Democratic Republic of Congo

Tuesday 15th May 2012 Lords Chamber

Question

14:51

Asked by

[Lord Chidgey]

To ask Her Majesty’s Government what has been their response to reports that state-owned mining assets in the Democratic Republic of the Congo have been sold over the last two years to offshore companies for less than one-twentieth of their commercial value.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, we share the concerns about the DRC mining sector and the mis-selling of state-owned assets. We continue to press the DRC Government to improve governance in this area. The Secretary of State for International Development raised this with President Kabila when they met in March. The UK is funding the PROMINES programme, which aims to strengthen transparency in the mining sector. We also support the international efforts to set standards for all extractive industries.

[Lord Chidgey]

My Lords, I thank the Minister for that reply. Does he share the widespread concern over the legitimacy of transactions that involve companies quoted on the London Stock Exchange and UK Overseas Territories such as the BVI? The Chancellor has turned his attention to these with regard to stemming personal tax avoidance but does not appear to have looked yet at corporate tax avoidance. Will the Government support the call by the DRC opposition parties for a full inquiry into the extent of what appears to be very widespread corruption in this field?

[Lord Howell of Guildford]

We share the concern about corruption and the need for major companies to observe the highest possible standards in their performance. The instruments through which this should be done are the EU transparency directive and the work of the Extractive Industries Transparency Initiative, which is excellently chaired by Clare Short and is currently planning to set up a strategic working group to look at extending EITI standards to require a much closer look at issues of the kind that my noble friend has raised.

[Lord Alton of Liverpool]

My Lords, does the Minister agree that the extraordinarily rich deposits of minerals that are held in the DRC should be a blessing but have become a curse as marauding bands and the DRC’s neighbours have plundered those resources, leading to conflicts that have taken the lives of between 5 million and 6 million people, many of them children? Does he know that at present it is estimated that 40% of those working in the DRC’s mining industry are children? When the DRC review of mining practices takes place this year, will he use the extensive leverage that the Government have through their aid programme to ensure that at least children are removed from the mines and protected in the future?

[Lord Howell of Guildford]

The noble Lord is on to an excellent cause and a very good concern. Our view is that the PROMINES programme, which now will be launched in October and for which we have high hopes, will raise the standards and control better all activities of mining, including artisanal mining of the sort which employs children. That programme includes explicit activities to address the issues of child labour, including supporting initiatives to enable the artisanal mining subsector to comply with supply chain diligence standards which are increasingly being applied—for instance, in connection with the OECD due diligence guidance. We see the PROMINES programme as the avenue through which to increase the pressures and to overcome the appalling deprivations and dangers which are evident particularly for children in this sector.

[Lord Triesman]

My Lords, I accept of course that there are a number of transparency conventions in Europe and on a world basis, some of which have been useful in dealing with topics such as the illicit mining of diamonds in the past. Given the difficulties that have just been described, particularly in relation to children and the lack of transparency in supply chains, would there not be a good case for company reports in the United Kingdom to be candid and be required to say how transparency issues have been dealt with so that the legitimacy of their operations would be clear to everyone?

[Lord Howell of Guildford]

Yes, that is exactly the kind of proposal that Clare Short, as chair of the EITI, is examining in her strategic working group. Of course, not every company and certainly not every country has signed up to the EITI. Those that have are required to make certain reports, although those reports do not cover all the issues we are discussing now. Her idea, and that of the EITI, is to see whether the requirements for standards for signatories to the EITI can be increased and, obviously, for other countries—and the DRC being a candidate country—to sign up to the whole initiative.

[Lord Avebury]

My Lords, as I understood the Minister’s reply to my noble friend’s supplementary question, the rules of the EITI do not at present require candidate countries or full members to disclose accounts of the sales of mining assets. Will my noble friend press not only for sales to be disclosed but for countries that are candidates or full members to publish due diligence reports identifying the purchasers and verifying that they are fit and proper persons to comply with the EITI rules, and ensure that the rules are amended for that purpose?

[Lord Howell of Guildford]

I repeat that this is exactly what the EITI initiative proposes. Incidentally, this body was set up in 2002 by the previous Government. It has been a considerable influence and success, although it has a long way to go in certain areas. These are just the sort of proposals for an extended authority of the EITI that will be considered by the strategic working group. That aim should certainly be supported by the Government and all Governments who are full members of the EITI now. We recognise the need also for candidates to be required to move to higher standards in order to become full members.

[The Lord Bishop of Wakefield]

My Lords, related to the questions we have just heard, how are DfID’s funds allocated to government programmes in the Democratic Republic of Congo being used to ensure that the DRC Government tackle corruption and non-transparency in the mining sector? Is the Minister’s previous answer related to that or are there other questions to be asked about transparency and corruption?

[Lord Howell of Guildford]

There is a lot more to be said because this is a major subject. DfID programmes are in operation. They are under review and therefore I cannot give a precise up-to-date answer on the size and specific focus of programmes. Generally, the aims behind the DfID programmes are to decrease corruption and to improve the social and educational conditions, and, thereby, conditions in the mining sector generally.

[Lord Davies of Coity]

Can the Minister tell the House the extent to which the Government believe that British companies are involved in the offshore companies that are involved in this expertise?

[Lord Howell of Guildford]

We know that British companies are involved in the DRC and we know that certain deals have been made—some of them reportedly far below market prices. We support the EU transparency directive, and I urge all companies listed on the FTSE 100 to observe the highest possible standards and disclose their activities in the way we would expect of responsible companies. That continues to be the position.