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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 923-vii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE International development committee
conflict and development: peacebuilding and post-conflict reconstruction
Tuesday 4 July 2006 MR PATRICK ALLEY and MS PATRICIA FEENEY Evidence heard in Public Questions 345 - 445
USE OF THE TRANSCRIPT
Oral Evidence Taken before the International Development Committee on Tuesday 4 July 2006 Members present Malcolm Bruce, in the Chair John Barrett John Battle Richard Burden Ann McKechin Joan Ruddock Mr Marsha Singh ________________ Witnesses: Mr Patrick Alley, Director, Global Witness; and Ms Patricia Feeney, Executive Director, Rights and Accountability in Development (RAID); gave evidence. Q345 Chairman: Good afternoon, ladies and gentlemen. Thank you to our two witnesses for coming in to assist us with our inquiry. Firstly, by way of introduction, when members of the Committee visited the DRC a few weeks ago, and indeed prior to that, it was made clear to us that the mining of minerals in the DRC was a major source of revenue to fuel the conflict, that very often those minerals were mined illegally, with abuses of human rights, effective slave labour, theft, whatever it may be, but ultimately found themselves on the international markets, and presumably into "respectable hands" and the money came back in ways which helped to continue to fuel the conflict. It is worth reminding people that it is the worst single conflict since the Second World War, with between three and four million people killed. What this evidence session really wanted to do was look at how this process happened, what are the implications and what can be done about it. Perhaps I can start by asking you just that question: how important a role, from your point of view, did natural resources play in the conflict in the eastern Congo? Ms Feeney: Thank you very much. It is a great privilege to come before the Committee and we applaud very much the work that you are doing. I am the Executive Director of the NGO Rights and Accountability in Development and we have been trying to follow up on the allegations that were made in the UN Panel Reports from 2001 through to 2003 and the allegations made against all companies but particularly UK-related companies. We would say just that the exploitation of natural resources in the Congo provided the revenue for a bloody civil war which then has been perpetuated largely in order to control the trade in lucrative natural resources. As you are aware, no doubt, from your visit, the conflict has been characterised by widespread human rights violations and what is particularly of concern is that multinational companies, not all of them household names but based in OECD countries and in the UK as well, have continued to obtain trade or purchase these resources, even after and in the full knowledge of what the UN Panel had to say over a number of years. We welcome the fact that the Committee has taken the initiative to look at the continuing problems, it was not resolved when the UN Panel Reports finished, and we would echo very much the view of the Panel in its first Report, of April 2001, that companies trading minerals were the engine of the conflict in the Democratic Republic of the Congo and that they prepared the field for illegal mining activities. I would also just want to add that, as regards the eastern DRC, which continues to be perhaps the powder-keg of the Congo, minerals like coltan, in the view of the UN Panel, no coltan left the eastern Democratic Republic of the Congo without benefiting either rebel groups or foreign armies. In their opinion, by contributing to the revenue of élite networks, either directly or indirectly, companies have contributed to the ongoing conflict.
Chairman: Thank you for that. Mr Alley: I do not have a whole load to add to that but I would say that natural resources were central to the conflict in DRC; that is not news to anyone really. Many countries entered the conflict for various reasons. Rwanda, for example, cited reasons of its own internal security, because of Interharamwe rebels who were in DRC, but a lot of those concerns about security, in fact, are camouflaged commercial interests, if we are looking at eastern DRC in particular, both Uganda and Rwanda had very extensive economic networks in those countries, which were maintained for and by their armies. All the armed factions in the conflict in DRC sought to control resource-rich territory, and the reason that you have the players you have currently in the forthcoming elections in the DRC is those are the guys who were successful in gaining their resource-rich territory and maintaining their militias through the control of resources. I think we should welcome the democratic process in DRC but we did not get to this point in a very ideal way. Adding to that, fighting often targeted mining areas, areas rich in resources, so it was not just resources used to pay for conflict, they were the target, they were the motivation and, of course, some of the worst human rights abuses ever seen in the last few years happened in DRC, especially in the east, around the issue of natural resources. As Patricia said, militias and armed factions taxed the trade in resources from the mine, through the whole transport network, through points of export, and the neighbouring countries also made money in a similar way. Chairman: Thank you for that. Q346 John Barrett: The actions of foreign and UK companies clearly played a key role in continuing this brutal conflict. Can you name names of either British or foreign companies which, directly or indirectly, were funding the conflict? Ms Feeney: I would say that, as regards the eastern DRC, we have been investigating for some time the activities of two UK companies, one of which is an assaying company, Alfred Knight, which is based in Merseyside and which was named in the original 2002 Annex 3, the notorious Annex 3, which listed over 85 companies which were said to be in violation of the OECD Guidelines for multinational enterprises, and a mineral trading company, based in London, called A&M Minerals and Metals. Those two companies are interesting because after having been exonerated, or placed in the 'resolved' category by the UN in its final Report of October 2003, from evidence that we have, they continued through 2003/2004 in exactly the same way, maybe with a slight shift in commodities, and they were in close commercial relationships with people who were helping to fund the rebel groups, renegade dissident groups, after the transition process and very closely associated with the Rwandan political élite. Mr Alley: I would add to that Afrimex, a company based in Wembley; they have been trading in DRC since the 1960s, I believe, and have traded in both coltan and cassiterite, which is the ore of tin. For example, in 2004, they were buying from both North and South Kivu, which were controlled by various different factions, mines, such as Walikale, the Bisie mine, which was controlled by different armed factions and changed hands several times, and also from a Rwandan monopoly company, it had a monopoly on coltan in the early 2000s, called SOMIGL, and Afrimex traded with those companies. Q347 Joan Ruddock: I am interested in what has happened. I think Global Witness has actually praised the Dutch Government for taking a prosecution against a timber baron in Charles Taylor's Liberia, and that is in contrast to what has happened in the DRC, where, despite lots of evidence, it appears that there is impunity for all the companies involved. Can you tell us actually what happened? You said, I think, Patricia, that there were 85 companies on the list; what follow‑up was there to that list, what follow‑up has there been? Ms Feeney: Because I am one of the co‑ordinators of this group OECD Watch, we have been filing complaints against some of the companies which were named in the UN Panel Reports and also monitoring what action was taken under this voluntary instrument. We have also been trying to keep track of any prosecutions or investigations which were going on. The list of 85 companies from the 2002 Report shrank, after the Panel's mandate was extended for another six months, to about 15 companies, 12 of those were placed for further investigation and sent to the British Government, the German Government and the Belgian Government; in none of those cases was there adequate investigation. Two companies were placed under a category for monitoring. Q348 Chairman: Can I press you on "adequate investigation;" what you think should have happened and did not happen? Ms Feeney: If, as was said subsequently by the British Government and other OECD governments, the OECD Guidelines and its procedures, as a voluntary instrument, did not give powers of investigation nor to make findings of fact, nor actually to decide whether indeed there had been a breach of the OECD Guidelines, one has to ask the question was this the appropriate instrument for those governments to use when being asked by the Security Council to investigate with all appropriate means. We know that there were some tentative approaches, we would say, rather half-hearted but we did not engage, to look into some; four UK companies were sent for further investigation to the British authorities. We know that, in a couple, maybe three, of those four cases, there was an investigation into whether UN sanctions had been broken and there was a rather perfunctory investigation by the Serious Fraud Office, and actually they went to New York to look at the UN Panel archive for the confidential material. We engaged in a lot of discussions with ministers, Global Witness, Human Rights Watch and ourselves, at the time, before and after the final Panel Report came out, but we never felt there was the determination and the political will really to send a clear signal to the companies of what was acceptable and what was not acceptable, and the failure to do that, I think, has led to the continuation of the same problem and the same lack of clarity. We have had no serious investigation. We know that, in the case of Alfred Knight, very full documentation was presented to the Crown Prosecution Service in 2004, to New Scotland Yard, to DTI's Companies Investigative Branch, which, compared with the National Contact Point for the OECD Guidelines, has a range of important powers, which fall short of criminal powers but actually could lead to a company being forced to go into liquidation. If we are serious about wanting to promote peace, to have natural resources used for the benefit of the people of the Democratic Republic of the Congo, when we have a company which has been warned by the UN Panel, which has had all the information about the dire effects of its activities presented to it, publicly and in private, by the Panel, then