Congo report: Uganda indicted for plunder of natural wealth
Oct 24, 2002
The UN Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo has released its final report, which was due to be debated by the Security Council yesterday. Following is the full text
(V) Uganda-controlled area:
The objective of the elite network in the areas controlled by Uganda has been to exercise monopolistic control over the area’s principal natural resources, cross-border trade, and tax revenues for the purpose of enriching members of the network.
Notwithstanding the current political rapprochement and the apparent momentum towards normalising relations between Uganda and the Democratic Republic of the Congo, the elite network continues to increase its economic hold over the area.
The Elite Network
98. The elite network operating out of Uganda is decentralised and loosely hierarchical, unlike the network operating out of Rwanda.
The Uganda network consists of a core group of members including certain high-ranking UPDF officers, private businessmen and selected rebel leaders/administrators. UPDF Lieutenant General (Ret.) Salim Saleh and Major General James Kazini are the key figures. Other members include the Chief of Military Intelligence, Colonel Noble Mayombo, UPDF Colonel Kahinda Otafiire and Colonel Peter Karim.
Private entrepreneurs include Sam Engola, Jacob Manu Soba and Mannase Savo and other Savo family members. Rebel politicians and administrators include Professor Wamba dia Wamba, Roger Lumbala, John Tibasima, Mbusa Nyamwisi and Toma Lubanga.
99. The network continues to conduct activities through front companies such as the Victoria Group, Trinity Investment, LA CONMET and Sagricof. Each of these companies may concentrate on one or two commercial niches, though these may change. The role of the companies is to manage their respective niche activities by assembling the personnel, logistics and occasionally the financing for the operations.
100. The network generates revenue from the export of primary materials, from controlling the import of consumables, from theft and tax fraud. The success of the network’s activities in the Democratic Republic of the Congo relies on three interconnected features, namely, military intimidation; maintenance of a public sector facade, in the form of a rebel movement administration; and manipulation of the money supply and the banking sector, using counterfeit currency and other related mechanisms.
101. The Uganda People’s Defence Forces and their associated rebel militias have been used as the de facto enforcement arm of the network, ensuring the network’s pre-eminent commercial position through intimidation, and the threat and use of force. UPDF or militias associated with individual UPDF officers have established physical control over areas containing commercially viable natural resources— coltan, diamonds, timber and gold. They establish authority in major urban and financial centres, such as Bunia, Beni and Butembo, where they use the rebel administration as a public sector facade to generate revenue, specifically to collect taxes under various pretexts, including licensing fees for commercial operators, import and export duties and taxes on specific products.
102. Uganda has recently agreed to withdraw all UPDF troops except for a reinforced battalion in Bunia and a small number of units on the slopes of the Ruwenzori Mountains. In anticipation of this withdrawal, a paramilitary force is being trained under the personal authority of Lt. General Saleh which, according to the Panel’s sources, is expected to continue to facilitate the commercial activities of UPDF officers after UPDF have departed. This military group draws on dissidents from Jean-Pierre Bemba’s MLC, members of the Uganda-supported RCD-Congo including its leaders Professor Kin-kiey Mulumba and Kabanga Babadi, and others in the north-eastern Democratic Republic of the Congo who have supported UPDF in the past. It has been reported that Lt. General Saleh discreetly provides financial support for this new rebel group. The Panel’s sources have indicated that Heckie Horn, Managing Director of Saracen Uganda Ltd., is a key partner with Lt. General Saleh in supporting this paramilitary group and that Lt. General Saleh himself is a 25% owner in Saracen. Saracen’s managing director also provides military training and arms to members of this group. In an interview with Panel members, the Managing Director of Saracen Ltd. categorically denied any involvement with Lt. General Saleh’s activities in the north-eastern Democratic Republic of the Congo.
103. Panel sources report that Lt. General Saleh and Mr. Horn consulted President Joseph Kabila to obtain support for this covert operation. Its primary objective has been to replace Mbusa Nyamwisi with Roger Lumbala as head of RCD-K/ML in order to ensure access to the diamond-rich areas around Buta and Isiro controlled by Mr. Lumbala’s rebel group, RCD National. This objective has largely been achieved. Their more long-term objective is to bring about the downfall of Jean-Pierre Bemba, adding the growing number of dissidents in Mr. Bemba’s ranks to the new rebel movement RCD-Congo. With increased numbers and training, they will then be in a position to confront RCD-Goma and Rwanda.
104. Members of the Ugandan network are typically tax-exempt. The Panel is in possession of documents showing that the network uses its control over the RCD-K/ML rebel administration to request tax exonerations for imports of high-value commodities. The granting of numerous tax exonerations to UPDF Colonel Otafiire between late 2001 and early 2002 is one of numerous cases. Not only did Colonel Otafiire benefit financially but, eventually, those exonerations forced local competitors out of markets in Bunia and Beni, leaving the petrol trade largely under the control of the network.
105. Local commercial operators are, however, required to pay substantial import and export duties. These operators may be favoured with discounted tax payment deals, in the form of prefinancing arrangements, but tax payment for local operators is mandatory. Prefinancing arrangements involve the payment by an importer of discounted tax payments in exchange for a financial payment to an authorising rebel politician or administrator. None of these payments to the rebel administration is used to finance public services.
106. The network uses its economic influence to control the banking sector, which in turn allows the network to further control access to operating capital for commercial operators in the area. Economically speaking, this region has become a captive region, where the types of commercial ventures are manipulated and the viability of local businesses is controlled. Furthermore, the flow of money is regulated by the network through currency trading and the widespread introduction of counterfeit Congolese francs.
107. As in the past, the network continues to involve the transnational criminal group of Victor Bout. Mr. Bout recently purchased the Uganda-based non-operational airline company Okapi Air. The purchase of the company allowed Victor Bout to use Okapi’s licences. The company was subsequently renamed Odessa. The Panel is in possession of a list of outbound flights from 1998 to the beginning of 2002 from Entebbe International Airport, which confirms the operational activities of Mr. Bout’s aircraft from Ugandan territory. Currently, Mr. Bout’s aircraft share the flight times and destinations (slots) with Planet Air, which is owned by the wife of Lt. General Salim Saleh and which facilitates the activities of Mr. Bout by filing flight plans for his aircraft.
