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IS THERE AN AFRICAN RESOURCE CURSE?

HEARING

BEFORE THE

SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH, 

GLOBAL HUMAN RIGHTS, AND 

INTERNATIONAL ORGANIZATIONS

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

FIRST SESSION

JULY 18, 2013

Serial No. 113–91

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

TREY RADEL, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH, GLOBAL HUMAN RIGHTS, AND

INTERNATIONAL ORGANIZATIONS

CHRISTOPHER H. SMITH, New Jersey, Chairman 

TOM MARINO, Pennsylvania 

RANDY K. WEBER SR., Texas 

STEVE STOCKMAN, Texas 

MARK MEADOWS, North Carolina 

KAREN BASS, California 

DAVID CICILLINE, Rhode Island 

AMI BERA, California 

(III)

C O N T E N T S 

Page

WITNESSES 

Ms. Corinna Gilfillan, director, Global Witness, USA .......................................... 7

Mr. Mohammed Amin Adam, executive director, Africa Centre for Energy 

Policy ..................................................................................................................... 22

Mr. Anquan Boldin, Ambassador, Oxfam America ............................................... 34

Mr. Tutu Alicante, executive director, EG Justice ................................................ 38

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Ms. Corinna Gilfillan: Prepared statement ........................................................... 9

Mr. Mohammed Amin Adam: Prepared statement ............................................... 24

Mr. Anquan Boldin: Prepared statement .............................................................. 36

Mr. Tutu Alicante: Prepared statement ................................................................. 40

APPENDIX 

Hearing notice .......................................................................................................... 74

Hearing minutes ...................................................................................................... 75

(1)

IS THERE AN AFRICAN RESOURCE CURSE? 

THURSDAY, JULY 18, 2013

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH,

GLOBAL HUMAN RIGHTS, AND INTERNATIONAL ORGANIZATIONS,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 2 o’clock p.m., in 

room 2167 Rayburn House Office Building, Hon. Christopher H. 

Smith (chairman of the subcommittee) presiding. 

Mr. SMITH. Good afternoon, everybody. Today’s hearing probes 

the question of whether or not there is an African resource curse. 

The resource curse refers to the paradox in which countries and regions with an abundance of natural resources, specifically non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with 

fewer natural resources. This is believed to happen for many reasons, including a decline in the competitiveness of other economic 

sectors, the volatility of revenues from the natural resource sector 

due to global commodity market swings; government mismanagement of resources; or weak, ineffectual, unstable or corrupt institutions. 

Africa has abundant natural resources, from critical and desirable agricultural products, such as gum arabic, to strategic minerals, such as cobalt, titanium, and coltan, to energy resources, 

such as petroleum and natural gas. However, under the so-called 

African resource curse, African citizens don’t benefit from these resources to the extent that would be expected. Education, health 

care, and other services too often are not provided to citizens by 

their governments who profit from African resources but, rather, 

are too often paid for by donors. 

Throughout history, African resources have often led to negative 

outcomes for African people such as slavery, colonization, predatory 

governments, and vicious rebel group activity. The ivory trade 

opened Africa to trans-Saharan trade to the Middle East and beyond, but it also opened Africa up to the earliest days of international slavery. African gold and other natural wealth made the 

continent and personalities in it famous and admired, but also led 

to the even more expansive trans-Atlantic slave trade. 

Ivory hunters wiped out the elephant population in various locations in Africa and in recent years included the Lord’s Resistance 

Army and its murderous reign of terror in the Great Lakes region. 

Minerals that power modern society also fund the chaos brought by 

2

militias, such as M23 and the numerous other militias now terrorizing the eastern portion of the Democratic Republic of the Congo. 

So-called blood diamonds earlier funded predatory rebels in Liberia 

and Sierra Leone. 

What should be a blessing, abundant natural resources, has alltoo-often been a curse. It has been argued, for example, that one 

can correlate the rise and fall in the price of petroleum with the 

rise and fall of the implementation of human rights in major oilproducing countries. Protection of human rights throughout resource-cursed countries is dismal or completely lacking. Most resource-cursed countries are ruled by either authoritarian or other 

types of highly repressive regimes. These regimes are kept in 

power by an elite group, such as those comprised of high-ranking 

politicians and military leaders. As long as the existing government 

keeps these few people happy, they can rule without fear of consequences. This system is set up so that those most in need of protection are left to fend for themselves. 