it continues, it strikes me that the UK Government has failed, and it is not alone, in giving a strong message to our companies that we are serious about codes of conduct, like the OECD Guidelines: "If we can prosecute you for fraud, conspiracy to deceive or for bribery then we will, and if we can't we'll use all the administrative tools at our disposal to make that message very clear." We have failed. Q349 Joan Ruddock: Before Patrick answers, could I ask him just to say is there something obviously very different in the Dutch case from the cases which have just been described as failures by Patricia? Mr Alley: Looking at the Dutch case and to enlighten people on that, there was a Dutch businessman, Gus Kouwenhoven, who ran a logging company in Liberia; diamonds from Liberia were sanctioned by the United Nations in 2001 and Charles Taylor thereafter relied very much on timber revenue to fund his regime and to fund his regional ambitions, the RUF rebels in Sierra Leone, infamous for amputating the limbs of their victims, a lot of that was done with timber money. Gus Kouwenhoven ran the biggest company, the Oriental Timber Company, and was very close to Taylor, both when Taylor was a rebel leader and when he came to power. Kouwenhoven also shipped guns, which is a stage above. Funding conflict is one thing, which he did through the timber trade. The ships which brought out the timber brought in the guns; that was a more serious issue. The charge that he faced was one of war crimes, because militias hired by the timber companies were alleged to have committed human rights abuses and murders against the local population. He was not convicted of that charge; he was convicted, in the end, of breaking the UN arms embargo. Q350 Joan Ruddock: It was slightly different? Mr Alley: It was slightly different, but I think, just adding to what Tricia said, one of the real problems here, both for companies and for governments, is that the trade in what we would call conflict resources is not illegal, in itself. There is no international law which makes it illegal, despite the fact that so many wars, particularly in Africa, are funded by the trade in natural resources. The phrase is becoming popular now, the 'resource curse'; the countries which in fact are most wealthy in natural resources, like Angola, like Sierra Leone, like Liberia, like DRC, like Congo-Brazzaville, are the countries most likely to suffer war. There are some pretty well accepted statistics now that once a country has come out of such a war there is a 50 % chance that it will be back in it again within five years; the odds are not great. There needs to be some kind of change to the international architecture to prevent companies from trading in conflict resources, and we would say a definition of 'conflict resources' at UN Security Council level would be the way to go. That would have a couple of effects, one of which would be to act as a deterrent to companies, because one thing that many companies will say, and they said it in DRC and they said it in Liberia, is, "Well, we're not doing anything really bad; there are no guidelines, what are we meant to do?" The fact they could take a moral or ethical judgment is neither here nor there; they should and they could, but very often they do not and will carry on trading. It means also that if you had such a definition it would act as a deterrent to those companies, because a legitimate company which had carried out its due diligence could not argue that it did not know what was going on, and I think it would give the international community more power to act more strongly and more rapidly. Very often, Liberia being another good example, it took two years from the identification of the problem to the imposition of UN sanctions on timber, which was two more years which Charles Taylor had to do what he did. In DRC, similarly, if you had such a definition, the international community could have come down hard on the company; there were hundreds of companies which dealt with natural resources in DRC though this, as you said, the worst conflict since World War Two. Where are the prosecutions, where is the accountability; there is complete impunity for these companies, and that is what needs to change. Q351 Ann McKechin: Patricia, your organisation has been critical about the lead role of the DTI in these investigations. I am wondering whether or not a change to some other department, perhaps law officers taking charge, you believe would increase the prospects of effective prosecution, or if you believe that there needs to be a change in primary legislation to ensure that effective prosecutions can take place? Ms Feeney: First, on the question of DTI, I think we noticed there was a very big difference in the receptiveness to the problems and our concerns when we were speaking to ministers and civil servants in the run‑up to the UN Panel's final Report, when we talked to Foreign Office, Chris Mullen, when we talked to DFID, Hilary Benn, then when we talked to officials and the ministers in DTI. It was as if the political, social, human context, as well as the international law context, was completely missing, and so you were talking to people whose role in DTI is to promote British interests. Really unlike Liberia, there were these strategic minerals, you have a real scramble for control of these resources through companies, but behind that you have the Chinese, behind that you have the Israelis, behind that you have the Belgians, who still cling to the view that they have some commercial interests, the US, Canada. That geopolitical jockeying meant that the British Government did not have the heart, and certainly DTI was not the knight in shining armour, to take on the challenge, which is a great pity, and a failure to get a clear endorsement at the level of the Security Council, they never fully endorsed the new list resolutions asking and demanding, requesting states to investigate fully, to prosecute these companies, and so allowed everybody to get off the hook. As Patrick said, no country has brought a single prosecution; there are a few criminal investigations but no prosecution. DTI, I think, was just congenitally incapable of tackling the gravity of the problems. I think what we should have had would have been a commission of inquiry, headed by a QC, or someone, or something like the Belgian Commission's Great Lakes Commission, even if at the end it got rather subverted politically. Given the number of British companies that were listed originally, given the seriousness of the human rights violations in the war, given the levels of profits that were being made, some of which clearly were going to armed forces, to rebel groups, as well as to the City of London and shareholders, I think a more serious response should have been anticipated, and it is a great disgrace, I think, that it failed to have been. On your final point, it strikes me that, even with the existing legislation, we could have attempted more seriously to bring a few salutary, exemplary prosecutions; there may not have been this bar, that we have to have 100 % certainty before we bring one of these extra-territorial bribery cases, but which official at SFO is even going to dare to attempt it, and if there are no extra funds. I think that we could have done more with existing legislation and more with the administrative procedures, like the Companies Investigative Branch, which I know terrifies companies, even with the pathetic OECD Guidelines, and they are weak, all they can do is mildly reprimand or question companies, we could see that companies take that process seriously enough to engage expensive corporate lawyers to defend it. Chairman: Perhaps you would want to name and shame? Q352 Ann McKechin: Saying just about the London Stock Exchange, do you think, in their own internal rules, they should be a bit more conscious of these dangers? Ms Feeney: I think there should be a much more rigorous due diligence done. I think there should be much greater scrutiny of the directors, where they come from. A number of companies now are wanting to list on the alternative investment market. We would hope, and certainly we would be pressing the regulatory authorities to start scrutinising some of these companies. Mr Alley: If I could add to that just a couple of things. I think that self-regulation by companies, and there are lots of examples that we have looked at, DRC being the prime one, just does not work. Companies should be leading the way, because if companies trade responsibly that is the way to sustainable investment, sustainable development, a stable environment which will suit long-term business; that is what we would all like, but there is example after example where they simply do not do that, they go for the short to medium term, and usually the short-term profit. I think more statutory regulation should come in. I will add, as well, in terms of existing legislation, that you could argue, in the case of eastern DRC, that the trade which went on, when there is a legitimate Government in place in Kinshasa, trade going on in eastern DRC in areas which are beyond Government control, without Government permission, against Government laws, where the revenues do not go to Government, is an illicit trade, and the profits of illicit trade, by definition, are money-laundering. There is legislation to deal with this. Q353 John Battle: This is on the general principle really, and I take your points about the inability seriously to check and examine what companies are doing. One of the areas where some progress has been made in the last 50 years has been with the setting up of the Health and Safety Executive. The purpose of that Executive, for all its failings, was to say if companies treated their employees badly by having such conditions that they were maimed or injured then those companies were prosecuted. It is a semi-autonomous body, aside from Government, with some powers and those powers have been increased on asbestos, for example; it is useful in a way. Has any thought been given to having a standing body, like the Health and Safety Executive, not just a one-off inquiry but a standing body, because, as we talk about corporate and social responsibility, I feel all the time we are in this kind of vague game. I used to get reports, as Members of Parliament we do often, annual reports of companies, with their human resource management strategy plan. I used to send them back and ask them had they actually implemented the Minimum Wage yet, and when they told me they had I would read it; so there is a lot of rhetoric around. Do we need a new statutory body to check the investment strategies of companies, and is it feasible, and have organisations, such as yours, or Global Witness, given any thought to that kind of built-in structure to the institutions? Ms Feeney: We realise that there is a big political battle to fight.