Strategies and Sources of Revenue
Coltan
108. Coltan has been exploited extensively in Orientale Province by various armed groups under the protection of the UPDF. A number of coltan operations, especially under the supervision of UPDF Colonels Muzora and Burundi, have been coordinated under the front company Trinity Investment, where UPDF Major General Kazini is the principal figure. Armed groups frequently identified with militias under the command of UPDF officers manage sites in remote locations where diggers pay a daily fee to exploit an area.
Case study of a commercial chain involving coltan
109. During March 2002, Panel members met with Valentina Piskunova who, together with her husband Anatoly Piskunov, represents and operates the company LA CONMET from its base in Kampala. During discussions with the Panel, Ms. Piskunova explained that, because of the collapsed international coltan market, prices for the mineral in the eastern Democratic Republic of the Congo had dropped dramatically. However, Ms. Piskunova told the Panel that the continuing international interest in coltan from the Democratic Republic of the Congo is due to the “very low†labour costs for extracting the mineral. Therefore, the company continued to buy coltan from its office at Butembo in the Democratic Republic of the Congo. She said that their purchase price for coltan with a 30 per cent tantalum content was $10 per kilogramme. The same coltan was then sold for $17 per kilogramme.
110. Ms. Piskunova went on to tell the Panel that the company’s coltan was transported by road across the border between the Democratic Republic of the Congo and Uganda at Kasindi to Entebbe International Airport, where it was then transported by Boeing 707, via Sharjah, United Arab Emirates, at a cost of $140,000 per flight, to Ulba, Kazakhstan, for processing.
111. In addition to the profit made on the sales of coltan, LA CONMET also experienced savings by being granted “full exoneration†for “all activities involving exploitation for the territory of Beni-Lubero†(Democratic Republic of the Congo), including freedom from paying fiscal and customs duties. The document granting the exonerations is in the possession of the Panel. It was signed at Kampala by Mbusa Myamwisi, then Commissioner General for RCD-Kisangani, on fifth January 2000, identifying Salim Saleh as the owner of LA CONMET and designating his representatives as “the Russian group LA CONMETâ€.
Diamonds
112. The network coordinates all elements of the diamond trade, local buying houses, Lebanese exporters, army protection from UPDF and individual militias, tax exonerations from the public sector, and Lebanese connections in Antwerp, under the aegis of the front company, the Victoria Group. Considerable evidence available to the Panel has named the Lebanese-born, Khalil Nazeem Ibrahim, and another known as Mr. Abbas, as the present focal points in Kampala for Victoria’s diamond operations. The Panel has credible evidence that Khalil Nazeem Ibrahim used the capital and marketing services of Hemang Nananal Shah, proprietor of Nami Gems in Antwerp. Lt. General Saleh is recognised by the Panel’s sources in Bunia, Kisangani and Kampala as the founder and director of the Victoria Group and as the mastermind of its operations.
113. The Lebanese individuals, together with their families, who are commonly named in connection with the Victoria Group, are also regarded as closely associated with the Lebanese families Khanafer and Ahmad. Khanafer Nahim, in particular, has been named as a key figure in Victoria Group operations. He is well known by a number of national intelligence and police organisations for the production of counterfeit currency, money-laundering and diamond smuggling on behalf of generals who were prominent in President Mobutu’s time and are still interested in returning to power. The Victoria Group’s use of counterfeit United States currency in Bunia to purchase gold from local comptoirs is widely known.
Tax Fraud and the Requisition of Assets
114. Control over imports is as lucrative as the monopolisation of exports. Exoneration from import duties gives the network an advantage in the northeastern Democratic Republic of the Congo over local importers who pay duties and taxes. An across-the-board exoneration was recently proclaimed in the Protocole d’Accord issued by RCD-K/ML on 22nd February 2002, which ensured Ugandan commercial operators complete exoneration from all taxes in the area under their control.
115. But increased profit margins from tax-free imports provide only a fraction of the benefits. Equally lucrative is access to the taxes themselves, monopolised by the network that uses the rebel administration’s facade of a public treasury and its collection agents to raise revenue from local businessmen and the population at large. Hundreds of containers are imported each month into the Butembo, Beni and Bunia areas, and importers are obliged to pay an average of $8,000 per container. Revenue from these import duties can be considerable. Some revenue is also diverted through prefinancing arrangements, which provide discounted import duties in exchange for kickbacks to rebel politicians. The Panel’s sources insist that the revenues generated from import duties and prefinancing payments are diverted to UPDF officers. None is utilised for public services.
116. Trinity Investment’s local transporters in Bunia, the Savo family group among others, carry agricultural products, wood and cattle from Bunia to Kampala exempt from UPDF toll barriers and export taxes. Trinity investment also works with another front company under the name of Sagricof to fraudulently evacuate wood from North Kivu and the Ituri area. Tree plantations have been raided in the areas of Mahagi and Djugu along the north-eastern border with Uganda. Concerned citizens and research by local non-governmental organisations have identified Colonel Peter Karim and Colonel Otafiire, in addition to the Ugandan parliamentarian Sam Engola, as key figures in the illegal logging and fraudulent evacuation of wood.
117. Many of the cattle removed have been forcibly taken from villages that have been the objects of attack by Hema militia supported by UPDF troops. The Panel has received reports from ranchers in areas to the south of Bunia as well as to the north in Mahagi detailing the removal of large numbers of cattle by UPDF troops. The representative of the Food and Agriculture Organisation of the United Nations in Bunia has reported the more recent UPDF practice of offering protection to ranchers against attacks that they themselves have orchestrated, in exchange for regular payment in animals.
UPDF have also required local butchers to hand over hides from animals butchered locally, and these hides are then transported to Kampala where they are reputedly sold to Bata Shoe Manufacturing.
Economic Exploitation and Ethnic Conflict
118. The ongoing armed conflict between members of the Hema and Lendu clans stems, in part, from attempts by powerful Hema businessmen and politicians to increase the benefits they derive from the commercial activities of the elite network through their front companies, the Victoria Group and Trinity Investment, in the Ituri area.