Equatorial Guinea is an example of how the resource curse 

works. It is a small country with a population of slightly more than 

1⁄2 million people but a Gross Domestic Product that has increased 

more than 125 times, not 125 percent, 125 times, since oil production began in the mid-1990s. On paper, the wealth per capita in 

Equatorial Guinea is as high as almost any wealthy country in Africa, if not higher. Yet, if you visit the country and move beyond 

the gleaming new hotels and resorts, you will find numerous people 

who are forced to survive on $1 a day or less. 

Corruption in Equatorial Guinea is rampant. President Obiang 

owns two luxury homes in the Washington, DC, area, and his sons 

own two homes and numerous luxury cars in California. In fact, it 

is estimated that the President’s son spent more on houses and 

cars alone between 2004 and 2006 than the entire government 

spent on education in the year of 2005. 

Facts involving Equatorial Guinea’s Government’s siphoning of 

natural resource profits were revealed in a 2004 U.S. Senate investigation of Riggs Bank, which could no longer continue operations 

due to financial improprieties, partly involving questionable funds 

from Equatorial Guinea. The Obiang family dominates private 

business in the country so commerce there benefits them first and 

foremost, rather than provide a means of economic opportunity 

more broadly. 

In order to counteract corrupt practices from profits from natural 

resources and to ensure they are not diverted or otherwise abused, 

various international agreements, as we all know, have been created. The Extractive Industries Transparency Initiative, or EITI, 

was created and announced at the 2002 World Summit for Sustainable Development in Johannesburg to provide a multi-stakeholder 

system that would require disclosure of profits from natural resource extraction. Thus far, 34 countries have produced EITI reports, covering $1.02 billion in total government revenue. Four African countries have been officially suspended from the process for 

noncompliance: The Central African Republic, the Democratic Republic of the Congo, Madagascar, and Sierra Leone. 

Similarly, the Kimberly Process Certification Scheme, established in 2009 by the U.N. General Assembly Resolution 55/56, is 

3

designed to prevent conflict diamonds from entering the mainstream rough diamond markets. Global Witness, which present testimony today, pulled out of the scheme 2 years ago, but there are 

those within the organization that reportedly still believe it provides at least a basis for addressing the problem of blood diamonds. 

Neither African governments nor the international community 

are helpless to effectively address the misuse of African natural resources. Working together, we can ensure that corruption is minimized, if not eliminated altogether. Protection of wildlife and other 

natural resources must be achieved. The days of corrupt governments shirking their responsibilities so that a select few can benefit from their country’s blessings must be ended. 

Earlier today in Congress, we honored the life, legacy, and values 

of former South African President Nelson Mandela on his 95th 

birthday. During one of his visits to Congress, he told Members 

that to deny a person’s human rights is to deny their humanity. We 

must do all we can, not only to ensure that African natural resources benefit the people of African countries economically, but 

also to guarantee that the human rights of African people are more 

fully respected by those who wield power through government authority or by the barrel of a gun. 

Thank you very much, to my colleagues, for being here. And I 

would like to yield to Karen Bass, the ranking member, for any 

opening comments she might have. 

Ms. BASS. As always, thank you, Mr. Chair, for convening this 

meeting on African resources and what will be done to ensure that 

a continent with immense resource wealth is able to leverage those 

resources to promote broad and sustained development. 

I also want to thank today’s witnesses for making yourselves 

available to brief this committee and the work all of you do to expose the challenges on this and other relevant topics. I also want 

to give a special greeting and thanks to Mr. Boldin for lending your 

star power to this issue. Mr. Boldin, I know that you will mention 

in your statement that in consultation with Oxfam, I have also 

written a letter that is cosigned by Members of Congress that calls 

on ECOWAS to develop a regional mining code that will apply to 

all 15 member nations and that will protect the basic rights of local 

communities. 

I have often shared my strong interest in this committee focusing 

on Africa and the growth opportunities that exist throughout the 

continent. Mr. Obama recently returned from Senegal, South Africa, and Tanzania. And his message was clear. Our language, our 

perception of Africa must change. Business, trade, and investment 

are the conversations we need to have with African nations. I have 

to tell you that I was a little disappointed in the coverage of his 

trip because oftentimes the news covered Africa and the fact that 

he was on the continent almost as a backdrop and focused on other 

issues of the day that were important to our country but really 

didn’t spend a lot of time covering the nations that he was visiting. 