John Battle: I am all for that. Ms Feeney: Yes, as your name suggests, we have to roll up our sleeves and engage. We thought, by trying to use the OECD Guidelines mechanism, albeit weak, that might become some sort of blueprint, something which might be acceptable, and so we have tested the Guidelines. We have filed over 12 complaints since 2001 against various companies, more than half of them to do with the Congo, and in various jurisdictions, and we have made a number of recommendations. As you know, the DTI is engaged in this consultation about how to improve the procedures. First of all, they do not have any procedures, it is totally ad hoc; it has been a disgrace. To have a standing body, to have somebody with genuine authority, who is accountable to Parliament, to have procedures which are fair to all parties, so that companies cannot complain that they have not had a fair hearing, if they do not give the same to the other side, so there should be a balance, which has not been struck. We would recommend very much to this Committee the recommendations which came out of this joint working group, which the All-Party Parliamentary Group on the Great Lakes established and to which we contributed, which has put forward a number of recommendations about the need for greater independence. We think that would be a kind of halfway house. Mr Alley: Just to add to that again, if I may, there is a problem between the national and the international; there is not an international acceptance of what a conflict resource is. The nearest we have got to it is with the Kimberley Process on conflict diamonds, where there is a definition of 'conflict diamonds', so until there is an international definition, given we are talking about an international trade, it is very hard for there to be national, international legislation. I think national would be great but it needs to be international as well. Right now, the last I heard, the draft White Paper, which currently is in production, does contain reference to the need for a definition of 'conflict resources'; I hope it stays there. Q354 Chairman: Perhaps we can turn to specifics; both of you have named two companies and, Patrick, you mentioned Afrimex, who are giving us evidence after this session. Afrimex UK was deemed resolved in the Third UN Panel Report, but we have already had an indication that we are not quite sure what 'resolved' means, but can you say why you are still concerned, or, if you are still concerned at Afrimex's operations, why, what it is that is continuing to concern you? Mr Alley: I think Afrimex is just one example, it happens to be a British example, so in many ways it does not stand out, any more than the other companies. It is hard to believe that they did not know what was going on in eastern DRC. They have been there since the early 1960s, they must have been dealing with all of the main players there throughout that period and, obviously, as we all know, eastern DRC has seen some of the bloodiest fighting and human rights abuses. Our worry, I think, would be that, as you have said and as other people have said, they traded with people, armed factions, for example, or political groupings obtained money from that trade, which, if I were doing it, I would think quite likely it would be used for improper purposes, then obviously you had to take a decision about whether you traded or you did not. Afrimex I believe serve an important function in eastern DRC, I think they bring in a lot of consumer goods, etc., and have done for years, so I do not think they are all bad, in that way, but they were engaged in a trade at a time when that trade was directly funding a conflict. Our worry would be, on past record, there is nothing to say they are not doing it now and there is nothing to say they will not do it again, from everything that we have in front of us. I go back to this issue, there are no international guidelines. Afrimex may argue that case, really I do not know. I think Afrimex is important because it shows that, without the international structure to govern these issues, companies can and will carry on trade which is detrimental to the people in the areas they are working in, which contributes to conflict and contributes to human rights abuses. Q355 Mr Singh: What I seem to be gathering from the previous discussion and just now is that there are no laws governing how, when and in what way these companies should operate, or are allowed to operate, in these countries. Given that context, though what they do might stink to high heaven, morally and ethically, I want to get this point clear, that in fact they are not acting illegally? Ms Feeney: I think it would be incorrect to say that there are no laws. Obviously, even in the DRC, there is the domestic legislation, however imperfect, which if applied would improve the situation. Q356 Chairman: If they were buying mined products from the DRC, for example, presumably, you made the point, tax or revenue should have been paid to the Government of the DRC, so that one reasonable thing to ask them to do was check whether or not any such tax had been paid? Ms Feeney: Exactly, and the special Parliamentary Commission, the Congolese Parliamentary Commission of Inquiry into the war contracts, the Lutundula Commission, went into a great deal of detail, not unfortunately about the east so much but certainly about Katanga, the southern part of the country, and showing the failure, from its researches, of mining companies to pay due taxes to the Kinshasa Government. We know, in the east, that payments were made, they did pay, but it was special taxes, it went to the military. I have a copy of a letter here, a rather typical demand which the Chief of Staff of RCD-Goma would send to companies that were operating mines. Q357 Chairman: Can you let us have a copy of that? Ms Feeney: Yes. It makes quite clear that "You want to operate your mine, you want to be in eastern DRC; we'll give you protection but we need money for our forces and for our military operations." There is no doubt about how that money was being used, particularly at the height of the war. I do not accept that there are no laws, and there are some international laws, obviously there is the International Criminal Court. Even though companies cannot be held directly liable, because of their legal personality issue, individually directors or employees can be, if they have been seen to be aiding and abetting war crimes or crimes against humanity. I think it is a slight misnomer. I think, what Patrick is saying, that to prompt and trigger adequate international responses to a situation where a lucrative resource is just going to disappear and a dangerous situation is going to develop, the Security Council could operate faster if it had some sort of clear statement, but I think it would be false and I think companies are misled, and gravely misled, to think that they are operating in a law-free zone. Q358 Mr Singh: Is it your view then that some, if not all, of these companies listed by the UN have been acting illegally in the Congo? Ms Feeney: I think the problem is that you have to specify, and I think that was the problem with the UN Panel, that it was a broad thing, because, as we know, when you are talking about law you have to say which law and precisely how, and so because that term was rather fuzzy and poorly defined by the UN Panel it became a kind of escape clause. I think we can show that in many instances a lot of the companies were acting in violation of the OECD Anti-Bribery Convention. We are not the experts but I think the Serious Fraud Office could say whether they were in breach of the fraud legislation which exists, the anti-money-laundering legislation. I think there are a number of instruments out there where, had there been the intent and the prosecutorial interest and capacity, we would have seen a few and important prosecutions. Q359 Mr Singh: Do we have in the UK any guidelines which these companies could follow? Ms Feeney: We have the OECD Guidelines. Q360 Mr Singh: Apart from that, do we have any national guidelines? Ms Feeney: No. We have been pressing the Government, for what the OECD has termed 'weak government' zones or conflict zones, like the Democratic Republic of the Congo and like most of the countries that you are examining in your studies, to draw up very specific guidance to companies, to make it clear, even if there was not any legislation, "This is what we expect. This is what you do if you receive an extortion demand from a rebel group which you know are going around slitting people's throats or raping women and young girls; it's not alright just to pay the money and close your eyes, or to bury bodies and say nothing," which, unfortunately, is what many companies in the DRC have been doing. We would like to see some very hard-nosed, practical