As the country’s chief financial officer warns Congress that the U-S Treasury will shortly run out of money to pay the nation’s bills, the United States Treasury is preparing to send millions to the government of the Democratic Republic of the Congo (DRC), a nation with billions of dollars from the US, the World Bank, the International Monetary Fund, China and a handful of European countries diverted to obvious and organized mass corruption, fraud and embezzlement.
On August 22, 2013, Mr. Simon Nyandu Shabandu, a senior magistrate in DRC was asked to lead an investigation of corruption at the Customs and Excise Agency in Lubumbashi in Katanga province. (Read the original in french) The 25 cases his commission examined (fewer than 10 percent of the total) accounted for over three quarters of a billion dollars in government funds lost to corruption and fraud. The remaining cases likely accounted for billions more. The investigators found those responsible for the corruption operated with an “excessive degree of impunity” and asked to be granted the opportunity to finish the investigation. Based on past experience it seems unlikely that any meaningful changes will come about as a result of the investigation.
The DRC does not need foreign aid, it needs stronger institutions. If well managed it can generate far more than what it receives from donors. It is bad foreign policy for the US and other western nations and institutions to endlessly subsidize corruption.
Why should Americans be concerned?
Foreign aid reform is long overdue. In the case of the DRC, there is an opportunity for the American people to remind their leaders that they support common sense policies and if not this money can go a long way here at home. The best way to help the DRC is to reach out to the government and kindly point them to where their money is and that the way forward is institutional reforms. The US should continue investing in civil society empowerment project which has also been demanding good governance and transparency.
In mid-December 2013 Mr. Rajiv Shah, the head of the U.S. Agency for International Development (USAID) visited the site of the Inga III hydropower project in the DRC. Mr. Shah said the US plans to invest some money in the estimated $12 billion hydroelectric power project provided that the DRC reorganizes and reforms its public utility and its governance structure. While this is a step in the right direction, more can and must be done if the US strongly believes in a positive outcome from this project.

We’ve seen this movie before
A little reminder about what happened when Congolese leader Mobutu Sese seko was entrusted with money for hydroelectric project. In 1980 and 1986, the late President Mobutu Sese Seko’s regime made deals with ENERGOINVEST, a company based in Sarajevo, the capital of Bosnia Herzegovina, to build a hydroelectric plant on the Ubangi River and also a High-Voltage electricity power line from Bukavu to Goma. In 2004, ENERGOINVEST sold the DRC’s defaulted debts to the Vulture Fund FG Hemisphere and Associates. The latter filed a lawsuit against the DRC in a Washington DC court to enforce payment which not only includes the full debt, but also interest, debt service fees, cost of the legal fees, and fines. When the DRC refused to disclose the location of its properties outside the country and other assets as requested by the court, FG Hemisphere filed a motion for civil-contempt which was granted. As a result, a $5,000 per week fine has been imposed upon the DRC since March 2009. This fine doubles every four weeks until it reaches $80,000 per week as long as the DRC has not complied with the court’s judgment. It is estimated that this fine represents about $4 million a year.

Policy Recommendation
How can the U.S help recover these billions of dollars as a down payment for Congolese economic development? In coordination with its European partners, the World Bank and the International Monetary fund (IMF) the US can lead the effort to tie current and future funding or aid and bilateral cooperation to transparency benchmarks focused on addressing corruption in all its forms particularly embezzlement and fraud within DRC’s Customs and Excise Agency . First the US should tie any funding for Inga III dam project to results on the reforms mentioned by Mr. Shah; the immediate recovery of the $741.025.015, 00 and an immediate investigation of the remaining 252 cases estimated to $2.964.080.060, 00. Second, ask that similar the investigation be conducted across all Customs and Excise posts in DRC starting with Kasumbalesa. Finally, all US agencies and departments including USAID, the office of the US Special Envoy to DRC and the Great Lakes and the Pentagon condition all assistance and cooperation to strict implementation of these reforms.
By Jacques Bahati AFJN’s Policy Analyst and edited by Tom Hannon AFJN’s Media & Public Relations