CONTINUED CONFUSION ON DIAMOND SECTOR MANAGEMENT

C O N F I D E N T I A L KINSHASA 002000

SIPDIS

E.O. 12958: DECL: 10/28/2014
TAGS: EMIN ECON EAID PGOV PREL
SUBJECT: CONTINUED CONFUSION ON DIAMOND SECTOR MANAGEMENT


Classified By: Econoff Peter Newman for reasons 1.4 b/d


1. (C) Summary: Competition between the Minister of Mines
Eugene Diomi Ndongala and CEEC (diamond evaluating authority)
Managing Director Victor Kasongo continues to increase. The
European Commission (EC) recently decided not to fund a
diamond sector audit presented by Diomi and the IMF. The two
major industrial diamond producers and the CEEC were included
in the terms of reference. The Minister is also complicating
the GDRC delegation to the Kimberley Process Plenary in
Ottawa by attending himself with two advisors, separately
from the original delegation led by Kasongo and three of his
advisors. Coordination is non-existent between the two bodies
and will frustrate reforms. End summary.


2. (C) In concert with the IMF, Minister of Mines Diomi
Ndongala approached the EC with terms of reference for a
diamond sector audit to be conducted outside of the context
of both the Kimberley Process and normal audits of
parastatals. The terms of reference specifically targeted
Sengamines (a privately-owned industrial level diamond
producer),Miba (the diamond parastatal),and the CEEC (the
diamond evaluating authority and a parastatal),all of which
are significant revenue earning companies. (Comment: The
Ministry of Mines has no jurisdiction to hold a financial
audit of these firms and only has technical oversight of
mining parastatals. Administrative and financial oversight
rest with the Ministry of Portfolio. Diomi was, yet again,
attempting to overstep the bounds of his authority, this time
with the support of the IMF. End comment.)


3. (SBU) EC representative Vincent Ringenberg reported to
Econoff that the EC has decided not to fund the audit.
Although the EC is interested in providing aid targeted
toward the natural resources sector, it feels an ad hoc audit
of three companies in the diamond sector is too specific (and
politically sensitive) to have as a starting point. Before
accepting projects in this sector, the EC would want to
commission an expert study to identify what kind of
value-added EC funded projects could have for the development
of the DRC. The EC representative office has not yet informed
the Ministry of Mines or the IMF.


4. (C) The Kimberley Process considers the CEEC to be the
main Congolese interlocutor for diamond evaluation and
certification in the DRC. The CEEC is sending a delegation of
four CEEC officials to Kimberley Process Plenary in Ottawa.
When the Minister Diomi discovered that there was a plenary
meeting and that the CEEC was already prepared to send a
delegation and make a presentation, he immediately informed
the Kimberley Process that he would attend himself with two
accompanying advisors, effectively creating a parallel
delegation. Canadian pol/econ counselor Stephen Randall
commented that Kimberley Process Chair Tim Martin has allowed
Victor Kasongo to remove the DRC from the list of presenters.
Martin prefers not to officially deal with either group until
Diomi and Kasongo sort out their differences. (Comment: The
current Kimberley Process Plenary delegation snafu is
unfortunate as it puts a very unprofessional face on the DRC
shortly after the clear positive of voluntarily inviting the
Kimberley Process to review DRC operations. End comment.)


5. (C) Comment: Post feels the EC and the Kimberley Process
are correct in avoiding official entanglements with the
Ministry of Mines as any involvement is likely to be
politicized by the Minister. If institutional battles between
the Minister of Mines, the CEEC and other mining sector
agencies continues, reforms as recommended by the World Bank
and the recent Kimberley Process Review Visit will only come
to fruition very difficulty and contentiously. IMF
involvement is curious and is most likely tied to its
objective of increasing government receipts. The IMF,
however, has been shanghaied this time into supporting
Diomi's personal agenda. End comment.
MEECE