Digging into bad accounting to recover millions

In 2013, the Extractive Industries Transparency Initiative (EITI) exposed major leakages from the Democratic Republic of Congo (DRC) revenue collection agency Direction Générale des Recettes Administratives, Judiciaires, Domaniales et de Participation (DGRAD). Civil society used this information to successfully advocate for a legal enquiry to recover the funds and for the implementation of better oversight mechanisms for the mining revenue collection system.

The DRC has a long history of civil war and corruption. The country’s abundant natural resources have helped fuel the world’s deadliest conflict since WWII, with some 5 million lives lost. Bad governance – enabled in part by a lack of transparency of government revenues and spending – has perpetuated political instability and extreme poverty. Despite its vast natural resource wealth – the DRC’s extractive sector accounts for roughly two-thirds of the government’s budget and 99% of total exports – the DRC’s Human Development Index scores are among the lowest globally, and 63% of the population was living in extreme poverty in 2012.

The DRC’s EITI report for the fiscal year 2010 revealed that $88 million in mining revenue transfers made to DGRAD had not been accounted for. This fuelled a public debate about the lack of accountability among tax collection agencies such as DGRAD. Congolese civil society campaigned for the government to trace the missing $88 million and publish its findings.

The EITI disclosure and civil society campaign lead to several improvements in the Congo’s mining revenue collection system. Multiple government investigations lead to the recovery of $82 million. All tax collection agencies are now subject to annual audits. The government’s tax intake subsequently increased and the level of revenues withheld by collection agencies declined.

Key Lessons:

  • Disaggregated data on mining revenues can be effectively used for fund recovery.
  • Complex, unclear revenue collection system may lead to major leakage of funds.
  • Civil society and independent auditors are needed actors to ensure the government is held accountable.

Website: http://www.itierdc.net

Photo credit: Julien Harneis