Time for High-level EU and US Targeted Sanctions on DR Congo

Time for High-level EU and US Targeted Sanctions on DR Congo

11/05/2017

In 2016, the United States and the European Union announced targeted sanctions against a total of nine Congolese individuals deemed most responsible for violent repression of protests against President Kabila’s moves to cling to power beyond his constitutional term limits. On the last day of 2016, following several stages of U.S. and E.U. sanctions combined with extensive mediation by the Catholic Church, the political opposition and government reached agreement on a roadmap for the country’s governance leading up to elections to be held before the end of 2017. However, the government’s appointment of a new prime minister on 7 April without the opposition’s consent is widely regarded as a violation of the agreement, including by the Catholic Church, and casts serious doubt over Kabila’s commitment to live up to his promise to step down.

The time is ripe for additional sanctions in order to maintain pressure on the Kabila government. Rather than looking at those directly responsible for violent repression, this post focuses on how US and EU sanctions can be expanded to target the core of Kabila’s kleptocratic regime, which seems to be committed to preserving itself at all cost.

In order to pursue the designations made in 2016, both the US and EU added new sanctions criteria to relevant operational authorities. In 2014, Executive Order 13671 was issued in the US to update the sanctions authorities on the Democratic Republic of Congo, including the addition of “actions or policies that undermine democratic processes or institutions in the DRC” to the sanctions criteria. An  EU Council decision of 12 December 2016 added “obstructing a consensual and peaceful solution towards elections in the DRC” to the EU sanctions criteria. These criteria came in addition to those already in place to implement UN Security Council resolutions that mostly deal with human rights violations and support to armed groups.

Five out of nine of the 2016 designations were based on the additional sanctions criteria, whether solely or in combination with criteria related to planning, directing or committing human rights violations. Whereas UN sanctions have in the past mainly targeted armed groups, their leaders and the associated businesses operating in the east of the country, U.S./EU sanctions now hit senior state officials in Kinshasa. The table below lists the nine individuals designated by the US and the EU in 2016.

While these sanctions start to focus on close allies of President Kabila, they haven’t affected those who profit most from the violence and corruption in Congo and who obstruct or help obstruct the democratic process: the Kabila family, key presidential advisors, heads of state owned enterprises, and some of Kabila’s other business accomplices.

The Enough Project earlier reported that during Kabila’s tenure, up to $4 billion per year has gone missing or been stolen due to the manipulation of mining contracts, budgets, and state assets. A share of this money is likely to have gone to at least 70 businesses that Bloomberg recently linked to the Kabila family, which are reported to have to generated hundreds of millions of dollars for the family.

In a passport scam recently reported by Reuters, a company owned by one of Kabila sisters is set to make an estimated $120 million from a deal that will require Congolese citizens pay $185 for a new passport. Kabila’s advisor Emmanuel Andrupiako, who helped broker the deal, reportedly received $700,000 from companies associated with the passport producer.

To facilitate dubious transfers the Kabila family often seeks to control commercial banks. President Kabila’s sister Gloria Mteyu has a 40% stake in the Congolese branch of BGFI Bank, where his brother, Selemani Mtwale, is CEO, as reported by Bloomberg. According to a whistleblower quoted in the Belgian newspaper le Soir, BGFI has been involved in a number of suspicious multimillion-dollar transactions favoring the president’s close ally Albert Yuma, who is also president of the state-owned mining company Gecamines.

Foreign business accomplices play an equally important role. For example, in a recent U.S. Department of Justice plea agreement, the U.S. hedge fund Och-Ziff pleaded guilty to having paid, through an associated businessman, tens of millions of dollars in bribes to Congolese officials in order to receive mineral concessions at very low prices.

The existing U.S. sanctions criteria may offer greater scope to target individuals involved in embezzlement and corruption than those of the EU because corruption and mismanagement clearly “undermine democratic institutions.” Beyond the sanctions provided for in EO 13671, theGlobal Magnitsky Human Rights Accountability Act became law at the end of 2016. This law is not tied to one country but authorizes targeted sanctions against any foreign official and/or their accomplices involved in significant acts of public corruption, including “the expropriation of private or public assets for personal gain, corruption related to government contracts or the extraction of natural resources, bribery, or the facilitation or transfer of the proceeds of corruption to foreign jurisdictions.” To the extent DRC sanctions do not directly provide the authority to target corruption, the Global Magnitsky Act does. The process for implementing the law is currently being developed by the U.S. government, and sanctions are expected to be issued during 2017.

Concerning targeting corruption within the EU sanctions framework, the current EU criterion most likely to be used is the impact of a targeted official on elections (the EU does not yet have an analogue to Global Magnitsky). One could argue that money embezzled from state coffers draws away finances needed to organize elections and, by depleting state coffers, threatens other basic rights. But it is not clear how far this criterion could extend or the evidence that would be needed to make these linkages. Thus, it would appear to be a safer legal course for the EU to follow its previous process and add a new, targeted criterion to its legislative texts and expand its targeted sanctions list accordingly.

As long as Kinshasa’s kleptocratic leaders and their entourages enjoy unrestricted travel and are able to wire money through the EU and US and hold assets here, they won’t feel the pressure to cease violent repression and self-enrichment and adhere to the constitution. Targeted sanctions on these individuals, their corporate holdings and networks, as well as their facilitators, would send an important political signal and offer a swift and effective way to alter their calculations and push them toward holding elections. Such change still being elusive, it is now time for the EU and US to push ahead with more significant designations.

Enough Project