119. Hema clan members, particularly members of the sub-clan Gegere, have justified the purchase of arms and the training of their own militia by the need to defend themselves against their traditional enemies, the Lendu. It is true that a long-festering dispute over land has resulted in discord between the two groups.
Recently, however, the traditional enmity over land and the ongoing feud between the two groups is used as a rationale by the Hema, and especially by the extremist sub-clan Gegere, for importing arms and training their own militia with the ultimate unspoken objective of consolidating their economic strength in the region.
120. The Gegere sub-clan plays an important role in the operation of the elite network. The majority of transporters and local traders in Bunia come from this group. Jacob Manu Soba, Manasse Savo and other members of the Savo family are among those who have provisioned UPDF in the area and who provide transport, logistical services and local commercial links. They have established close links with a succession of UPDF commanders and troops in the area and work closely with them in conducting cross-border trade.
121. The Hema fill an important niche in the operation of the criminal enterprises as truck owners and businessmen. They transport shipments of primary products from Ituri across the border to Uganda under the protection of UPDF troops and return with gasoline, cigarettes and arms, all exempt from taxation. They benefit from the trade and the generous profit margins, and from their association with the Trinity Group’s Ugandan patrons. But their niche has remained marginal. They control none of the primary product exports themselves. They remain peripheral to the alliance between RCD-K/ML leaders, the Ugandan patrons and UPDF. The plot to replace Mr. Nyamwisi with Mr. Lubanga, which appears now to be a fait accompli in Bunia, is part of an attempt by these Hema traders to secure greater control over the spoils available to inside members of RCD-K/ML.
122. UPDF have created the conditions that require the presence of troops and their continued involvement in commercial operations. This has entailed providing arms to both sides in the ethnic conflict, the Lendu and the Hema. The consequent increase in ethnic fighting has resulted in UPDF being urged to assist in furthering the peace process in Bunia. This function was formalised in an official Protocole d’Accord signed on 22 February 2002 by Mbusa Nyamwisi and John Tibasima as President and Vice-President of RCDK/ ML and by Colonel Noble Mayombo as an official representative of the Government of Uganda. The Protocole d’Accord gave UPDF official responsibility for reducing the conflits armés inter-ethnique en Ituri and for assisting in bringing about a retour de la paix by keeping a contingent in place for observation and for negotiating an eventual long-term solution. In exchange, UPDF were promised a monthly stipend of $25,000 from the RCD-K/ML public treasury, and all Ugandan enterprises that were approved by UPDF were accorded exoneration from all duties and taxes due to the rebel administration. This has given UPDF a legitimate cover for continuing military support for the elite network’s activities in the area.
123. The Protocole d’Accord was signed a week after UPDF had been involved in a succession of attacks, from 11 to 16 February 2002, on villagers at Geti. The Panel’s sources on the matter stated that the attack had been financed by Hema businessmen in Bunia. The UPDF motive was clarified even further in the course of a meeting with RCD-K/ML department chiefs on 12 July 2002, when a Panel member was informed that the Hema businessmen in question sought to have control over gold deposits in the Geti area, and that in fact the ethnic conflict was a minor issue.
Armed Conflict and its Consequences
124. UPDF military operations have contributed to the arming of large numbers. UPDF have trained the militia of their Ituri commercial allies, the Hema, and provoked the need for the victims of Hema attacks to defend themselves. Lendu villages have mounted their own local forces, and they in turn have frequently attacked Hema villages. The creation of local self-defence groups is a familiar pattern: local ethnic groups frequently assemble armed groups to defend their villages or collectivities.
125. Armed conflict has spread throughout society, as economic and personal insecurity reach extreme levels. Large numbers of young men join one or another armed group because they have no other means of finding food or medicine or because they have no one to care for them. The young men in the Armé Patriotique Congolaise are unpaid but are provided with weapons and a uniform giving them the tools for menacing others. Widespread armed activity is characterised by opportunistic and chaotic encounters. Children are killed, adult victims are eviscerated, women are raped, property stolen, houses burned, churches demolished and whatever infrastructure exists is laid waste.
126. In the cities, young men dressed in military uniform and equipped with guns target businesses, households and churches. In the countryside, armed groups target whole villages. The attack on the village of Mpingi on 24 December 2001 is illustrative. A small Mayi-Mayi group had teamed up with a group claiming to be members of a Hutu opposition to set up a roadblock on the road from Butembo to Kanyabayonga. When the roadblock drew the attention of APC, the Mayi-Mayi group withdrew to the west into the village of Mpingi where they sought refuge. APC followed them in force and attacked the entire village of Mpingi, destroyed and burned houses, vandalised the church, razed the school and clinic and forced the residents to flee. Targeting whole villages with violence, brutally raping and murdering residents, removing livestock, food and other property and dispersing residents has been the trademark of armed aggression. A portion of those who flee seek protection in nearby villages, abandoning their own productive activities in their home village while becoming dependent on the resources of host populations.
127. A portion of the displaced population take refuge in urban areas where they benefit from somewhat better security but have little, if any, means for survival. Unemployment rates in cities and towns often reach 90%. An income survey by civil society groups in Butembo found that 90% lived on a few cents a day and ate one meal a day. Urban families break up to seek survival in separate ways. The women engage in prostitution, the older men may return to what remains of their villages or mining sites and the young men enter the rebel army, swelling both the ranks of its forces and the numbers of young boys without subsistence possessing weapons.
128. In March 2001, the Office for the Coordination of Humanitarian Affairs estimated that there were 620,000 displaced persons in North Kivu, which amounted to 16% of the total population. The area covered by the Office’s survey includes both Uganda-controlled and Rwanda-controlled areas, but the conditions surveyed are representative of the Uganda-controlled area. Given the frequency of displacement in the area, this would mean that four out of five rural residents have been forcibly displaced at one time or another since 1998. This is the highest number ever registered for Africa. These aggregates have been confirmed for specific localities surveyed by international non-governmental organisations.
