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UPDATE 1-Mining royalties Glencore said were for Congo went to Israeli billionaire

Published 2017-03-03, 05:26 a/m
© Reuters.  UPDATE 1-Mining royalties Glencore said were for Congo went to Israeli billionaire
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(Adds Fleurette later reaction, paragraphs 12-13)

By Aaron Ross

KINSHASA, March 3 (Reuters) - Tens of millions of dollars in royalties and signing bonuses that Glencore GLEN.L told an independent transparency board it had paid to Congo's state mining company actually went to a business controlled by Israeli billionaire Dan Gertler, advocacy group Global Witness said in a report on Friday.

Glencore-controlled Kamoto Copper Co (KCC) told the Extractive Industries Transparency Initiative (EITI) in 2013 and 2014, in publicly available disclosures, that the payments were made to Gecamines, the state company.

EITI audits payments by mining companies to governments annually, an initiative the companies sign up to voluntarily.

Glencore acknowledged in a statement to Reuters that KCC paid the royalties and signing bonuses in 2013 and 2014 to Africa Horizons Investment Ltd (AHIL), a wholly owned subsidiary of Gertler's Fleurette Group, rather than Gecamines. But Glencore said this was what Gecamines instructed it to do. Glencore said the payments to AHIL "discharged KCC's obligation to make these payments to Gecamines".

Glencore said KCC made the payments to AHIL "in accordance with the payment instruction from Gecamines and the subsequent tri-partite royalties agreement between KCC, Gecamines and AHIL".

Reuters was not able to review the documents providing these instructions. The chairman of the Gecamines board and its interim director-general could not be reached for comment about the payment of royalties and signing bonuses. Fleurette confirmed that it received the payments.

Glencore has said in the past that it adheres to strict anti-corruption standards.

Some campaign groups including Global Witness have accused Gertler of exploiting his friendship with Congo President Joseph Kabila to ink sweetheart deals with the state that have cost the Congolese treasury millions.

Gertler and Kabila have denied that. Gertler has long denied any improper conduct and says his investments have contributed to Congo's economic development.

AHIL has been receiving Gecamines' 2.5 percent royalty stream since at least 2013, though this was only made public last November in a separate report by Global Witness. Fleurette has said AHIL bought the royalty right from Gecamines, although it has not disclosed for how much.

Reuters could not determine how AHIL acquired the rights to the signing bonuses. Fleurette did not respond to a Reuters question about the signing bonuses but said in a statement that Gecamines stood to benefit from having sold the royalty stream, which Fleurette has said proved less lucrative for AHIL than anticipated.

Fleurette later added in a statement to Reuters that KCC's payments to AHIL were in part the repayment of a chunk of a $196 million loan Fleurette made to Gecamines in 2013.

It did not specify how much of that sum had been settled by the royalty payments.

According to EITI reports and KCC's 2014 financial statement, reviewed by Reuters, KCC paid more than $70 million in signing bonuses and royalties to AHIL in 2013 and 2014.

Last month, Glencore bought Fleurette Group's 31 percent stake in the Mutanda copper mine in southeast Congo and its smaller stake in KCC for a total of $960 million. Fleurette spokesman told Reuters after the sale that the company had retained its royalty streams in Mutanda and KCC. (Editing by Tim Cocks and Dale Hudson)

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