guidance going out through the commercial attachés. It would be very interesting to know, in the light of the UN Panel's Reports post-2003, what, if any, special advice was given by our Foreign Office, by commercial attachés, by British High Commissioners and Embassies and DTI to companies like Afrimex, like Alfred Knight, like A&M Minerals and Metals, which were named, which were 'resolved', but were continuing to operate in that climate, and if they were told, "From now on, boys, no payments under the table to RPA or to RCD-Goma." Q361 Mr Singh: In the view of your two organisations, is there actually any way at all in which these companies can trade ethically in these conflict zones, or is it impossible? Mr Alley: It is a big question. I think, if you trade in a resource and that trade benefits any organisation in the commission of serious human rights violations, violations of international humanitarian law, then that trade should not happen. Going back to your earlier question on it being not illegal, I think that is the one law which is missing. There is not anything against that specifically. There are various war crimes statutes which could apply in various cases, but just trading with a militia group which uses that money and carries out human rights abuses is not a war crime in itself. Only if the company knows that there will be a specific crime resulting will it become a war crime, I am paraphrasing but that is roughly what you are looking at. I think the short answer is, no, ethically that cannot happen, but I do appreciate that there are situations which are very difficult. I was in eastern DRC two or three years ago and there was a company which had been there for a very long time, it employed 5,000 people and it carried on trading, it was innocent trade, agricultural trade, and I said to the guy who ran it, "Who do you pay your taxes to?" and he said "I pay my taxes to the same people I've always paid my taxes to, in the office in the middle of town, but the management changes occasionally." So nothing changed for him. That is a difficult issue, but in the areas we are looking at in eastern DRC right now, with the companies we are talking about right now, I do not think that applies necessarily. It is not like these companies, the ones I am talking about, have large factories or industrial mines where they are responsible for employees; they are buying off artisanal miners who themselves sometimes are virtually forced labour. Channel 4 did a news piece on that which showed it very clearly, working in terrible conditions, abused by the military, sometimes not paid, dying, in terrible working conditions in bad mines. I do not think that is acceptable. Q362 Richard Burden: The letter that you were referring to, that you are going to supply to us, is that available today? Ms Feeney: Yes. Q363 Richard Burden: Just for the record, could you let us know what the date was, of that letter? Ms Feeney: The date of that letter was June 2000. I believe, but I would have to confirm it, that it was sent to the person who controlled the Lueshe Mine, which was the mine by which Alfred Knight was engaged to provide assaying services. Q364 Chairman: Perhaps we could turn to Alfred Knight, which company declined to give evidence, which is of some interest in itself. I think you have seen the letter they sent to our Special Adviser, Dr Dickson, in reply to a letter from me. Within that, they make one comment: "we necessarily often work at arm's length with no real knowledge of the origin of any particular sample that is being analysed." Then they go on to say that "the name of AHK had been included incorrectly in the UN Report and it was subsequently removed." Those are their responses. I wonder how you react to those and what evidence you think there is that Alfred Knight was involved directly or indirectly in the exploitation of trading in minerals from the eastern DRC, and I think the minerals concerned were coltan, niobium and the usual other metals and minerals that are mentioned? They actually make no mention in the letter of their engagement in Rwanda, which, given that people know that Rwanda was in this, is a little surprising. I wonder if you could comment on that? Ms Feeney: I think we take it with a very big pinch of salt, the claim that they had no real knowledge of the origin of the samples that they were analysing from their laboratory based in Kigali, in Rwanda. We have a copy, which we can provide the Committee with, of what is a draft although it is signed by the people who controlled the Leushe Mine in North Kivu, a company called KHA, which was run by a German national called Albers but which we have found out subsequently actually was owned by the German Ministry of Trade, because they paid political risk insurance for it, and obviously they gave some political coverage to this mine continuing to operate, even though Albers, as they have now subsequently told the UN, had no authority to operate or run the mine. In this contract, it is quite clear that Alfred Knight set up a laboratory in the Kigali office that KHA ran, it dealt with minerals coming from the Lueshe Mine, which is also known as SOMIKIVU, in North Kivu, so it was quite clear, there was no mystery about the origin; it was run as a commercial enterprise, so it was not just odd bags turning up out of the blue. We have photographs of the types of bags and drums that were sent, shipped from the Lueshe Mine, and it was sent through the trading arm, Masingiro, which was also one of Albers' companies, and there you will see, and I can give you the photographs, that it is clearly stamped 'Lueshe Mine', it says 'Masingiro', it says 'Republic of the Congo', so it would be these drums for pyrochlore, which is a finer powder. Q365 Chairman: They are suggesting that they had no real knowledge of the origin of any particular sample? Ms Feeney: I think you would have grounds for challenging that statement, as regards their arrangements. Q366 Chairman: They say also that the majority of the assaying services are performed at St Helens? Ms Feeney: In fact, we have a list of invoices, a statement from Alfred Knight to Masingiro, which list lots of samples that were taken, on behalf of Masingiro, which we must assume the bulk came from the Lueshe Mine, which run from August 2003 right through to 2004; we have a number of different ones. Some of the instructions that we have copies of, that were sent from other companies to Alfred Knight, they were not done only in Kigali, they say: "Please send the samples through to Merseyside," to the headquarters. It seems to us, on the basis of the contract that they appear to have had with KHA, which started in 2002, so just as the UN Panel is listing them as being in violation of the OECD Guidelines they sign a contract or seem to enter into a contract with Albers, who is listed and there is a lot of detail about his role in supporting the war in the eastern DRC. There is then another document which we have for you, which seems to be a prospectus which KHA prepared in February 2003, and they say there, quite clearly, that it is thanks to their arrangements with Alfred Knight that they are able to: "We have secured a unique co‑operation agreement with Alfred Knight, one of the best independent sampling companies, to operate our lab facilities in Rwanda and Mozambique. This agreement is proof of our technical credibility and will allow us to obtain independent export certificates on the ground, thus improving payment terms." This is a document which they prepared when Albers was hoping to list on the 'AIM' market in the UK. I think there are very many reasons for doubting and questioning the statement which was provided by Alfred Knight in that letter. Q367 John Battle: In the light of, as you said, the allegations against Alfred Knight, what measures do you think the British Government could take? Ms Feeney: We have not attempted to file a complaint under the OECD Guidelines because when we started hearing about their continuing activities, of Alfred Knight and A&M Minerals, which is a trading company, we thought "This is going on now, it is not in the past; this is something that could be stopped and dealt with and we can move it up a level." We contacted the Companies Investigative Branch at DTI and we got just a run-around really. Obviously it is at their discretion. I think there was a clear political message, I assume, not to tackle this case, and we felt that there was a lot of obstruction going on. We know that a rival Austrian company, called Krall, which has a somewhat dubious reputation as well, had claims to the Lueshe Mine; they provided a lot of information to Scotland Yard, to the Crown Prosecution Service and also to the Companies Investigative Branch. There was also a Kinshasa Interpol request, asking authorities in all