129. The spread of HIV/AIDS, the large numbers of child soldiers and the rape of women are other consequences of the pervasive armed conflict. Many soldiers are young boys who hardly seem capable of wielding the weapons they carry. The issue of child soldiers surfaced when 700 young recruits from the Bunia area were discovered at a UPDF training camp in Tchakwanzi, Uganda, of whom 165 were between 14 and 16 years of age. The programme to demobilise those 165 children, two of whom were girls, has attracted considerable attention. The issue also received attention recently when the Governor of Bunea, Jean-Pierre Molondo, revealed that of the recruits being trained for the extremist Hema militia, 60 per cent were under the age of 18.
Malnutrition and Mortality
130. Population displacement has a direct impact on agricultural production, food security and levels of malnutrition. The threat of attack and displacement is so prevalent in this area that farm families adopt farming strategies that minimise losses under conditions of extreme insecurity. They cease raising animals, since animals can be easily stolen. Fewer families raise protein-rich legumes, since these crops require attention through the growing cycle, and this attention can rarely be given. Malnutrition, in turn, substantially increases the exposure of the population to life-threatening illnesses.
131. The International Rescue Committee surveys provide the most comprehensive research into mortality in the eastern Democratic Republic of the Congo. None of the health zones sampled in its two major surveys was in the areas now controlled by Uganda. However, the pattern of armed conflict, population displacement, food insecurity and malnutrition in Uganda-controlled areas resembles the pattern that explains the very high mortality rates in the seven health zones where the research was conducted. The Committee’s team judged the similarities to be sufficient to warrant extrapolating the results of areas sampled in the Kivus to the entire eastern Democratic Republic of the Congo, including areas under Ugandan control. The Panel concurs.
One can expect the same range of mortality for children under five, from nearly 30% per year in areas of extreme insecurity without health facilities to 7% in areas where there is less insecurity and some services. For the more than 20 million people living in the five eastern provinces, the number of excess deaths directly attributable to Rwandan and Ugandan occupation can be estimated at between three million and 3.5 million.
VI. Collaboration of the Panel with the Porter Commission in Uganda
132. During its previous mandate, the Panel’s relations with the Judicial Commission of Inquiry headed by Justice David Porter (Porter Commission) were occasionally strained. However, with the encouragement of Member States, notably the members of the Security Council, the Panel established an amiable working relationship with the Commission. This relationship is unique in the history of panels of experts mandated by the Council, given the degree and the nature of the cooperation developed between the two bodies.
133. Panel members held frequent discussions with the Porter Commission. From the outset, Justice Porter was critical of the quality of the Panel’s reports and the credibility of its sources. At the same time, he claimed that the Commission’s investigations, ongoing now for more than a year, were stymied primarily because of a “conspiracy of silence†within UPDF. Under the Commission of Inquiry Act, the Commission has the power to conduct searches and compel the production of documents and testimony.
134. The Panel made evidence available to the Commission, including copies of 12 letters and a statement from a witness, together with five original audiotapes containing testimony given by a primary source. These materials represent only a small sample of the documentation gathered by the Panel on the involvement of leading Ugandan military and senior Ugandan Government personnel. They provide evidence of criminal activity by such ranking Ugandan authorities.
They show officials demanding extortionist payments and tax exonerations from Congolese rebel movements, including the UPDF Chief of Staff demanding that his vehicles transporting coltan be allowed to cross the border without paying export duties. The Panel also arranged for one of its sources to testify before the Commission at a special hearing in spite of the risk of exposure to the source. In exchange, the Porter Commission provided the Panel with copies of the testimony of certain high-ranking military officers, Government officials, private businessmen and other individuals who had appeared before it.
135. The Panel’s many efforts to establish a constructive relationship with the Commission have mostly been met with attempts to dismiss its credibility. The Commission has challenged the authenticity of letters provided by the Panel that show significant payments to UPDF officers from rebel movement budgets, even when reliable witnesses have testified to their validity. It has submitted other documents signed by ranking officials to handwriting analysis and used this analysis to imply that they may be forgeries. The analysis of those documents, however, suggested that the signatures were probably genuine. During a specially arranged hearing aimed at corroborating the authenticity of certain documents transmitted by the Panel, the Porter Commission submitted one of the Panel’s informants to an unusually aggressive questioning designed to frighten the individual and discredit his testimony.
136. When the Commission recalled Major General James Kazini in May 2002 to question him on the basis of documents supplied by the Panel, the UPDF military commander finally admitted that the signatures on the documents were indeed his and accepted that the documents related to his actions as the former commander of UPDF operations in the Democratic Republic of the Congo. Justice Porter commented during the questioning that General Kazini, who had consistently denied under oath any involvement in such illicit economic exploits, had perjured himself repeatedly during both that hearing and his original testimony before the Commission the previous year. The head of the Commission also conceded, according to transcripts of the hearing, that the Panel’s “allegations†about General Kazini’s involvement in exploitation activities, including those related to the diamond trade and tax revenues, “were actually true.†Justice Porter reconfirmed these observations in meetings with the Panel, again conceding that the conclusions of the Panel’s earlier reports about this officer and the involvement of UPDF in the illicit exploitation were “right.†In an electronic message dated 25 May 2002, Justice Porter wrote to the Chairman of the Panel regarding the documentary evidence provided and General Kazini’s second appearance before the Commission. He expressed his appreciation to the Panel, saying, “We feel, and hope you agree, that with your assistance we have at last been able to break what we have described as a conspiracy of silence within UPDF, at least in relation to diamonds and ‘security payments’, and we are extremely grateful to you for enabling us to do so.â€
137. During the Panel’s last meeting with the Commission in September 2002 in Kampala, Justice Porter explained that any recommendation by the Commission to refer an individual for criminal prosecution as the result of its enquiries must first be approved by the Minister for Foreign Affairs and President Museveni. A criminal investigation would then be necessary before the authorities could determine if grounds for prosecution existed. The Panel also understood that, in spite of the Commission’s extensive investigative powers, its terms of reference restrict the scope of its enquiries into the activities of military personnel. It is not empowered to obtain military records and documents from the Defence Ministry. Nor can it conduct audits of individual officers’ finances.
138. The Porter Commission’s mandate has now been extended beyond that of the Panel, to 15 November 2002, allowing it the opportunity to comment on the Panel’s report. In the event that the Porter Commission ignores or rejects the validity and evidentiary value of the documents provided or attempts to further discredit the Panel’s work, the Chairman of the Panel requests that the Security Council authorise the Panel to respond to the Commission’s report in a letter addressed to the Security Council, which would be circulated as a United Nations document.
