed an official document confirming the sale of Kun Hou’s gold to Alfa Gold’s Congolese office. Global Witness says attempts to contact Franck Menard were unsuccessful.