China faces lawsuit for more than USD 17 billion for failing to comply with infrastructure agreements in Africa

Workers from China’s Sinohydro Corp outside a hydropower plant. REUTERS/Philimon Bulawayo/File Photo (Philimon Bulawayo/)

The Financial Auditor of the State of Democratic Republic of Congo (DRC) has demanded more than 17,000 million dollars from China after denouncing breaches, by the beijing regimeof the infrastructure agreement in exchange for the exploitation of Congolese minerals signed by both countries in 2008.

The agreement, specifically, required Chinese state-owned companies Sinohydro Corp. (Engineering) and China Railway Group Limited (Railways) the construction of roads and hospitals in exchange for a 68% stake in Sicomines, a cobalt and copper joint venture with Congo’s state-owned mining company, Gecamines.

The report presented by the Auditor estimates that the country has not received adequate compensation from China for the exploitation of its copper and cobalt reserves. According to the document, collected by Bloombergthe Chinese partners have disbursed only about 870 million dollars in infrastructure financing during the last 14 years in works that “for the most part, have not had a visible impact on the population.”

The report understands that Chinese investment in infrastructure it should be “at least $20 billion” given the value of mineral deposits mined in connection with a deal whose initial figures were around $3 billion.

The auditor takes the opportunity to accuse Chinese companies of bad financial practices such as the execution of a price collapse contrary to competitive practices (or “dumping”) and recommend fines of nearly $110 million for flouting capital controls by the Congolese authorities.

People draw water from a Sicomines-run copper and cobalt mine in Kolwezi, Democratic Republic of Congo.  REUTERS/Aaron Ross/File Photo/File Photo
People draw water from a Sicomines-run copper and cobalt mine in Kolwezi, Democratic Republic of Congo. REUTERS/Aaron Ross/File Photo/File Photo (Stringer ./)

The Auditor does not have the legal capacity to impose its recommendations but the conclusions of the report could prompt the congolese government to renegotiate an agreement conceived at the time as an urgent need to reactivate the economy of the African country after years of conflict.

In this sense, and in a response statement, Sicomines questions “both the competence of the Auditor” for these cases “as well as the procedure followed” in an investigation that, in the opinion of the company, supposes a “violation of their rights”, picks up on his Twitter account.

The report “ignores the mechanism put in place by the DRC through Collaboration agreement and the rights granted to Sicomines, and in particular their right to be attended” in these proceedings, “ultimately harming the interests of the country and the Congolese people.”

Thus, Sicomines will begin an evaluation procedure with a view to undertaking “actions to take to protect your rights” before remembering that DRC “It is a rule of law where the right to defense is enshrined and guaranteed by the Constitution.

“In particular, the security of private assets, national or foreign, is guaranteed in the DRC and the commitments made with respect to investors cannot be circumvented,” he concluded.

The outgoing Chinese ambassador to the country, Zhujing, defended last month the work of companies in the African country. According to his estimates, since the implementation of the agreement they have been involved in commercial practices worth almost 10,000 million euros and created more than 11,000 jobs, according to statements to Bloomberg.

(With information from Europa Press)

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