The objective of the elite network in the areas controlled by Uganda has been to exercise monopolistic control over the area’s principal natural resources, cross-border trade, and tax revenues for the purpose of enriching members of the network.
Notwithstanding the current political rapprochement and the apparent momentum towards normalising relations between Uganda and the Democratic Republic of the Congo, the elite network continues to increase its economic hold over the area.
The Elite Network
98. The elite network operating out of Uganda is decentralised and loosely hierarchical, unlike the network operating out of Rwanda.
The Uganda network consists of a core group of members including certain high-ranking UPDF officers, private businessmen and selected rebel leaders/administrators. UPDF Lieutenant General (Ret.) Salim Saleh and Major General James Kazini are the key figures. Other members include the Chief of Military Intelligence, Colonel Noble Mayombo, UPDF Colonel Kahinda Otafiire and Colonel Peter Karim.
Private entrepreneurs include Sam Engola, Jacob Manu Soba and Mannase Savo and other Savo family members. Rebel politicians and administrators include Professor Wamba dia Wamba, Roger Lumbala, John Tibasima, Mbusa Nyamwisi and Toma Lubanga.
99. The network continues to conduct activities through front companies such as the Victoria Group, Trinity Investment, LA CONMET and Sagricof. Each of these companies may concentrate on one or two commercial niches, though these may change. The role of the companies is to manage their respective niche activities by assembling the personnel, logistics and occasionally the financing for the operations.
100. The network generates revenue from the export of primary materials, from controlling the import of consumables, from theft and tax fraud. The success of the network’s activities in the Democratic Republic of the Congo relies on three interconnected features, namely, military intimidation; maintenance of a public sector facade, in the form of a rebel movement administration; and manipulation of the money supply and the banking sector, using counterfeit currency and other related mechanisms.
101. The Uganda People’s Defence Forces and their associated rebel militias have been used as the de facto enforcement arm of the network, ensuring the network’s pre-eminent commercial position through intimidation, and the threat and use of force. UPDF or militias associated with individual UPDF officers have established physical control over areas containing commercially viable natural resources— coltan, diamonds, timber and gold. They establish authority in major urban and financial centres, such as Bunia, Beni and Butembo, where they use the rebel administration as a public sector facade to generate revenue, specifically to collect taxes under various pretexts, including licensing fees for commercial operators, import and export duties and taxes on specific products.
102. Uganda has recently agreed to withdraw all UPDF troops except for a reinforced battalion in Bunia and a small number of units on the slopes of the Ruwenzori Mountains. In anticipation of this withdrawal, a paramilitary force is being trained under the personal authority of Lt. General Saleh which, according to the Panel’s sources, is expected to continue to facilitate the commercial activities of UPDF officers after UPDF have departed. This military group draws on dissidents from Jean-Pierre Bemba’s MLC, members of the Uganda-supported RCD-Congo including its leaders Professor Kin-kiey Mulumba and Kabanga Babadi, and others in the north-eastern Democratic Republic of the Congo who have supported UPDF in the past. It has been reported that Lt. General Saleh discreetly provides financial support for this new rebel group. The Panel’s sources have indicated that Heckie Horn, Managing Director of Saracen Uganda Ltd., is a key partner with Lt. General Saleh in supporting this paramilitary group and that Lt. General Saleh himself is a 25% owner in Saracen. Saracen’s managing director also provides military training and arms to members of this group. In an interview with Panel members, the Managing Director of Saracen Ltd. categorically denied any involvement with Lt. General Saleh’s activities in the north-eastern Democratic Republic of the Congo.
103. Panel sources report that Lt. General Saleh and Mr. Horn consulted President Joseph Kabila to obtain support for this covert operation. Its primary objective has been to replace Mbusa Nyamwisi with Roger Lumbala as head of RCD-K/ML in order to ensure access to the diamond-rich areas around Buta and Isiro controlled by Mr. Lumbala’s rebel group, RCD National. This objective has largely been achieved. Their more long-term objective is to bring about the downfall of Jean-Pierre Bemba, adding the growing number of dissidents in Mr. Bemba’s ranks to the new rebel movement RCD-Congo. With increased numbers and training, they will then be in a position to confront RCD-Goma and Rwanda.
104. Members of the Ugandan network are typically tax-exempt. The Panel is in possession of documents showing that the network uses its control over the RCD-K/ML rebel administration to request tax exonerations for imports of high-value commodities. The granting of numerous tax exonerations to UPDF Colonel Otafiire between late 2001 and early 2002 is one of numerous cases. Not only did Colonel Otafiire benefit financially but, eventually, those exonerations forced local competitors out of markets in Bunia and Beni, leaving the petrol trade largely under the control of the network.
105. Local commercial operators are, however, required to pay substantial import and export duties. These operators may be favoured with discounted tax payment deals, in the form of prefinancing arrangements, but tax payment for local operators is mandatory. Prefinancing arrangements involve the payment by an importer of discounted tax payments in exchange for a financial payment to an authorising rebel politician or administrator. None of these payments to the rebel administration is used to finance public services.
106. The network uses its economic influence to control the banking sector, which in turn allows the network to further control access to operating capital for commercial operators in the area. Economically speaking, this region has become a captive region, where the types of commercial ventures are manipulated and the viability of local businesses is controlled. Furthermore, the flow of money is regulated by the network through currency trading and the widespread introduction of counterfeit Congolese francs.
107. As in the past, the network continues to involve the transnational criminal group of Victor Bout. Mr. Bout recently purchased the Uganda-based non-operational airline company Okapi Air. The purchase of the company allowed Victor Bout to use Okapi’s licences. The company was subsequently renamed Odessa. The Panel is in possession of a list of outbound flights from 1998 to the beginning of 2002 from Entebbe International Airport, which confirms the operational activities of Mr. Bout’s aircraft from Ugandan territory. Currently, Mr. Bout’s aircraft share the flight times and destinations (slots) with Planet Air, which is owned by the wife of Lt. General Salim Saleh and which facilitates the activities of Mr. Bout by filing flight plans for his aircraft.
