UK government goes back on debt relief pledge
In 2010 the Central African country qualified for an international debt relief scheme. Since an announcement by Gordon Brown in 1999, the UK government has pledged to cancel all debt owed to it by countries which qualify through the scheme.[1] The Coalition Agreement says the current government will “work to accelerate the process” of cancelling debt under the international scheme.[2]
Information acquired by Jubilee Debt Campaign under the Freedom of Information Act reveals that whilst the UK has cancelled £91 million owed by the Democratic Republic of Congo, a further £19 million remains on the books.[3] A year ago Department for International Development Minister Stephen O’Brien told parliament that the UK has “cancelled all of the £91 million of remaining debt” owed by the Congo, [4] but in fact Congo still owes £19 million.
Tim Jones, policy officer at Jubilee Debt Campaign, said:
“The people of the Democratic Republic of Congo have suffered for decades from repaying unjust loans to General Mobutu. The £19 million debt is illegitimate. The UK should do what it said and drop the debt.”
The £19 million of debt is owed to UK Export Finance. UK Export Finance (then known as ECGD) backed loans to the Congolese state mining company Gecamines in 1989 to buy British exports. This was under the rule of General Mobutu, when it was known the regime was pillaging Gecamines of recources. It has been estimated that $240 million a year was stolen from Gecamines by Mobutu and others in the 1980s.[5] The UK and institutions such as the IMF and World Bank kept lending to Mobutu and the then Zaire in order to prop-up the dictator during the Cold War.
The UK government says it has not cancelled the debt because it is owed by the state mining company Gecamines rather than the Congo government. However, UK Export Finance contradicts this by listing it as a debt owed by the Congolese state.[6] However, under questioning in Parliament this month, Business Minister Norman Lamb, said “Consideration is being given to abandoning recovery, which would lead to the debt being written off in full.”[7]
Tim Jones said:
“The UK government has been trying to have its cake and eat it. The government says it has not cancelled the debt because it is owed by a mining company rather than the Congo government, but then says the Congolese government is responsible for paying it after all.”
The mining company Gecamines is currently being taken to Court in Jersey by a US vulture fund FG Hemisphere for $100 million of debt said to be owed by the Democratic Republic of Congo. FG Hemisphere paid just $3 million for the debt. The Jersey Court has twice ruled that Gecamines is part of the Democratic Republic of Congo state, and so liable for the Congolese governments debts. A final appeal is expected at the UK Privy Council in May.
Notes
[1] The Democratic Republic of Congo completed the Heavily Indebted Poor Countries (HIPC) initiative in July 2010. Since 1999, UK government policy has been to cancel 100 per cent of debts owed to the UK by countries which have completed the HIPC initiative.
[2] HM Government. (2010). The Coalition: Our programme for government. May 2010. The international scheme is called the Heavily Indebted Poor Countries initiative.
[3] ECGD. (2011). Freedom of Information response FOI (11) 94. 31/12/11.
[4] http://www.theyworkforyou.com/wrans/?id=2011-02-28b.42266.h&m=40085
[5] Renton, D., Seddon, D. and Zeilig, L. (2007). The Congo: Plunder and resistance. Zed Books. London.
[6] ECGD. (2011). Freedom of Information response FOI (11) 94. 31/12/11.
[7] Lamb, N. (2012). Parliamentary written answer to Andrew Gwynne MP. 06/03/12.