countries to seize and stop the sale of consignments of ore from the Lueshe Mine; that was issued in March 2004. We know that the South African authorities did act to halt some of the consignments. There was action also in Kenya. There was just the brush‑off in the UK; so, what could be done now. Q368 John Battle: Just to push on the brush-off, in some ways, and you dropped it in as an aside and I am not assuming to take it for granted that you said there was a political message in there; was the issue also raised with ministers as well as with officials, because it may be sometimes that things are dealt with by officials which are not put to ministers, or of which they are not aware, and the DTI assumes a background role, of taking the side of the company, and it is now the foreground to show the problems to ministers? Did you raise it with ministers as well as with officials? Ms Feeney: At the time that we were getting this information we were locked in a struggle with DTI to be accepted as complainants against the three companies, the remaining companies, under investigation, and we were not being allowed to act. They said that they wanted to deal with the cases without a complainant. That was taking up a lot of time, so we had to get the support of people like Hilary Benn actually to be allowed to act as complainants. In this case though, DTI officials sided with the Austrian and German National Contact Points in claiming that there was not a case against Alfred Knight because, under the OECD Guidelines, they claim it is an investment instrument and they said there was no investment nexus. They said that in the full knowledge that under GATS Mode 3 and most bilateral investment treaties mining-related services are defined as investment. That is why we think there is something political, or certainly an interpretation, we are not saying at a ministerial level. Q369 Ann McKechin: Obviously, AHK alleged that their original naming on the UN Panel Report was erroneous. I just wonder if you could advise us why the UN Panel put them on the October 2002 Report and then, subsequently, why did the UN Panel consider the case against Alfred Knight to be resolved, given the allegations made about their subsequent behaviour? Ms Feeney: It is not clear from the UN Panel Reports up to 2002 why AHK, not explicit, but we can say that it was clear the UN Panel was concerned about those engaged in helping the supply chain of raw materials and in particular they were concerned about and drew attention to the role of companies which provided analytical services. There are only two companies which provide analytical services which are in the list of 85 companies in that 2002 Report, so we can assume that it was assaying services which Alfred Knight were providing, particularly in the eastern DRC, albeit not based in the DRC but with a concern. In their October 2003 Report they say clearly that companies with tangential or indirect links to the DRC but do not trade directly with the DRC but are at least one step removed, for example, companies providing analytical services, buying finished tantalum powder produced from raw materials, they wanted to raise the issue of what they were doing and enforce on them the fact that they can be a force for fair and transparent exploitation of natural resources by dealing only with reputable companies, so they were removed. That was the concern. We have evidence from a law suit that was filed by the German trading company Masingiro against a Congolese, a former chief of security for RCD-Goma, this case was filed in the Berlin Court, I have the dates, about 2000, where they accuse this man, who ran a comptoir, of running off with some of their money. They put money up front and he bought the coltan from the artisanal miners, which we know was in appalling conditions. In that claim, which they presented to the Berlin Court, Masingiro says, in 1999 and early 2000, Alfred Knight were providing the assaying services. The UN Panel gives us a clue, the evidence is from the Berlin Court and Masingiro says so itself. Why they were exonerated; the UN Panel's use of the word 'resolve' is very confusing, as we pointed out at the time, but they said 'resolved' should not be interpreted as meaning that it invalidated their findings. They said that after a dialogue with the companies they had got some time-bound agreement, either that they would cease operating in the way that they had been or that they were going to stop, and we do not know if we got such an agreement, because Alfred Knight did not go on the public record, unlike 41 other companies which did publish their response to the Panel allegations. Alfred Knight is free to present us with the documents from the Panel saying that it was a case of mistaken identity. Q370 Ann McKechin: AHK are saying, just for the record, that they were not the company that the UN Panel thought; on the other hand, your belief is that in terms of 'resolved' it was probably likely they may have given some reassurance to the UN that they would cease this type of work on a certain date, but really we just do not have any knowledge of whether that has actually occurred? Ms Feeney: Yes; so if there was a mistaken identity by the UN Panel we have evidence that, in fact, they were engaged in the sorts of activities, before and after the Panel, so even if there was a mistake in their documentation, we know there is evidence to show that they were. Q371 Ann McKechin: You do not know whether they have actually now stopped? Ms Feeney: From what we gather, probably they have stopped dealing with the Lueshe Mine, because Albers went into bankruptcy and the mine has been taken over by Rwandan-backed businessmen; but, as with Afrimex, what lessons are they learning, where is the next place they are going to go to? Q372 Joan Ruddock: I think that is the point on which perhaps we want to end, what lessons should be drawn from what has happened, because here we have got a company which say they were in an arm's-length relationship but your evidence is very clear that they were not. It appears then they had discussions themselves directly with the UN Panel but continued in the relationship; so what are we learning from this? Ms Feeney: I think the first lesson is that in the voluntary measures, self-regulation, vague promises are not enough, particularly in conflict-prone situations. We think also the lesson is that the Government has got to give a much clearer signal, and it spent much more time challenging and questioning the procedures and findings of the Panel than saying, "Well, let's take a look at it, let's set up a committee; let's appoint a barrister, or whoever, really to look into it independently and come to some sort of finding." We know, from the work with the joint working group of the APPG, that many companies have said to us, and said on the record, in the APPG Report on the DRC and the Guidelines, that they felt some of the worst offenders were placed in the 'resolved' category, and some of the people, who should not have been, got sent for further investigation. You felt, from the beginning, there was a reluctance to investigate and I think that is because of the failure to get agreement at the Security Council level. Q373 Joan Ruddock: May I interrupt just to say that really we are saying this is a lack of political will rather than the difficulties, which must be real, in getting these facts on the ground and proving the case? Ms Feeney: Exactly, and I think that the difficulties of getting the evidence were exaggerated. If very small NGOs, like my own, can gather the information, because we are interested, I do not think it is beyond the wit of Government to do it. Q374 Chairman: On the record, it is important to acknowledge that assay analytical services have a very important role in mining, and actually in any interface between the mined product and the international market the assay has a very important intermediary role, it is not some subsidiary element, they are not dealing in minerals but they are essential to the process of allowing it to happen. Ms Feeney: They set the price, so it is essential. Mr Alley: Again, to add to what Tricia said, I think another thing we have learned is that there is a need for regulation, companies will not regulate themselves in these situations, or a lot of companies will not. There is a need for an end to impunity for the companies which do get engaged in this trade. What you see is, again and again in situations in vulnerable countries and countries with poor enforcement capability for governance, companies leap in to take advantage, in DRC's case, of escalating commodity values for metals, which are going up and up and up, they are getting it very cheap, because they are buying it from artisanal miners who are earning a pittance, so the companies can make