I am pleased that today’s panel is prepared to discuss a set of 

issues that present extraordinary opportunity and at the same time 

illustrates the deep challenges that face African nations. The question before us is, how can African nations benefit from their natVerDate 0ct 09 2002 17:02 Jan 13, 2014 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 Y:\WORK\_AGH\071813\81978 HFA PsN: SHIRL
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ural resource wealth and take that wealth to expand and accelerate 

development that will ultimately lift millions out of poverty? 

As I often mention, Africa is not the next economic frontier, but 

the emerging market of today. We have seen strong double-digit 

and near double-digit growth in places like Angola, Nigeria, Mozambique, and Rwanda. 

I visited several African nations over the last year that share 

with us their strong desire not to engage our Government in more 

of the same forms of aid but to shift our discussion to topics of 

trade dealing in arrangements that provide and promote private 

sector engagement, economic growth, and job creation. 

What is remarkable about this is that our nation has the comparative advantage to play a key role in the continent’s economic 

emergence, but we have yet to fully act. These trade and business 

gains cannot be fully realized, however, until we address some of 

the well-known barriers, including and specifically around natural 

resources, extractive industries, and the laws and regulatory environments needed to ensure billions of the world poor benefit from 

their country’s natural resources. Countries like Ghana, Sierra 

Leone, and Liberia are poised to reap benefits from new discoveries 

of oil, but many wonder if they will. 

In my travels, I have grown deeply concerned with contracts 

from multinational companies, particularly those from more developed nations where resource extraction doesn’t necessarily do much 

for the majority of the people. I would like to learn more about 

those contracts. I had an experience of being in the DRC and just 

leaving from the airport and going to the Embassy and seeing such 

unbelievable poverty and knowing that the resources in the DRC 

are some of the greatest on the planet and what companies are 

doing business that is extracting those resources. And I am particularly interested if any of them are our companies or companies 

from the United States. I know that some of the issues are that 

some of the African countries might negotiate poor terms with the 

extractive companies. They don’t necessarily collect resource revenues effectively. And then when they do, where those resources go, 

of course, is a question. 

So I am pleased that there are a number of programs and initiatives, including Dodd-Frank, that have been created to address and 

bring greater accountability and transparency across the African 

continent and the world. These include the extractive industries, 

transparency initiative, a voluntary multi-stakeholder program 

that promotes revenue transparency, and accountability associated 

with the extractive industries, the open government partnership, a 

multilateral initiative to promote more effective responses to governance by improving public services, increasing public integrity, 

managing public resources, creating safer communities, and increasing corporate accountability. 

Now, I have also heard that some of the provisions that were put 

into Dodd-Frank actually have some unintended consequences 

when it comes to the extractive industries. And I am not sure if 

we will learn about those today, but hopefully some of our witnesses might be able to reference that. 

Now, I believe these programs are making a real difference. And 

I will be interested to also hear from our witnesses if the programs 

5

are effective. I am also interested to know how the 2013 resource 

governance index ensures resource wealth benefits to those countries and people who greatly depend on proper management of 

those resources. 

I want to thank you. And I look forward to the testimony from 

our witnesses today. 

Mr. SMITH. Yes. Thank you so very much. 

Mr. Meadows? 

Mr. MEADOWS. Thank you, Mr. Chairman. And thank you for 

being here. And on a personal note, as an avid Florida State fan, 

I have cheered for you for many years with each reception. And it 

is those wonderful hands that today I cheer for you even louder because of what you are doing here today and this important work. 

And I just want to say thank you on behalf of many here in Congress for highlighting this particular issue. 

You know, we have known for a long time that Africa has just 

a great potential with natural resources, you know, a number of 

natural resources that not only could serve as an engine for economic development but possibly move the entire continent to a new 

era of prosperity. Unfortunately, that hasn’t happened. We have 

seen, as the chairman and the ranking member have testified already and shared, that those challenges from around the world just 

really create areas of great concern. Some of those challenges are 

gone. Many of them still remain. And some of those challenges now 

are new. They are evolving each day as we start to look at it. 

