Congolese oil wealth squandered in Geneva

1. March 2015

An investigation conducted by the Berne Declaration (BD) reveals how Philia, a Swiss trader, has been profiting at the expense of the Congolese state-owned oil refinery, Coraf. Coraf is managed by the President’s notoriously corrupt son, Denis Christel Sassou Nguesso. Largely unknown in the opaque world of trading, Philia was able to obtain an exclusive contract to export petroleum products with no public tender process and under highly questionable conditions. This case clearly illustrates the problems that plague the commodity sector, notably the risk of misappropriation of oil rents at the expense of the population of producer countries.

With access to exclusive documents, the BD analysed Philia’s business model and the clauses of a contract signed in 2013 with the Republic of the Congo’s state-owned oil refinery. The contract and invoices in our possession leave no room for doubt that Philia generated significant profits from Coraf’s generosity. Coraf provided the Geneva-based trader with free credit and, in doing so, enabled it to bypass the compliance procedures that trade finance banks typically conducted before allocating credit. By immediately re-selling its cargoes to third parties, including other Swiss traders, Philia acted as a pure intermediary between Coraf and the international markets. Philia therefore pocketed substantial profits for zero logistical effort. These perks granted at the Congolese population’s expense enabled Philia, owned by one single shareholder, to competitively position itself in the downstream oil sector.

Coraf is a true financial abyss for the Congolese Treasury. For three years, the state has not received a single penny in exchange for the oil it allocates to the refinery. It is little coincidence that Coraf is managed by the President’s son, an individual who has complete control over this ultra-corrupt state’s oil sales. While the population live in poverty, Denis Christel Sassou Nguesso distinguishes himself by his elaborate expenditures, meticulously detailed in the “Biens mal aquis” inquiry currently underway in France. Ten years ago, a London tribunal further revealed how he flogged, for his own profit, large quantities of state crude sold-on to Glencore and Vitol.

The story of Philia reveals how oil contracts are manipulated in the dark corridors of power, all the while maintaining a veil of legality. Transparency in the payments and contracts concluded between Swiss companies and state entities is crucial in the fight against the misappropriation of oil rents by corrupt elites. Yet, the Swiss government nevertheless refuses to adopt such measures for the commodity trading sector, despite the significant positioning of Swiss traders in African markets. The BD further calls for the creation of a sector-specific surveillance authority – ROHMA – which would require companies to conduct mandatory due diligence on their supply chains and business partners.
 

For more information

Marc Guéniat, Berne Declaration, +41 (0) 21 620 03 02, gueniat@ladb.ch.
 

http://issuu.com/erklaerungvbern/docs/bd-2015-investigation-philias_s_ref?e=3524425/11642081