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FINANCE: Groups Question World Bank’s Role in Troubled Mine

Emad Mekay

WASHINGTON, Feb 1 2006 (IPS) - World Bank President Paul Wolfowitz, who has sought to cast himself as a champion of transparency, is facing accusations that his office is suppressing a report on a Bank-backed mining project in Africa that allegedly contributed to the deaths of dozens of people.

Watchdog groups say that violence has marred the Dikulushi Copper-Silver Mining Project in the Democratic Republic of Congo (DRC) where the bank’s guarantee arm, the Multilateral Investment Guarantee Agency (MIGA), provided 13.3 million dollars of political risk insurance to the Australian company, Anvil Mining, running the mine.

At issue is the reluctance of the Bank to disclose the findings of an internal investigation into whether the institution followed due diligence in granting its political risk guarantee to Anvil Mining.

The British-based Rights and Accountability in Development and the Washington-based Bank Information Centre say calls to make the report by the Bank’s Compliance Advisor Ombudsman available to the public have so far gone unanswered.

A Bank official contacted by IPS declined comment.

Sources close to the Bank say Wolfowitz’s office is not withholding the report and may in fact release it “very soon”, possibly with a response from the Bank’s management. The Compliance Advisor Ombudsman says it submitted the final review to Wolfowitz in October 2005, and that its final release is “still awaiting clearance” from the World Bank president.


Wolfowitz has held his post since June 2005. He was previously the deputy defence secretary in the George W. Bush administration, where he played a key role in the U.S. push to invade Iraq.

Watchdog groups complain that Anvil and MIGA have both been allowed to look at the findings of the report, but not the people in the DRC who have been directly affected by the project.

“It is the victims of the Kilwa massacre and their families who have a right to know the outcome of the internal audit without further delay,” said Rights and Accountability in Development in a letter to Wolfowitz.

The complaints come at a sensitive time for the Bank. Wolfowitz says that recent organisational reshuffling – which has reportedly been greeted with suspicion and frustration from many staff – were designed to fight corruption and open up the institution to greater public scrutiny.

The groups monitoring the mining industry in the DRC counter that the conduct of the World Bank president’s office raises questions over the sincerity of such claims.

“Stalling the release of the report only gives the impression that the Bank Group has something to hide,” said Nikki Reisch, Africa programme manager with the Bank Information Centre.

“CAO reports are routinely disclosed to the public so it seems strange that an audit of such a high-profile and controversial project would be kept secret.”

The audit’s findings could offer lessons about the need to address human rights and governance issues before the Bank supports further private sector engagement in mining in the DRC, the groups argue.

“For all the president’s emphasis on transparency and accountability inside the Bank, one would think that Mr. Wolfowitz would be eager to disclose the report,” Reisch said.

The World Bank is the world’s largest public lender for development, extending some 20 billion dollars for hundreds of projects in developing countries every year. It also has an enormous influence on many economies around the globe and often sets the tone for private sector involvement in developing nations.

The controversy around the mining project started in October 2004 when the Congolese army suppressed a small-scale uprising by Mayi-Mayi militia fighters in the nearby town of Kilwa, reportedly killing as many as 100 people. The crackdown came one month after the Bank’s MIGA approved the insurance.

Fearing that instability could threaten its operation and exports from the mine, the company, Anvil, allegedly provided logistical support to the Congolese army, including air and land transport.

Kilwa is the point of export for Dikulushi copper and silver concentrates to neighbouring Zambia.

Earlier in January, the company reported that the Dikulushi copper-silver mine had record production for the last quarter of 2005 at 6,085 tonnes of contained copper and 587,882 ounces of silver.

In an investigative report, the Australian Broadcasting Corporation (ABC) found that Anvil’s trucks were used to transport troops to repress the uprising, and then to allegedly take away corpses of the victims of summary executions. A U.N. investigation has corroborated those findings.

Anvil says it does not know for certain if its equipment was used in the crackdown, but denies having taken part in human rights violations.

If found in breach of the Bank’s regulations on due diligence because of the bloodshed associated with crackdown, MIGA may have to withdraw its political risk guarantee for the Dikulushi project.

In 2001, after a 10-year hiatus, the Washington-based World Bank resumed its lending to the DRC. It has since committed almost two billion in loans and grants. A recent increase of political stability had attracted many miners back to the country, where some the world’s richest copper and silver mines are found.

Watchdog groups fighting for corporate responsibility say the Bank may have moved back in too fast and without enough consideration of whether the return of miners could refuel violence and instability.

They protest that the DRC’s abundant mineral resources have triggered conflict in the country since the late 1990s and note that while fighting has ebbed since 2001, violence has escalated lately in Katanga Province, where the Dikulushi mine is located.

In 2002, a U.N. report found that complicated networks of high-level political, military and business people were intentionally fomenting violence in order to retain control over the DRC’s natural resources.

Activists say this should have been a sufficient warning for the World Bank not to lend to mining projects if it was sincere about fighting corruption, especially in conflict-prone countries like the DRC.

 
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