You know, today too much of Africa is really ruled by repressive 

and oppressive regimes that take those natural resources as an 

asset to leverage power and to stay in power and truly not to improve the lives of the people within their own country. That is deplorable. Human rights violations, as we have heard testimony a 

number of times before this committee, the human rights violations 

continue to happen over and over again. And this leverage, this 

tool that continues to get used really needs to be one that we hold 

those that are using them as a weapon, hold them accountable. 

The chairman and the ranking member have really on a bipartisan really worked very well together to make sure not only that 

it is highlighted, that we in Congress make sure that we do what 

is possible from a legislative standpoint to address. And so I look 

forward to hearing that. 

I hope that we look to an Africa that is truly transformed one 

day because some of the testimony that we hear today affects the 

lives of the people in many countries throughout that wonderful 

continent. 

I am going to apologize beforehand. Because of votes and everything, I have got two hearings. And so I will be bouncing back and 

forth. But I just want to say thank you for coming. Thank you for 

your interest. And I thank the chairman and ranking member. And 

I yield back. 

Mr. SMITH. Mr. Meadows, thank you very much for your leadership and for your participation in a very meaningful way in every 

hearing and markup we have had. 

I would like to now welcome our very distinguished panel of witnesses, beginning with Corinna Gilfillan, who is the head of the 

U.S. office for Global Witness and has worked for more than 10 

6

years to strengthen governance over natural resources. She led 

Global Witness’ campaign to combat conflict diamonds and since 

2004 has directed Global Witness’ U.S. office right here in DC. She 

currently serves on the international board of the Extractive Industries Transparency Initiative and has been an adjunct instructor at 

Princeton University’s Woodrow Wilson School of Public and International Affairs. She also previously worked for the U.N. Environmental Program in Paris and was Director of Friends of the Earth 

U.S.’s Ozone Protection Program. 

We will then hear from Mohammed Amin Adam, who is the executive director of the Africa Centre for Energy Policy. Before joining 

ACEP, he was coordinator of Ibis’ Extraction Industries Program in 

Africa. He has also worked as an oil coordinator to Publish What 

You Pay for Ghana. Mr. Adam also served in various positions in 

the public sector in Ghana, including in the Energy Ministry and 

as mayor of Ghana’s third largest city. He is also a member of the 

consortium that worked on Ghana’s first EITI report on oil and 

gas. He also participated in designing meetings for two global governance initiatives: The Open Governance Partnership and Open 

Contracting. 

Then we will hear from Anquan Boldin. I would just point out 

that I had and Greg had the privilege of meeting with Anquan on 

June 24th and had a very good meeting. He gave us an update of 

his work in this area. And while Greg and I have been talking 

about doing a hearing like this sometime in the future, it crystallized at that meeting that sooner would be better than later. 

And, as a matter of fact, we asked what his availability was with 

training coming up, so that is why it is being done and was put 

together rather quickly. 

Anquan Boldin is a professional football player, as we all know, 

with the San Francisco 49ers but is here today in his capacity as 

an Ambassador of Oxfam. He has worked tirelessly to give back, 

both in the United States and in Africa. And in connection with 

this work, he founded the Anquan Boldin Q81 Foundation to bring 

hope to underprivileged children. In March 2012, in response to a 

severe drought in Ethiopia, he traveled with a friend and former 

teammate, Larry Fitzgerald, to Ethiopia to visit Oxfam programs 

and to bring attention to the need in that region. Together he and 

Mr. Fitzgerald visited people in communities working hard to rebuild and carry the story for the people they met back home, appearing on many prominent news outlets and again before the U.S. 

Congress to speak to each and every one of us. 

We will then hear from Mr. Tutu Alicante, who is from Equatorial Guinea and is a founder and executive director of EG Justice. 

His organization is dedicated to promoting human rights to rule of 

law, transparency, and civic participation in his homeland. Before 

founding EG Justice, he worked as a legal consultant with international NGOs promoting legal accountability and transparency in 

the extractive industry. In 2007, he received a fellowship from 

Echoing Green to establish EG Justice. Prior to that, he worked as 

an employment attorney with the Southern Migrant Legal Services, where he represented migrant farm workers. 

7

So, Corinna, if we could begin with you? And, again, I want to 

thank our distinguished witnesses for sharing their expertise and 

their time with our subcommittee today. 