Strategies and Sources of Revenue
Coltan
108. Coltan has been exploited extensively in Orientale Province by various armed groups under the protection of the UPDF. A number of coltan operations, especially under the supervision of UPDF Colonels Muzora and Burundi, have been coordinated under the front company Trinity Investment, where UPDF Major General Kazini is the principal figure. Armed groups frequently identified with militias under the command of UPDF officers manage sites in remote locations where diggers pay a daily fee to exploit an area.
Case study of a commercial chain involving coltan
109. During March 2002, Panel members met with Valentina Piskunova who, together with her husband Anatoly Piskunov, represents and operates the company LA CONMET from its base in Kampala. During discussions with the Panel, Ms. Piskunova explained that, because of the collapsed international coltan market, prices for the mineral in the eastern Democratic Republic of the Congo had dropped dramatically. However, Ms. Piskunova told the Panel that the continuing international interest in coltan from the Democratic Republic of the Congo is due to the “very low†labour costs for extracting the mineral. Therefore, the company continued to buy coltan from its office at Butembo in the Democratic Republic of the Congo. She said that their purchase price for coltan with a 30 per cent tantalum content was $10 per kilogramme. The same coltan was then sold for $17 per kilogramme.
110. Ms. Piskunova went on to tell the Panel that the company’s coltan was transported by road across the border between the Democratic Republic of the Congo and Uganda at Kasindi to Entebbe International Airport, where it was then transported by Boeing 707, via Sharjah, United Arab Emirates, at a cost of $140,000 per flight, to Ulba, Kazakhstan, for processing.
111. In addition to the profit made on the sales of coltan, LA CONMET also experienced savings by being granted “full exoneration†for “all activities involving exploitation for the territory of Beni-Lubero†(Democratic Republic of the Congo), including freedom from paying fiscal and customs duties. The document granting the exonerations is in the possession of the Panel. It was signed at Kampala by Mbusa Myamwisi, then Commissioner General for RCD-Kisangani, on fifth January 2000, identifying Salim Saleh as the owner of LA CONMET and designating his representatives as “the Russian group LA CONMETâ€.
Diamonds
112. The network coordinates all elements of the diamond trade, local buying houses, Lebanese exporters, army protection from UPDF and individual militias, tax exonerations from the public sector, and Lebanese connections in Antwerp, under the aegis of the front company, the Victoria Group. Considerable evidence available to the Panel has named the Lebanese-born, Khalil Nazeem Ibrahim, and another known as Mr. Abbas, as the present focal points in Kampala for Victoria’s diamond operations. The Panel has credible evidence that Khalil Nazeem Ibrahim used the capital and marketing services of Hemang Nananal Shah, proprietor of Nami Gems in Antwerp. Lt. General Saleh is recognised by the Panel’s sources in Bunia, Kisangani and Kampala as the founder and director of the Victoria Group and as the mastermind of its operations.
113. The Lebanese individuals, together with their families, who are commonly named in connection with the Victoria Group, are also regarded as closely associated with the Lebanese families Khanafer and Ahmad. Khanafer Nahim, in particular, has been named as a key figure in Victoria Group operations. He is well known by a number of national intelligence and police organisations for the production of counterfeit currency, money-laundering and diamond smuggling on behalf of generals who were prominent in President Mobutu’s time and are still interested in returning to power. The Victoria Group’s use of counterfeit United States currency in Bunia to purchase gold from local comptoirs is widely known.
Tax Fraud and the Requisition of Assets
114. Control over imports is as lucrative as the monopolisation of exports. Exoneration from import duties gives the network an advantage in the northeastern Democratic Republic of the Congo over local importers who pay duties and taxes. An across-the-board exoneration was recently proclaimed in the Protocole d’Accord issued by RCD-K/ML on 22nd February 2002, which ensured Ugandan commercial operators complete exoneration from all taxes in the area under their control.
115. But increased profit margins from tax-free imports provide only a fraction of the benefits. Equally lucrative is access to the taxes themselves, monopolised by the network that uses the rebel administration’s facade of a public treasury and its collection agents to raise revenue from local businessmen and the population at large. Hundreds of containers are imported each month into the Butembo, Beni and Bunia areas, and importers are obliged to pay an average of $8,000 per container. Revenue from these import duties can be considerable. Some revenue is also diverted through prefinancing arrangements, which provide discounted import duties in exchange for kickbacks to rebel politicians. The Panel’s sources insist that the revenues generated from import duties and prefinancing payments are diverted to UPDF officers. None is utilised for public services.
116. Trinity Investment’s local transporters in Bunia, the Savo family group among others, carry agricultural products, wood and cattle from Bunia to Kampala exempt from UPDF toll barriers and export taxes. Trinity investment also works with another front company under the name of Sagricof to fraudulently evacuate wood from North Kivu and the Ituri area. Tree plantations have been raided in the areas of Mahagi and Djugu along the north-eastern border with Uganda. Concerned citizens and research by local non-governmental organisations have identified Colonel Peter Karim and Colonel Otafiire, in addition to the Ugandan parliamentarian Sam Engola, as key figures in the illegal logging and fraudulent evacuation of wood.
117. Many of the cattle removed have been forcibly taken from villages that have been the objects of attack by Hema militia supported by UPDF troops. The Panel has received reports from ranchers in areas to the south of Bunia as well as to the north in Mahagi detailing the removal of large numbers of cattle by UPDF troops. The representative of the Food and Agriculture Organisation of the United Nations in Bunia has reported the more recent UPDF practice of offering protection to ranchers against attacks that they themselves have orchestrated, in exchange for regular payment in animals.
UPDF have also required local butchers to hand over hides from animals butchered locally, and these hides are then transported to Kampala where they are reputedly sold to Bata Shoe Manufacturing.
Economic Exploitation and Ethnic Conflict
118. The ongoing armed conflict between members of the Hema and Lendu clans stems, in part, from attempts by powerful Hema businessmen and politicians to increase the benefits they derive from the commercial activities of the elite network through their front companies, the Victoria Group and Trinity Investment, in the Ituri area.
119. Hema clan members, particularly members of the sub-clan Gegere, have justified the purchase of arms and the training of their own militia by the need to defend themselves against their traditional enemies, the Lendu. It is true that a long-festering dispute over land has resulted in discord between the two groups.
