Examination of Witnesses (Questions 133
- 139)
THURSDAY 27 APRIL 2006
MR ALEX
YEARSLEY
Q133 Chairman:
Mr Yearsley, thank you for your patience. I know that we are a
little later than we anticipated. You will have heard from the
flavour of the previous discussions, particularly towards the
end, some ideas as to what our Government can do to help resolve
conflicts. I just wonder whether, on the back of the submission[8]
that you have given to us, you can identify perhaps on the negative
side what you think the UK Government has done wrong, or what
is inconsistent in what it has done, in sub-Saharan Africa. We
have identified some of the issues with which we are not entirely
happy, so perhaps you can give us your thoughts on that?
Mr Yearsley: To start with, in
the Democratic Republic of the Congo one of the key matters that
we look for as an organisation is consistency in government particularly
within DFID on the issue of governance. To be quite honest, we
are funded by DFID to do mainstream work in the Congo, looking
at corruption and the role of resources. We have produced quite
a number of reports into most of the resources that have been
fuelling the conflict and corruption there. One of the key problems
we have found is a general unwillingness to talk about them quite
as brazenly as we did especially in relation to some of the key
political groups and actors within the Congo in order not to upset
the applecart on the basis that the elections were the most important
thing to happen in the Congo. In part they might be. There was,
therefore, a definite attempt to try to make sure that not too
much revelatory information emerged to cause areas of concern
on the governance side. We have also seen that in relation to
Rwanda and Uganda. In our submission we state how the UK Government
has been depressingly quiet on the issue of governance in Rwanda,
especially with regard to the smuggling of resources out of the
Congo. We feel that quite a lot of Rwanda's post-conflict economic
change can be attributed to that large resource grab; similarly
with Uganda. One has only to look at the amount of gold and other
commodities that have gone over the border from northern Congo
into Uganda to see that.
Q134 Chairman:
Do you suggest that to some extent indirectly our Government's
actions or inactions have contributed to those problems?
Mr Yearsley: It could have taken
a much tougher line and for reasons of expediency did not do so,
and continues not to do so. One could say the same of Angola.
As far as we can see, at the moment there is no interest within
the Foreign Office or DFID in democracy or human rights in a way
that should occur, especially in regard to corruption. There is
a continued siphoning off of enormous quantities of revenue which
amount to literally billions of dollars.
Q135 Chairman:
What do you think we could constructively do to stop that?
Mr Yearsley: A number of initiatives
could easily derail that. One could begin by looking at offshore
tax centres such as British Virgin Islands, Jersey and Guernsey.
The list of places where most of the money sits is pretty large.
We could reform trust company law and the global financial system
that facilitates and allows money to be taken out of countries
such as Angola, Kazakhstan and a number of other countries that
are resource-rich and resource-dependent. It could be done easily
and very quickly.
Q136 Chairman:
You are referring to a Kimberley process where one marks the goods
and then takes them off the legitimate market?
Mr Yearsley: As to the Kimberley
process, I do not agree entirely with Professor Collier's comments.
It is working and it has had some tremendous successes. It is
not perfect, and one will never stop diamond smuggling. It did
an enormous amount of good. His analysis of what will happen in
the future is not true. The system to which he referred as emerging
in future was designed by us. The governments are refusing to
accept it, which we regard as a shame. That would bring about
greater control in the diamond fields in Africa in particular.
One can mark timber and other commodities. A number of initiatives
are being debated at the moment, but there is still considerable
inaction.
Q137 Chairman:
What you are implying is that the problem is not DFID's actions
on the ground but the intervention of British corporations and,
therefore, it is really the Treasury or the DTI that ought to
be taking action?
Mr Yearsley: I would say that
across government within the UK there is general inaction, first,
to take the issue of corruption seriously within the countries
that are being assisted; second, seriously to investigate British
companies that are involved in corruption and money-laundering
which facilitates it; and, third, to rush resource-extractive
companies into post-conflict environments. If we look at the rush
of investment into the Congo at the moment to get hold of strategic
natural resources, that has the potential to undermine peace.
These are serious issues that are not being addressed.
Q138 John Barrett:
Can you say something about the sequencing of action in post-conflict
situations? On the one hand, one has foreign direct investment.
From its point of view, DFID as donor wants to move in to help
the poorest of the poor. At the same time, if security is not
at the level where the government has control of what is derived
from the extraction of minerals, or whatever, on the one hand
there is an argument for delaying the investment by donors or
the private sector. On the other hand, there is the argument that
if there is delay the poorest of the poor will suffer for longer
than they need to. How do you get that balance right?
Mr Yearsley: It is not the case
that mineral resource companies going into a post-conflict environment
will bring about immediate benefits in terms of taxation and royalties,
if they are ever paid in the host country, which is a rare event,
and their redistribution back by the so-called government to those
provinces, which again is a very rare thing. In the Congo there
are approximately three million people involved in the artismal
mining sector which is key to their survival. If each of those
has 10 dependants when one starts to look at the figures the artismal
side of it is very important. However, sequencing is vital if
one has a large-scale industrial resource extraction in a post-conflict
situation. If the government structures are not in place there
is no transparency and there is still fighting in the ministries
as to who controls what and who gets what in the post-conflict
"divi-up". One must have a degree of accountability
and transparency within the government structures. One needs a
decent civil service that is paid and one needs government inspectors
who have the ability to go to the areas to do the inspections.
In Sierra Leone the mines monitoring officers are equipped only
with bicycles and the diamond dealers are in Suzuki jeeps. If
the mines inspectors are paid only $5 a month, if that, and they
are given $100 bribes to ensure that the diamonds go the other
way, of course they will take it. That is where the support needs
to be given. Once those structures are in place one can bring
in some large-scale extraction that will benefit the economy where
the money goes into the budge transparently and to the appropriate
places.
Q139 John Barrett:
Are you saying that one should wait until everything is in place
and somebody agrees that now is the time to move, or do you believe
there is an overlap and we must go in there to facilitate those
particular circumstances being in place?
Mr Yearsley: I would say we should
wait. They will not be facilitated by rushing in or even going
in cautiously. In the Congo the extent of organised crime masquerading
as so-called legitimate mining companies—we can look at
some very interesting Russian/Israeli companies operating there—has
dramatically undermined any semblance of an attempt to bring in
transparency and good corporate governance. One can even dress
it up as elegant organised crime. There are people who have access
to the AIM market here in London to raise finance. The World Bank
rushed in very quickly in the Congo to redraft the mining law
without much consideration or thought. It is doing it at the moment
in order to try to re-introduce industrial logging in the Congo
without realising that nearly one million people are dependent
on the forest for their livelihoods. Sequencing is key.
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