a big profit. Referring back to the Channel 4 news piece, they quoted in that piece what Afrimex told them, which was, "Well, if we don't do it, someone else will," and frankly that is not good enough. Chairman: That is the usual plea, and it is one unfortunately which DTI sometimes seems to back up. Can I thank you both very much indeed. Witness: Mr Ketan Kotecha, Executive Director, Afrimex (UK) Limited, gave evidence[1]. Q375 Chairman: Mr Kotecha, thank you for appearing before the Committee. We do appreciate you have listened to the evidence and that you are here to answer our questions. Perhaps I could start by saying that during this particular period, 1998 to 2003, you were operating in the DRC, as you had been before; were you aware of the conflicts and were you aware of the human rights abuses associated with that conflict, which all parties were committing? Were you really aware of what was going on around you, as an individual and as a company? Mr Kotecha: Thank you. Yes, as you are aware, our family has been involved in the DRC since 1962. When the conflict happened, naturally everybody was aware of it and what was going on. As I said, we have been there for all those years, over 40 years, especially in the eastern Congo, namely in Bukavu. Q376 John Battle: In view of the fact that the conflict was going on, and you were aware of it, why did Afrimex choose to continue buying coltan and cassiterite from areas where militias were fighting for control over the mines and committing human rights abuses against civilians in that process? Mr Kotecha: Afrimex, in particular, has also been trading in Congo, or the ex-Zaire, since 1984, mainly supplying foodstuffs to the population, rice and flour and things like that, and also being involved in the export of certain minerals as well as certain medicinal plants, and things like that. Whatever are the sources of these, these are all genuine, legal, licensed sources; they were not just sources that cropped up during the conflict but they were there long before this problem happened. Q377 John Battle: Did you not think that dealing with resources in which the militia had a direct interest by now in the conflict would exacerbate the conflict? Mr Kotecha: To an extent, whatever goods that also went into the DRC and whatever the taxes, they were paid there; again, we were not sure and we can only assume that these were going into the same pot as the export taxes were going. To differentiate, we will not export from the DRC but we will only import more; at that stage we did not think that it was necessary to stop. Q378 John Battle: With respect, it was not the usual import and export situation any more, law and order had broken down and I would be interested to know who could sign the licences for you to trade; was it the Government or the armed groups that gave you licences? Mr Kotecha: No, it was the regional government based in Goma who are the people who are signing all the documents. Again, as was mentioned previously, we were going into the same offices to get the documents signed, but possibly the people in there were not from the previous government; that is all. John Battle: Thank you. Q379 Richard Burden: Did Afrimex, at any time, make any payments to the RCD-Goma, as a political party or as a military organisation or anything in‑between? Mr Kotecha: No, not at all. Q380 Richard Burden: Did Afrimex, at any time, make any payments to any political party or military organisation in the DRC? Mr Kotecha: No. Q381 Richard Burden: Was Afrimex approached by RCD-Goma, or any other political party or military organisation, to make payments to it? Mr Kotecha: No. Q382 Richard Burden: Are you aware that the UN Panel reported that it was virtually impossible for companies to operate in the eastern DRC during the period you operated in the eastern DRC without dealing with one of the military groups, most probably the RCD-Goma? Mr Kotecha: The minerals that were coming out to us were all coming out on an FOB basis, so all the documentation, whatever had to be done, was done on an ex-border basis, so Afrimex was working more in going and getting the documents signed and getting the documents obtained. That was all done by the licence exporters in eastern DRC. Q383 Richard Burden: Do you know whether the licence exporters were ever approached by or made any payments to the RCD-Goma or any other political party or military organisation? Mr Kotecha: Not to my knowledge, no. Q384 Richard Burden: Did you ask? Mr Kotecha: Yes. We had a written statement from there to say that the minerals which were coming out were not coming out from any military sources or improper sources; they were buying it and they were getting it from the broker, proper mines. Q385 Richard Burden: That was not actually the question I asked. Did you ask if they made any payments? Mr Kotecha: No. Q386 Richard Burden: You never asked them? Mr Kotecha: No. Q387 Richard Burden: We have received evidence from two of the NGOs, which produced for us a letter from the period in which you operated in the eastern DRC, which is pretty clear, that it is from a major general and basically it is asking, in no uncertain terms, for money. You are not aware of any letter like that going to you or to any of your agents in DRC at the time you operated there? Mr Kotecha: No. Q388 Richard Burden: Have you ever volunteered to the UN Panel, given the fact that they said it is virtually impossible to operate in there without having approaches or having some dealings with military or paramilitary groups, information about how you managed to have no contact when virtually everybody else did? Mr Kotecha: It is not a question of not having any contact. If you are in the land and you have been there in the land for so many years, whatever is the law of the land you have to abide by it, so all the taxes were being paid, all the documentation was being forwarded, whatever was the necessary paperwork, that was all being done. Q389 Richard Burden: In the period in question, there was not much law of the land going on there? Mr Kotecha: Yes, there was; yes, there was. Q390 Chairman: Who were these taxes being paid to? The reports are, basically the Government in Kinshasa was not getting any money out of this area, so who were these taxes going to? Mr Kotecha: To the local government, which was based in Goma; there was a government which was based in Goma, including a president and right from there, so that all the departments were actually existing within Goma, which was controlling all of that area. Q391 Richard Burden: Do you know who they were? Mr Kotecha: The RCD Government. Q392 Richard Burden: The RCD Government? Mr Kotecha: Yes, the RCD Government. Q393 Richard Burden: So payments were made to RCD-Goma? Mr Kotecha: They were, in some of the taxes, yes. Q394 Chairman: This was a rebel organisation? Mr Kotecha: If we had to live there and deal there we had to pay, including even if you arrive, you pay your car taxes, you pay your visas. Q395 Chairman: Actually, are you not paying into a protection racket, in that situation? Mr Kotecha: No, we were not paying, saying "This is for this," or "This is for that," we were only paying whatever official papers were presented, asking for taxes for this export, which was being done even before the conflict; so there was nothing that had changed in that sense, that during the conflict there were special payments, no. Q396 John Battle: Could I ask about the conditions in the mines really; why did Afrimex continue to buy cassiterite and coltan from mines which were reported at the time to operate using forced labour? Mr Kotecha: As I mentioned earlier, we asked the people from whom we are buying, the registered compliers or the licensed compliers, and they assured us that these are not materials coming from any such areas, these are coming from where they have control over the mines. Q397 John Battle: Mines were popularly reported at the time, there was feedback coming through to say that some of the mines you were dealing with had forced labour as part of their arrangements. Were you not aware of that? Mr Kotecha: No. Q398 John Battle: Did you just take up, surface value, the assurances you were given? Mr Kotecha: No. We did not deal directly with any mines; we dealt only with the registered and the licensed exporters. Q399 John Battle: Did you ever check out any of the mines then, to see if they were operating with forced labour? Mr Kotecha: No. Q400 John Battle: Is Afrimex still dealing with mines which operate with forced labour now? Mr Kotecha: If you say Afrimex still is, Afrimex never was, so if it never was it is not now. Q401 John Battle: If you have not checked them, you could have been and you could still be? Mr Kotecha: The assurances I have are confirming that these materials do not come from any such mines, and