VZCZCXYZ0018
RR RUEHWEB

DE RUEHKI #0088/01 0251615
ZNR UUUUU ZZH
R 251615Z JAN 10
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 0075
INFO RWANDA COLLECTIVE
SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS KINSHASA 000088 
 
SENSITIVE 
SIPDIS 
DEPT FOR AF/C (CHRIS LAMORA AND LISA KORTE) 
DEPT FOR AF/EPS (MARY JOHNSON) 
 
E.O. 12958: N/A 
TAGS: EFIN EMIN ENRG EPET ECON PGOV CG
SUBJECT: DRC MAKES PROGRESS TOWARDS EITI VALIDATION 
 
REF: 09 STATE 28858 
 
¶1.  Summary:  In 2008, the DRC became a candidate country for the 
Extractive Industries Transparency Initiative (EITI), a 
multi-stakeholder effort to increase transparency in transactions 
between governments and companies in the extractive industries 
(reftel).  In order to be declared or "validated" as an 
EITI-compliant country by the International EITI Secretariat, the 
DRC must complete certain requirements by a March 10, 2010 
deadline.  The DRC has already taken some positive steps under 
EITI, including the establishment of a National EITI Executive 
Committee, which has met three times, on October 6, December 10 and 
January 14.  The National EITI Executive Committee is comprised of 
representatives from the DRC government, extractive industries and 
civil society organizations and is in charge of overseeing 
implementation of steps the DRC needs to take in order to be 
validated as a country which is compliant with the Extractive 
Industries Transparency Initiative (EITI). 
 
 
 
¶2.  Summary continued:  The third meeting of the DRC National EITI 
Executive Committee was held at the Ministry of Planning on January 
¶14.  Planning Minister Olivier Kamitatu presided over the meeting, 
which was attended by representatives from the government, 
extractive industries, civil society organizations and the donor 
community.  During the meeting, the EITI National Committee 
fulfilled two required steps towards EITI validation.  First, the 
Committee conditionally approved a report submitted by Price 
Waterhouse Cooper's on "EITI in the DRC," which included 
information on the amount of taxes extractive industries paid to 
DRC government agencies and the amount of money the government 
agencies actually recorded receiving from the extractive industries 
in 2007.   Second, the Committee selected the French Company CAC 75 
to validate the Price Waterhouse Cooper's report.  The objective of 
the validation is to provide an independent evaluation of progress 
the DRC has made in implementing EITI and also recommendations 
about necessary measures which still need to be taken.  Two steps 
which the DRC still needs to take before a March 10 deadline is a) 
to organize a workshop to present the Price Waterhouse Cooper's 
report at the national and provincial levels and b) validate the 
report.  Whether the DRC meets the March 10 deadline remains to be 
seen.  End summary. 
 
 
 
Report Conditionally Approved 
 
----------------------------- 
 
 
 
¶3.  During the January 14 meeting, Executive Committee members 
reviewed the first report published by the independent 
Administrator/Conciliator Price Waterhouse Cooper's on December 22 
on "EITI in the DRC," which covered twenty mining companies and 
five petroleum companies.  The report examined how transparency 
works in DRC extractive industries by matching taxes that 
extractive industries paid to government tax collecting agencies 
and how much money the tax collecting agencies recorded in 2007. 
DRC tax collecting agencies include OFIDA (Customs), DGRAD 
(responsible for administrative taxes), DGI (responsible for 
revenue, salary and property taxes), and OCC (the Import-Export 
Authority).  In the report, Price Waterhouse Cooper's recommended 
that the DRC take the following actions:  a) the extractive 
industries should be required to adhere to the EITI process; b) the 
DRC should define which revenues extractive industries should 
declare in advance and explain which revenues to record; c) the DRC 
should hold a workshop for all people involved in the EITI to 
explain how to complete the declaration forms; d) the EITI 
Technical Secretariat should sensitize extractive industries and 
government agencies to stick to the timetable of implementing EITI 
procedures and to provide all required documents related to revenue 
declaration and e) the DRC should implement some payment procedures 
for special payments of some revenues. 
 
 
 
¶4.  The report detected discrepancies between what the extractive 
industries paid and what the tax collecting agencies declared.  The 
EITI Executive Committee approved the report on condition that 
 
these discrepancies are addressed, some calculations re-adjusted 
and some typographical errors corrected.  Delegates from the OCC 
requested that their figures not be published, since they were not 
a "tax collection agency," but an "import-export authority." 
However, the EITI Executive Committee decided to keep the OCC 
figures in the report, provided that they label it as a "government 
entity" and not a "tax collection agency."  The next step in the 
EITI process is that the DRC must organize a workshop to present 
the report at the national and provincial levels. 
 
 
 
Now Validation Work Begins 
 
-------------------------- 
 
 
 
¶5.  As part of the EITI process, the Price Waterhouse Cooper's 
report will now have to be validated.  National EITI Coordinator 
Christian Mambu announced that on December 23, a five-member ad-hoc 
committee selected the French Company CAC 75 to validate the 
report.  He stated that the CAC 75's representative would arrive in 
the DRC in mid-January and complete a validation report by February 
¶15.  The total cost of the validation would be USD 103,000.  The 
CAC representative requires a down-payment of 40 percent of the 
total bill.  The GDRC would pay 51 percent of this amount, while 
multinational donors would cover the remaining 49 percent.  In 
order to raise funds, the EITI Executive Committee promised to send 
a letter to the GDRC through the Minister of funds.  The delegate 
from the German government's development agency (GTZ) said that he 
would call a meeting with donors to communicate their position. 
The EITI Executive Committee requested that the World Bank shorten 
its procedures for mobilizing funds, which normally take at least 
15 days.  (Note:  On January 23, Mambu sent an invitation letter to 
Hughes Renaux of CAC 75 to perform the validation.  As of January 
25, Renaux has still not arrived in the DRC.  In addition, there is 
no news as to whether the DRC has received funding to cover the USD 
103,000 cost of the validation.  End note.) 
 
 
 
¶6.  According to the Terms of Reference for the Validator, CAC 75 
would submit a pilot report to the National EITI Coordinator and 
the Validation Follow-Up Group on January 31.  Final amendments to 
the validation report would be shared with the International EITI 
Secretariat.  The final report would be submitted on February 28. 
The Minister of Plan emphasized that the DRC should be ready with 
its validation report no later than March 9.  The deadline by which 
the report needs to be validated is March 10. 
 
 
 
¶7.  (SBU) Comment:  The DRC seems to be making steady progress 
toward EITI validation.  While he was in Kinshasa in early December 
2009, Economic Governance Assessment Team member Nicholas Garrett 
strongly encouraged USG political support of EITI in the DRC. 
Whether the DRC fulfills all of its obligations for EITI validation 
by the March 10 deadline will depend on financing, political will 
of the GDRC and continued commitment by the international 
community.  End comment. 
 
 
 
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