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African Commission on
Human and Peoples' Rights

Statement of the African Commission on Human and Peoples’ Rights on illicit financial flight and other concerns arising out of the Paradise Papers

The Working Group on Extractive Industries, Environment and Human Rights (WGEI) of the African Commission on Human and Peoples’ Rights (the Commission) expresses its deep concern about the information which has come to light through the leaked ‘Paradise Papers’, a set of 13.4 million confidential electronic documents relating to offshore investments, particularly related to activities in African countries.

The WGEI is particularly concerned about the following major concerns on the continent which have been reconfirmed by the information from the Paradise Papers:

1.     Abuse by transnational companies of tax loopholes, including through the use of offshore tax havens and the use of shell companies to reduce taxable earnings, which result in illicit financial flight from the African continent. In this regard the Commission particularly recalls its Resolution 236 of 2013 on illicit flight of capital from Africa which noted that illicit capital flight by both multinational companies and individuals from Africa leads to the loss of billions of US dollars every year;

2.     The exploitative circumstances under which many employees of transnational companies work on the continent as well as the treatment of people and communities who live in the area where extractive industries operate, particularly with regard to eviction or displacement, development needs and environmental destruction;

3.     The evasion of legal liability through the use of jurisdictional technicalities by companies operating on the continent with parent companies abroad, which has resulted in an accountability vacuum; and

4.     The use of intermediaries with special access to high-placed government authorities and decision-makers by transnational companies operating in the extractive industries to circumvent the normal applicable procedures and policies, including through bribery and personal benefits to government officials.

The WGEI is particularly concerned about the exploitative and non-beneficial terms of licensing agreements for extractive industries in the Democratic Republic of the Congo (DRC), contrary to the provision in Article 21(1) that the right to natural resources ‘shall be exercised in the exclusive interest of the people’. In this regard information has come to light concerning the role of of Mr. Dan Gertler, an Israeli billionaire with close connections to the President of the DRC. The Paradise Papers reveal that Mr. Gertler negotiated a reduction of more than 75%, from $585 million to $140 million on payment due to the DRC by a foreign transnational mining company, Katanga in which Glencore, one of the world’s largest commodities companies has a major stake. Evidence of the questionable nature of Mr. Gertler’s activities in the DRC has been coming to light even before the Paradise Papers, including in a 2001 United Nations investigation which implicated him in a weapons deal in exchange for a stake in the extractive industries and the 2013 Africa Progress Panel Report which noted his role in concession deals which resulted in millions of dollars of loss for the DRC.

The WGEI is further concerned about the use of certain African countries as tax havens, to the detriment of other countries on the continent, including the use of shell companies in countries such as Mauritius and Seychelles to reduce taxes. While the WGEI is appreciative of the steps taken by Mauritius to ensure reform, the low taxes, ease with which foreigners can register companies and tax treaties between Mauritius and other Africa countries continue to result in loss of tax revenues from companies routing their profits through shell companies in Mauritius.

The WGEI therefore:

1.     Calls on State Parties to the African Charter on Human and Peoples’ Rights to assess their national tax laws and policies and, if necessary, to amend them in order to address the issue of illicit financial flight and to ensure that they are not used as tax havens to the detriment of other African countries;

2.     Calls on State Parties to hold companies operating within their jurisdiction accountable for environmental degradation or destruction as well as human rights and labour abuses throughout the operation cycle of the extractive industries;

3.     Calls on the DRC to do a thorough investigation into corrupt practices particularly in the allocation of mining licences and other benefits, including special access to and preferential prices or opportunities to persons and companies having government connections resulting in loss of payments due to the people of DRC; and

4.     Further strongly urges the Government of the DRC to investigate the involvement of Mr. Gertler in negotiations which have been detrimental to the people or the Government of the DRC, and given the extent of the evidence which has come to light, to henceforth terminate the involvement of Mr. Gertler in the extractive industries sector in the DRC.