that is what I am basing the business on. Q402 Chairman: Have you seen the Channel 4 programme, which I think was made about a year ago? Mr Kotecha: Yes, I have; that is correct. Q403 Chairman: It was of a mine in northern Kivu, where all kinds of abuses were going on. How do you know you are not buying cassiterite or coltan from that mine now? Mr Kotecha: There is not a 100 % way of saying that I am not, but, from the assurances which I have from the licensed exporters, that material does not come from such areas. Q404 Ann McKechin: You said that you have been buying these minerals since 1984, as a company. I wonder if you could tell me whether, during the period between 1998 and 2003, the amount that you purchased either increased or decreased significantly? Mr Kotecha: In cassiterite, it was more or less the same. In coltan, there was an increase, yes. Q405 Ann McKechin: By how much; 50 %, 100 %? Mr Kotecha: It was 100 %. Q406 Ann McKechin: It was 100 % plus; right, okay. That was at a time when it would be fair to say that the world price in that mineral increased very substantially as well? Mr Kotecha: Correct. Q407 Ann McKechin: The turnover that your company benefited from since 1998 through 2003 would have been very much greater than the period beforehand? Mr Kotecha: Afrimex buys on a commission basis, not investing into DRC. Q408 Ann McKechin: It is based on the price of the mineral? Mr Kotecha: Correct; yes. Q409 Ann McKechin: Your commission would have been substantially greater over that period of time? Mr Kotecha: Yes. Q410 Chairman: Mr Kotecha, I accept that you trade in lots of important and reputable ways and have done for a long time, but if I put it to you this way, if your company had not traded in some of these commodities, did it not occur to you that you might have been inhibiting the flow of funds to the rebel armies that were causing such mayhem and destruction, especially in the eastern Congo? Did not that occur to you; was it not something you and your colleagues discussed? Mr Kotecha: Yes, it did, but we even went to the Embassy in Kinshasa to ask them, that "We are dealing with these minerals, are we doing anything wrong, are we doing anything illegal, or against the law?" and apparently we were not. Being businessmen, we were doing what we thought was right. Q411 Chairman: In Kinshasa, this was? Mr Kotecha: Yes. Q412 Chairman: Did the people in Kinshasa confirm that they were receiving revenue, or in any way ask how you were trading these minerals and who you were paying? Mr Kotecha: The inquiry which I had put after the war was at the British Embassy in Kinshasa, and even after the Channel 4 report, that, "This is what's happening; can you please guide us to say if we are doing anything which is against the law, or we are doing anything wrong, then please tell us and we can correct it." According to them, there was nothing that would guide us. Q413 Chairman: You got that assurance? Mr Kotecha: As far as all the documentation was in order and everything we were doing, it was properly documented. Q414 Joan Ruddock: When you actually got listed by the UN, what was your reaction to that? You say you had all these assurances, you thought you were operating perfectly well; were you aware of OECD Guidelines, do you know what they are? Mr Kotecha: No. Q415 Joan Ruddock: You did not know what they were? Mr Kotecha: No. Q416 Joan Ruddock: When you were told you were listed by the UN, what were your thoughts about that? Mr Kotecha: They listed us and then they asked us to, because what it was, I think it started with the main wording, "illegal", and we said "What we are doing is not illegal," and that was what they asked us to prove, in a sense, "Come and explain to us." This was not during the conflict period. We explained to them that our family has been involved there since 1962 and Afrimex has been involved there since 1984, not during the 1996 or 1998 conflict period. On that basis, they understood that, yes, this was not a company which was there just dealing in minerals but a company, and a family, which has invested in eastern DRC, long, long before what happened. Q417 Joan Ruddock: You might have had a long history of dealing with people, but you were aware that you had begun to deal with people who were involved, maybe not absolutely directly but were involved, in some situations which led to real human rights abuses, and that your company was very profitable and so money was flowing. Did you not think this was a problem in some way; did you not have some conscience or worries about this? Mr Kotecha: As I said, the people we were dealing with were not the people during the conflict period; these were the same people we were dealing with before also. If business is good, today business is good, tomorrow business is bad. When we got looted, for example, when there was the war, we lost a lot of stock, including our sugar and our rice, and whatever. Again, we went to Kinshasa, knocking at the door of the British Embassy asking for help; there was no help, "That's your problem, sort it out yourself." Q418 Joan Ruddock: At any time did you refer to the Department of Trade and Industry in this country? Mr Kotecha: No. Q419 Joan Ruddock: You never referred, you never took advice? Mr Kotecha: No. Q420 Joan Ruddock: And they never contacted you at any time? Mr Kotecha: No. Q421 Joan Ruddock: I think you will understand that it is our view that the practices you were engaged in were ones which were in breach of the OECD Guidelines, Guidelines of which you say you are unaware. Are you now aware of those Guidelines? Mr Kotecha: Frankly, no. Q422 Joan Ruddock: Even having been listed and having gone through that process of discussion, you have felt no sense that you ought to know what the OECD Guidelines are? Mr Kotecha: We asked this question of the UN Panel and they told us "You are in the resolved case, so what you are doing, or what we have seen that you are doing, it is okay," so we were not told "Don't do this; do this; don't do it like that;" there was no approach at all from the UN Panel. Q423 Joan Ruddock: There was no advice; the UN said "We listed you, but clearly we got it wrong;" is that what you are saying? Mr Kotecha: Correct. They had not got it wrong but "Your case has been resolved." Q424 Joan Ruddock: What does 'resolved' mean to you? Mr Kotecha: Resolved means, to me, that we were placed in there not correctly in the first place, so after further explanation we had to give they understood our explanation and they said it was fine. That is what I understand. Q425 Joan Ruddock: Have you changed any of your practices since this period? Mr Kotecha: No; we do business in the same way. Q426 Joan Ruddock: In the same way; everything is just the same? Mr Kotecha: Yes. Q427 John Barrett: Clearly, you say your own company is reputable; there are serious concerns that you have been dealing with some very disreputable people. Have you stopped trading with anybody over a long period of time because of any concerns that have been raised with those companies you have been dealing with? Mr Kotecha: No. Q428 John Barrett: Do you not find that it is hard to accept that you have been unaware of any malpractices by anybody in the DRC over this prolonged period of time, and it does look as if you have been prepared to turn the other way or close your eyes to behaviour that has gone on that certainly appears to be unacceptable? Mr Kotecha: I do not know whether that is a matter of opinion, because we have had no guidelines. As a matter of fact, even now, we are open to any guidelines which say that, "Fine, you are supposed to trade within these guidelines, this is what you're supposed to do, what you're not supposed to do." Q429 John Barrett: Have your own suspicions never been raised over a long period of time, when a lot of very questionable acts have been going on and lives have been lost, people have been killed, that you have never once thought are any of the people you are dealing with people you ought not to be dealing with? Has that never struck you at all? Mr Kotecha: No; because we ourselves have also been at the losing end of what has happened there during these wars that have gone on. Our family has also lost a lot of investments and a lot of money there, so we are also part of it, but we cannot just pick up our bag and, okay, off we go; our roots are there, we have been there for a very, very long time. But we are open to any guidelines, any suggestions, that "You're supposed to do this; not do this," that is fine. We are open to any guidance; please give us the guidance. Q430 Richard Burden: When you were informed by the Panel that your case was resolved, how did they pass that information to you; did they tell you verbally, did they send you a letter? Mr Kotecha: Yes, they sent us a letter. Q431 Richard Burden: Would you be prepared to share that letter with the Committee? Mr Kotecha: Yes. Q432 John Battle: I have to say, I really appreciate the frank way you have answered our questions but I am a little bit surprised that you do not know about the OECD Guidelines. I just wonder, have you compared notes with any other companies dealing in the same business, in the same area, any of the others that were called in by the UN, you have not asked yourself "Why were they caught and not us?"