Recently, however, the traditional enmity over land and the ongoing feud between the two groups is used as a rationale by the Hema, and especially by the extremist sub-clan Gegere, for importing arms and training their own militia with the ultimate unspoken objective of consolidating their economic strength in the region.
120. The Gegere sub-clan plays an important role in the operation of the elite network. The majority of transporters and local traders in Bunia come from this group. Jacob Manu Soba, Manasse Savo and other members of the Savo family are among those who have provisioned UPDF in the area and who provide transport, logistical services and local commercial links. They have established close links with a succession of UPDF commanders and troops in the area and work closely with them in conducting cross-border trade.
121. The Hema fill an important niche in the operation of the criminal enterprises as truck owners and businessmen. They transport shipments of primary products from Ituri across the border to Uganda under the protection of UPDF troops and return with gasoline, cigarettes and arms, all exempt from taxation. They benefit from the trade and the generous profit margins, and from their association with the Trinity Group’s Ugandan patrons. But their niche has remained marginal. They control none of the primary product exports themselves. They remain peripheral to the alliance between RCD-K/ML leaders, the Ugandan patrons and UPDF. The plot to replace Mr. Nyamwisi with Mr. Lubanga, which appears now to be a fait accompli in Bunia, is part of an attempt by these Hema traders to secure greater control over the spoils available to inside members of RCD-K/ML.
122. UPDF have created the conditions that require the presence of troops and their continued involvement in commercial operations. This has entailed providing arms to both sides in the ethnic conflict, the Lendu and the Hema. The consequent increase in ethnic fighting has resulted in UPDF being urged to assist in furthering the peace process in Bunia. This function was formalised in an official Protocole d’Accord signed on 22 February 2002 by Mbusa Nyamwisi and John Tibasima as President and Vice-President of RCDK/ ML and by Colonel Noble Mayombo as an official representative of the Government of Uganda. The Protocole d’Accord gave UPDF official responsibility for reducing the conflits armés inter-ethnique en Ituri and for assisting in bringing about a retour de la paix by keeping a contingent in place for observation and for negotiating an eventual long-term solution. In exchange, UPDF were promised a monthly stipend of $25,000 from the RCD-K/ML public treasury, and all Ugandan enterprises that were approved by UPDF were accorded exoneration from all duties and taxes due to the rebel administration. This has given UPDF a legitimate cover for continuing military support for the elite network’s activities in the area.
123. The Protocole d’Accord was signed a week after UPDF had been involved in a succession of attacks, from 11 to 16 February 2002, on villagers at Geti. The Panel’s sources on the matter stated that the attack had been financed by Hema businessmen in Bunia. The UPDF motive was clarified even further in the course of a meeting with RCD-K/ML department chiefs on 12 July 2002, when a Panel member was informed that the Hema businessmen in question sought to have control over gold deposits in the Geti area, and that in fact the ethnic conflict was a minor issue.
Armed Conflict and its Consequences
124. UPDF military operations have contributed to the arming of large numbers. UPDF have trained the militia of their Ituri commercial allies, the Hema, and provoked the need for the victims of Hema attacks to defend themselves. Lendu villages have mounted their own local forces, and they in turn have frequently attacked Hema villages. The creation of local self-defence groups is a familiar pattern: local ethnic groups frequently assemble armed groups to defend their villages or collectivities.
125. Armed conflict has spread throughout society, as economic and personal insecurity reach extreme levels. Large numbers of young men join one or another armed group because they have no other means of finding food or medicine or because they have no one to care for them. The young men in the Armé Patriotique Congolaise are unpaid but are provided with weapons and a uniform giving them the tools for menacing others. Widespread armed activity is characterised by opportunistic and chaotic encounters. Children are killed, adult victims are eviscerated, women are raped, property stolen, houses burned, churches demolished and whatever infrastructure exists is laid waste.
126. In the cities, young men dressed in military uniform and equipped with guns target businesses, households and churches. In the countryside, armed groups target whole villages. The attack on the village of Mpingi on 24 December 2001 is illustrative. A small Mayi-Mayi group had teamed up with a group claiming to be members of a Hutu opposition to set up a roadblock on the road from Butembo to Kanyabayonga. When the roadblock drew the attention of APC, the Mayi-Mayi group withdrew to the west into the village of Mpingi where they sought refuge. APC followed them in force and attacked the entire village of Mpingi, destroyed and burned houses, vandalised the church, razed the school and clinic and forced the residents to flee. Targeting whole villages with violence, brutally raping and murdering residents, removing livestock, food and other property and dispersing residents has been the trademark of armed aggression. A portion of those who flee seek protection in nearby villages, abandoning their own productive activities in their home village while becoming dependent on the resources of host populations.
127. A portion of the displaced population take refuge in urban areas where they benefit from somewhat better security but have little, if any, means for survival. Unemployment rates in cities and towns often reach 90%. An income survey by civil society groups in Butembo found that 90% lived on a few cents a day and ate one meal a day. Urban families break up to seek survival in separate ways. The women engage in prostitution, the older men may return to what remains of their villages or mining sites and the young men enter the rebel army, swelling both the ranks of its forces and the numbers of young boys without subsistence possessing weapons.
128. In March 2001, the Office for the Coordination of Humanitarian Affairs estimated that there were 620,000 displaced persons in North Kivu, which amounted to 16% of the total population. The area covered by the Office’s survey includes both Uganda-controlled and Rwanda-controlled areas, but the conditions surveyed are representative of the Uganda-controlled area. Given the frequency of displacement in the area, this would mean that four out of five rural residents have been forcibly displaced at one time or another since 1998. This is the highest number ever registered for Africa. These aggregates have been confirmed for specific localities surveyed by international non-governmental organisations.
129. The spread of HIV/AIDS, the large numbers of child soldiers and the rape of women are other consequences of the pervasive armed conflict. Many soldiers are young boys who hardly seem capable of wielding the weapons they carry. The issue of child soldiers surfaced when 700 young recruits from the Bunia area were discovered at a UPDF training camp in Tchakwanzi, Uganda, of whom 165 were between 14 and 16 years of age. The programme to demobilise those 165 children, two of whom were girls, has attracted considerable attention. The issue also received attention recently when the Governor of Bunea, Jean-Pierre Molondo, revealed that of the recruits being trained for the extremist Hema militia, 60 per cent were under the age of 18.
