Congo Prime Minister Halts Asset Sales Before Cabinet Change

Democratic Republic of Congo Prime Minister Augustin Matata Ponyo forbade sales of state assets and the signing of new contracts while the country awaits a cabinet reorganization, according to a letter to his ministers.

Government officials should be prepared to hand over their posts after Congolese President Joseph Kabila said he plans to create a new government of “national cohesion,” Ponyo said in an Oct. 24 letter obtained by Bloomberg and confirmed by the government. Kabila’s announcement marked the end of a national conference last week to promote unity and reconciliation in Africa’s second-biggest copper producer.

During the transition, there is a “prohibition on the sale, transfer, or disposal of state assets,” it said. The order applies to all state-owned companies, while officials are also forbidden from concluding new financial engagements and procurement contracts, according to the letter.

Gecamines, Congo’s state-owned mining company, is facing pressure from advocacy groups including Kofi Annan’s Africa Progress Panel after announcing it may sell its shares in Glencore Xstrata Plc-controlled Kamoto Copper Corp. Between 2010 and 2011, the company sold stakes in several of its joint ventures at prices well below market value, costing the country hundreds of millions of dollars, the 10-member panel said in May.

New Tender

Publish What You Pay, a London-based anti-corruption campaign, and a group of Congolese non-governmental organizations monitoring the mining industry called for Gecamines to undertake a new tender process if it decides to sell the stake in KCC, which may become Congo’s biggest copper producer next year.

Congo’s Mines Minister Martin Kabwelulu told Gecamines in an August letter that he had not been informed of the sales process and that the company was not adhering to regulations requiring the publication of contracts.

In an Oct. 24 statement, the groups also question Gecamines’ plan to create an offshore company to separate its profitable joint venture stakes from its nearly $1 billion debt. The company hopes to use the entity to attract financing for a $2.8 billion development plan.

The groups “fear that this subsidiary will only serve to launder funds that could be embezzled by Gecamines’ officials since it will be difficult for Congolese authorities to control the subsidiary,” according to the statement.

Congo’s new government will be made up of members of the presidential majority and of opposition parties, as well as representatives from civil society, Kabila said on Oct. 23.

Several of the country’s opposition parties, who still challenge the validity of Kabila’s 2011 re-election, boycotted the conference. Kabila also faces a violent rebellion in eastern Congo and insecurity in copper-rich Katanga province.

Congo was the world’s eighth-largest producer of copper last year and is the biggest source of cobalt, used in rechargeable batteries.

To contact the reporter on this story: Michael J. Kavanagh in Kinshasa at mkavanagh9@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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