? When you were put on the list, my natural reaction, if I were put on a list, would be to check out why I was on it and somebody else was not. I would be looking at the others to say, "It's them; not me." Why did you not do that? Mr Kotecha: As I said, it started with the illegal exportation; we did not want to do anything illegal. My point was to prove that we did not do anything illegal and we are not here just during the conflict, we have been here 20 years before the conflict. Q433 John Battle: There is a lot of talk now about corporate social responsibility. I come to this angle because in my neighbourhood a company polluted not only the people who worked for them but the whole neighbourhood with asbestos. They closed the factory down because there were guidelines in Britain then, the 1936 Health and Safety Act. They shut in 1958 and reopened in Bombay, knowing there were no guidelines there, but they knew what they were doing and they knew about guidelines in Britain. I just wonder, under the new headings, of Corporate Social Responsibility, companies are aware of environmental concerns, does human rights feature in your company's analysis of where you invest, at all? Mr Kotecha: Yes, it does, and, for that matter, even the Kinshasa Government is now backing eastern DRC, which you all must be aware of. If we had been doing something that was totally wrong they would have approached us also. The eastern had been abandoned for a good ten years, whatever reasons there were, Kinshasa was not ready, to an extent, to know what was going on there, and we could not just pack our bags and say, "Fine, down goes 30 years of our parents' lives and we just pack up and go;" no. We do give back to society, we do have certain programmes there that are happening, there is the vaccination, there is education, these things are happening there, and I wish that whoever wants to study these things in depth possibly will look at it more in depth than just scratching the surface. John Battle: Very fair. Thank you. Q434 Chairman: Some members of the Committee have been to Bukavu, in the last few weeks, which I think is where your company operates. Just for the record, can you tell me, first of all, how many people the company employs directly, altogether, the whole company? Mr Kotecha: Maybe 160, 170. Q435 Chairman: How many of those are based in the DRC? Mr Kotecha: Most of them. Q436 Chairman: Most of your business really is in eastern Congo? Mr Kotecha: The selling, and all that, is done in DRC. Q437 Chairman: The turnover is derived mostly from the DRC? Mr Kotecha: Correct. Q438 Chairman: Are you still paying taxes to RCD-Goma? Mr Kotecha: No. The central government has now taken over Bukavu, but normally, after the elections, that is when things will get much more clear. Q439 Chairman: In the light of the questions that have been put to you, in the light of some of the things that have been said about you and about your company by NGOs and others, do you distinguish between legality and ethics and, as a company, do you feel you have ethical standards? On a number of occasions you have said "We haven't broken the law, everything we have done is legal," and, to be honest, Mr Kotecha, we are not trying to challenge you on the law, and indeed the discussion we have had is that the laws are somewhat inadequate, although not lacking actually, if there was a will to apply them. Do you not feel that there is an ethical dimension to this, that if you were not carrying out this trade, I know you are employing people, then other people may not have died? Mr Kotecha: As far as the dying issue is concerned, I do not know about that, or I do but I cannot comment on that. The issue I know is, at the moment what is happening, all the mining is artisanal and from every kilo that comes out the people are getting some food, they are getting something to eat. If this business does not go on, all these people, there is another hungry stomach on the street again. That is how I look at the ethics of it, but at least I am also doing my part and they are getting something to eat, they are feeding themselves. Q440 Chairman: The problem we have here is of a failed state, which is about to have elections, in which the UN has its biggest peace-keeping mission and is trying to re‑establish a functioning state where people pay taxes, where standards apply and people are not literally forced to go into mines at the point of a gun, killed while they are there, forced to work in inhumane conditions and, very often, then have the proceeds stolen from them. That apparently is still going on in eastern Congo. If the people who are extracting these minerals in that way were not able to trade with people like you, would that not help to bring it to a stop? Mr Kotecha: To my knowledge, it is not that kind of people that we are trading with, we are trading with people who have bought their own mines, who have won the concessions and who have got people who are working in the mines. I think what is being said here is just a general thing and possibly looking at just one mine; but, to my knowledge, no. Q441 Joan Ruddock: Just really on this point about your sense of certainty that you were not doing wrong, when you were listed by the UN you said then you went out to demonstrate to them that you were doing no wrong. I wonder if that evidence would be available to us. It would be interesting for us to see how you argued your case. Is that something which is now available which we could see? Mr Kotecha: It depends what you are asking me for; if you want to ask me clearly for illegal exportation, if that is your question, then, yes. If you are asking about people being killed, I do not have any evidence for that. Joan Ruddock: No, of course, and we would not expect you to have that. Q442 Richard Burden: Could we have all the correspondence? Mr Kotecha: Yes, so long as we are clear on the subject that the UN was accusing us of and what we demonstrated to them. Q443 Chairman: Is that all in the correspondence? Perhaps it would be possible for us to see that? Mr Kotecha: Yes. I will be very frank with you. We had a meeting with them and they asked us to write them a two-page letter, explaining what our background is and what we are doing, and whatever; and, yes, I am ready to share that letter with you, there is no problem. Q444 Joan Ruddock: You must understand, there is a real difference of perception between ourselves and yourself, in terms of the right and wrong of what was being done; so to see what you said to the United Nations would be informative to us? Mr Kotecha: I am ready to share that. For the record, I am also ready to co‑operate with you in any way possible. It is not that, but it is when you feel you are being accused of something, that is a matter of opinion; you can accuse me but that does not mean to say that I have to accept your accusations, so whatever we have said today I am ready to share that with you. Q445 Chairman: You have been helpful, Mr Kotecha, because you have also indicated that the British authorities frankly have been pretty well non-existent in applying what was international expectation, which might have made your behaviour different? Mr Kotecha: We had 400 tonnes of sugar which came in from Zambia, on the Lake Tanganyika, and that vessel went missing. I wrote to the Ambassador at the time, I will not recall his name, I even had correspondence with him, and the answer was, "Sorry, there's nothing we can do." Chairman: They did not help you on that score but they also did not apply a kind of pressure on you about international things, to which you are saying, from your manner, I think, that you may well have been prepared to respond. Your response is "I've been accused of things which may or may not be legal. I don't believe I've done anything wrong." I think we have a difference of view, frankly, on the ethics of the situation in which you operate, but that I think we can leave for judgment. I want to thank you very much. You have been here, the other company which has been in the frame has not, and the fact that you took the time to come and answer our questions is much appreciated. Thank you.
[1] The witness has submitted a letter which is intended to accompany the answers he gave at the meeting, and he wishes the content of the letter to form part of his evidence. See CAD 29. |