Malnutrition and Mortality
130. Population displacement has a direct impact on agricultural production, food security and levels of malnutrition. The threat of attack and displacement is so prevalent in this area that farm families adopt farming strategies that minimise losses under conditions of extreme insecurity. They cease raising animals, since animals can be easily stolen. Fewer families raise protein-rich legumes, since these crops require attention through the growing cycle, and this attention can rarely be given. Malnutrition, in turn, substantially increases the exposure of the population to life-threatening illnesses.
131. The International Rescue Committee surveys provide the most comprehensive research into mortality in the eastern Democratic Republic of the Congo. None of the health zones sampled in its two major surveys was in the areas now controlled by Uganda. However, the pattern of armed conflict, population displacement, food insecurity and malnutrition in Uganda-controlled areas resembles the pattern that explains the very high mortality rates in the seven health zones where the research was conducted. The Committee’s team judged the similarities to be sufficient to warrant extrapolating the results of areas sampled in the Kivus to the entire eastern Democratic Republic of the Congo, including areas under Ugandan control. The Panel concurs.
One can expect the same range of mortality for children under five, from nearly 30% per year in areas of extreme insecurity without health facilities to 7% in areas where there is less insecurity and some services. For the more than 20 million people living in the five eastern provinces, the number of excess deaths directly attributable to Rwandan and Ugandan occupation can be estimated at between three million and 3.5 million.
VI. Collaboration of the Panel with the Porter Commission in Uganda
132. During its previous mandate, the Panel’s relations with the Judicial Commission of Inquiry headed by Justice David Porter (Porter Commission) were occasionally strained. However, with the encouragement of Member States, notably the members of the Security Council, the Panel established an amiable working relationship with the Commission. This relationship is unique in the history of panels of experts mandated by the Council, given the degree and the nature of the cooperation developed between the two bodies.
133. Panel members held frequent discussions with the Porter Commission. From the outset, Justice Porter was critical of the quality of the Panel’s reports and the credibility of its sources. At the same time, he claimed that the Commission’s investigations, ongoing now for more than a year, were stymied primarily because of a “conspiracy of silence†within UPDF. Under the Commission of Inquiry Act, the Commission has the power to conduct searches and compel the production of documents and testimony.
134. The Panel made evidence available to the Commission, including copies of 12 letters and a statement from a witness, together with five original audiotapes containing testimony given by a primary source. These materials represent only a small sample of the documentation gathered by the Panel on the involvement of leading Ugandan military and senior Ugandan Government personnel. They provide evidence of criminal activity by such ranking Ugandan authorities.
They show officials demanding extortionist payments and tax exonerations from Congolese rebel movements, including the UPDF Chief of Staff demanding that his vehicles transporting coltan be allowed to cross the border without paying export duties. The Panel also arranged for one of its sources to testify before the Commission at a special hearing in spite of the risk of exposure to the source. In exchange, the Porter Commission provided the Panel with copies of the testimony of certain high-ranking military officers, Government officials, private businessmen and other individuals who had appeared before it.
135. The Panel’s many efforts to establish a constructive relationship with the Commission have mostly been met with attempts to dismiss its credibility. The Commission has challenged the authenticity of letters provided by the Panel that show significant payments to UPDF officers from rebel movement budgets, even when reliable witnesses have testified to their validity. It has submitted other documents signed by ranking officials to handwriting analysis and used this analysis to imply that they may be forgeries. The analysis of those documents, however, suggested that the signatures were probably genuine. During a specially arranged hearing aimed at corroborating the authenticity of certain documents transmitted by the Panel, the Porter Commission submitted one of the Panel’s informants to an unusually aggressive questioning designed to frighten the individual and discredit his testimony.
136. When the Commission recalled Major General James Kazini in May 2002 to question him on the basis of documents supplied by the Panel, the UPDF military commander finally admitted that the signatures on the documents were indeed his and accepted that the documents related to his actions as the former commander of UPDF operations in the Democratic Republic of the Congo. Justice Porter commented during the questioning that General Kazini, who had consistently denied under oath any involvement in such illicit economic exploits, had perjured himself repeatedly during both that hearing and his original testimony before the Commission the previous year. The head of the Commission also conceded, according to transcripts of the hearing, that the Panel’s “allegations†about General Kazini’s involvement in exploitation activities, including those related to the diamond trade and tax revenues, “were actually true.†Justice Porter reconfirmed these observations in meetings with the Panel, again conceding that the conclusions of the Panel’s earlier reports about this officer and the involvement of UPDF in the illicit exploitation were “right.†In an electronic message dated 25 May 2002, Justice Porter wrote to the Chairman of the Panel regarding the documentary evidence provided and General Kazini’s second appearance before the Commission. He expressed his appreciation to the Panel, saying, “We feel, and hope you agree, that with your assistance we have at last been able to break what we have described as a conspiracy of silence within UPDF, at least in relation to diamonds and ‘security payments’, and we are extremely grateful to you for enabling us to do so.â€
137. During the Panel’s last meeting with the Commission in September 2002 in Kampala, Justice Porter explained that any recommendation by the Commission to refer an individual for criminal prosecution as the result of its enquiries must first be approved by the Minister for Foreign Affairs and President Museveni. A criminal investigation would then be necessary before the authorities could determine if grounds for prosecution existed. The Panel also understood that, in spite of the Commission’s extensive investigative powers, its terms of reference restrict the scope of its enquiries into the activities of military personnel. It is not empowered to obtain military records and documents from the Defence Ministry. Nor can it conduct audits of individual officers’ finances.
138. The Porter Commission’s mandate has now been extended beyond that of the Panel, to 15 November 2002, allowing it the opportunity to comment on the Panel’s report. In the event that the Porter Commission ignores or rejects the validity and evidentiary value of the documents provided or attempts to further discredit the Panel’s work, the Chairman of the Panel requests that the Security Council authorise the Panel to respond to the Commission’s report in a letter addressed to the Security Council, which would be circulated as a United Nations document.