Congo Cancels Israeli Firm’s Export Monopoly

Apr 24, 2001 10:47 AM By RapNews

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(Rapaport…April 23, 2001) The Democratic Republic of Congo (DRC) has revoked Israeli-based International Diamond Industries’ (IDI) exclusive multimillion-dollar monopoly on diamond exports. IDI can now join other bidder for DRC diamond export contracts now being offered on the free market, said Mbaka Kawaya, Congo’s mining vice minister in a press statement to Congolese newspapers.

President Joseph Kabila, who succeeded his father Laurent Kabila, after he was assassinated in January, made clear in his inaugural address that he intended to open up the entire mining sector to the open market. The government said that market liberalization was aimed at maximizing revenues and combating fraud.

Laurent Kabila’s government monopolized the diamond trade to guarantee a regular income for the country. However, according to a UN-appointed panel investigating the plundering of resources in DRC, the deal had the unwanted effect of driving much of Congo’s diamond trade underground, which deprived the government of its revenue. To circumvent the government granted monopoly, black–market traders smuggled diamonds out through the neighboring Congo-Brazzaville.

IDI reportedly agreed to pay Laurent Kabila’s government $20 million in July 2000 for diamonds worth up to $600 million a year. According to the UN panel, the company ultimately paid Congo only $3 million for the monopoly.

The Dow Jones Newswire (DJ) reports that a spokesman for IDI insisted that the firm had paid the full amount it promised, although the amount was not revealed.

“IDI fully complied with the agreement between IDI and the Congolese governments,” Lior May told DJ from Tel Aviv. “We don’t understand why the Congolese government wants to change it.”

May claims that the Congo has been under pressure from IDI’s competitors and the International Monetary Fund to annul the deal. IDI and government officials had been in talks to amend the terms of the contact when Congo announced it was canceling the deal, he said.

Tags: Government, IDI, International Monetary Fund, Israel, NGO