Ms. GILFILLAN. Thank you. 

STATEMENT OF MS. CORINNA GILFILLAN, DIRECTOR, GLOBAL 

WITNESS, USA 

Ms. GILFILLAN. Good afternoon, Chairman Smith, Ranking Member Bass, and members of the subcommittee. Thank you very much 

for holding this hearing today to focus on the resource curse in Africa. 

I work for Global Witness, which is an international advocacy organization working to break the links between natural resources, 

conflict, and corruption. 

The African continent is rich in oil, gas, and other minerals. In 

2010, the value of exports of oil and minerals from Africa was 

worth $333 billion, about 6 times the value of exported agricultural 

products and nearly 7 times the value of international aid. Such resource wealth has the potential to lift many of Africa’s poorest out 

of poverty. Yet, often we see the opposite. African resource-rich 

countries mired in poverty because of public revenues earned from 

selling these resources are being squandered through corruption 

and lack of government accountability. 

An example of this is in the Democratic Republic of the Congo, 

one of the richest countries in natural resources, that is at the bottom of the human development index. Congo lost at least $1.36 billion from the underpriced sales of copper and cobalt mining assets 

between 2010 and 2012. In secret deals involving companies registered in British overseas territories that could keep their ownership secret, this is almost twice the country’s annual spending on 

health and education combined. 

In Guinea, there are corruption concerns related to the company 

BSGR’s acquisition of flocks 1 and 2 of the massive Simandou iron 

ore concession. A series of secret contracts seen by Global Witness 

spells out how BSGR promised Mamadie Toure, one of the four 

wives of then Guinean dictator Lansana Conte, millions of dollars 

in shares in Simandou in return for help in acquiring the licenses. 

BSGR paid nothing for its rights in Simandou and sold 51 percent 

of its stakes to Vale in 2010 for $2.5 billion. To put this deal into 

context, the Guinean Government’s entire annual budget in 2010 

amounted to just $1.2 billion. 

Natural resources are also funding conflict in Africa. For the last 

15 years, armed groups and members of the National Army have 

used profits from the trade in certain minerals to finance themselves and their operations in eastern DRC, fueling of war that has 

cost over 5.4 million lives. The metals mined in eastern Congo 

enter global markets and make their way into products we use 

every day, such as mobile phones, cars, airplanes, and jewelry. 

In Zimbabwe, the ruling ZANU–PF elite is using Zimbabwe’s diamond wealth as a source of off-budget financing for partisan security forces with a track record of committing human rights violations against Zimbabwe’s civilian population. 

Increasing transparency in the extractive sector is crucial to combat the resource curse. It deters corruption, creating an enabling 

8

environment for better resource governance and giving citizens information to hold their governments to account. 

The encouraging news is that there is a rising tide of transparency. The U.S. Government has exhibited strong leadership by 

passing sections 1502 and 1504 of Dodd-Frank. Section 1502, the 

conflict minerals provision, aims to cut off financing to abusive 

armed groups involved in the minerals trade in eastern Congo. Section 1504 requires extractive companies to publicly disclose payments to governments on a country and project level. U.S. leadership has catalyzed global action. The European Union and other 

countries are now following suit. 

Increased transparency through initiatives like the Extraction 

Industry Transparency Initiative will also empower citizens in African resource-rich countries to demand government accountability 

for responsible resource use. The Africa Progress Panel, led by Kofi 

Annan, recently issued a ground-breaking report entitled, ‘‘Equity 

in Extractives,’’ which calls on governments to promote greater 

transparency of the extractive sector and tackle hidden company 

ownership. 

We very much appreciate the work of the subcommittee in addressing corruption and human rights issues in Africa and today 

would like to make the following policy proposals for consideration: 

First, effectively implement and enforce sections 1502 and 1504 of 

Dodd-Frank; second, make the transparent and responsible management of natural resources an integral part of U.S. foreign policy 

objectives and mainstream resource governance as a core part of 

U.S. assistance to resource-rich countries. A key part of this should 

involve protecting human rights and actively supporting civil society in its efforts to hold governments to account over management 

of resource revenues. Third, tackle hidden company ownership in 

the U.S. to prevent American companies from being misused to 

move corrupt and other dirty money into the U.S. financial system. 

