Armed groups in the Shabunda territory of the eastern Democratic Republic of Congo (DRC) received “gifts” of arms and cash from a Chinese mining company and made up to $25 000 a month extorted from local miners during a recent two-year gold boom in the region, reports international watchdog organisation Global Witness.

The organisation says that, in just one year, about $17-million worth of gold produced by Chinese miner Kun Hou Mining went missing and was likely smuggled out of the DRC into international supply chains.

Global Witness also states that the DRC government lost out on tax revenues of about $38-million a year that was supposed to be levied on artisanal gold produced during the gold rush, owing 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 the illegal taxation of miners, while another altered official export documents to make it appear that the gold came from legally operating mines.

Global Witness’s investigation reveals the extent of the problems in the eastern DRC’s artisanal gold sector. The eastern DRC has experienced an uptick in gold production in recent years, the revenues from which could have been used to address the region’s “desperate poverty”, but these have instead often funded armed groups and corrupt officials.

“Most of eastern Congo’s artisanal miners – around 80% – work in the gold sector. Recent international reforms have [tried] to stop the DRC’s mineral wealth from funding armed groups. “The DRC government needs to hold companies and government officials involved in such abuses to account for these reforms to work.”

The watchdog alleges that 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.

It adds that 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. The taxes collected by authorities appear to have “disappeared”, depriving the DRC of much needed revenue, which could have been used for health and education.
“There were over 500 cases of malnutrition reported in Shabunda town in 2014 and yet the significant revenues generated by this gold boom benefited armed men and predatory companies instead of the Congolese people,” laments Global Witness senior campaigner Sophia Pickles.

She further notes that Global Witness’s research shows that almost $500 000 worth of Kun Hou Mining’s gold was exported to a Dubai company through official channels.

Pickles adds that mining officials in Shabunda town working for Saesscam, a government body mandated to support artisanal miners, ran an illegal taxation racket in areas where the local dredgers operated, and were also in collaboration with Raia Mutumboki armed groups.

She comments that gold from Shabunda’s gold boom period was sold on to a gold trading house in Bukavu, which then sold it to its sister company, Alfa Gold, 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 DRC law and United Arab Emirates guidelines.”

, Pickles points out that Alfa Gold has a wholly owned UK subsidiary registered in London’s Hatton Garden jewellery area. However, she notes that neither Alfa Gold, in Dubai or in London, responded to Global Witness’s request for comment.

Additionally, Pickles highlights that, in recent years, there have been significant international efforts to tackle the link between violent conflict, human rights abuses and the minerals trade in the DRC and elsewhere. This was set out by the Organisation for Economic Cooperation and Development (OECD) five years ago and has also been a legal requirement in the DRC since 2012.

She remarks that the US also passed a law enforcing this and, most recently, industry supply chain guidelines based on the OECD standard were agreed in China. The Chinese guidelines set a precedent for Chinese companies to recognise and reduce supply chain risks and, if adhered to, should allow companies sourcing minerals from high-risk areas to do so responsibly.

“Kun Hu Mining refused to comment on requests from Global Witness.