In conclusion, the U.S. Government has an important role to play 

in helping address the resource curse in Africa. Better governance 

of natural resources will contribute to stability and economic development in African countries, help protect U.S. national energy security interests, and promote a more stable operating environment 

for American companies and investors. 

Thank you. 

[The prepared statement of Ms. Gilfillan follows:]

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Mr. SMITH. Thank you so very much. 

Mr. Adam? 

STATEMENT OF MR. MOHAMMED AMIN ADAM, EXECUTIVE 

DIRECTOR, AFRICA CENTRE FOR ENERGY POLICY 

Mr. ADAM. Mr. Chairman, ranking member of the committee, 

thank you most sincerely for inviting me to a hearing of the subcommittee addressing the question, ‘‘Is There an African Resource 

Curse?’’; and, in particular, to give a testimony to this subject. As 

you know, the subject of resource curse in Africa is very broad, and 

I would like with your permission to focus my testimony on Ghana’s management of her natural resources. 

As a petroleum economist and an activist, I read by the day—

allow me to read—that Africa’s natural resources are being plundered, but Ghana is trying recently to take a departure from this 

path. 

At the height of the global financial and economic crisis in 2007, 

Ghana discovered oil and gas in commercial quantities estimated 

at 1.8 billion barrels of reserves. Oil has now become the second 

largest export commodity of Ghana following gold but overtaking 

cocoa. By the end of 2012, more than 50 million barrels of crude 

oil were produced from what we call the Jubilee Fields, which commenced production in late 2010. 

The positive impact of oil is already being felt in the budget. The Government of Ghana received $541 million last year. Significant 

efforts have been made, as I said, to avoid the case of oil burden 

on our ever-improving democratic regime, which many people consider a new paradigm of countries in Africa determined to break 

away from the resource case. 

Once called the Gold Coast, Ghana has been a major producer of 

gold, which is now in the largest export commodity of the country. 

This year, 2012, marked Ghana’s highest earning from mining in 

its history with export revenues of $5.7 billion. But in spite of these 

developments, the cost of mining to the country has been too high. 

Destruction to the environment, human rights abuses, displacement of communities, and low compensation paid to affected communities while mineral revenues have not translated to tangible 

development outcomes. 

In its attempt to avoid the mistakes of the mining industry and 

those of oil-producing countries which got entangled in the case of 

resource world, the Government of Ghana embarked on far-reaching policy and legislative development, both on public consultations 

and greater openness. This includes the Petroleum Revenue Management Act and the Petroleum Commission Act. 

Some of the most important provisions in these laws are a requirement that oil receipts, production lifting, and sales prices, and 

expenditure from oil must be published quarterly and annually and 

the establishment of the Public Interest and Accountability Committee to provide independent assessment of how oil revenues are 

being used. Ghana is an EITI-compliant country and has already 

issued a reconciliation report on oil 2 years into production. 

While these good efforts are commendable, good laws only provide a framework for managing the resources. Indeed, the resource 

case is a manifestation of poor implementation of regulations. And 

23

Ghana is one of the countries that is unable to implement its good 

laws. 

Abuse of regulations through regulatory capture and weak accountability institutions capable of checking rent-seeking behavior 

and vested interest, these problems are compounded by impunity 

and political patronage, which have often undermined the government’s ability to act. 

Ghana is, therefore, unlikely to escape the resource curse with oil 

unless a number of issues are addressed. One, Ghana’s accountability institutions and regulators are still weak and are not 

resourced to work independently. The Public Interest and Accountability Committee and the new Petroleum Commission, two institutions responsible for oil revenue monitoring and oil regulations, 

have not been provided with a budget since they were established. 

Two, for both oil and minerals, there is no open tendering or bidding process for acquiring prospecting or exploration rights. There 

is also no mandatory contract disclosure, and contracts are published at the discretion of the Minister of Energy or Natural Resources. Oil and mining deals are kept confidential, and the system 

provides opportunities for hidden benefits to companies as well as 

avenues for tax evasion. Further, beneficial owners are not disclosed, which promotes rent-seeking behavior. 

Three, Ghana is losing revenues through tax avoidance and 

transfer pricing and has been 1970 and 2008 lost $4.9 billion 

through illicit financial flows, including lost revenues from resource 

taxes. 

Four, also, the country is not deriving value from money from the 

infrastructure projects funded with oil and gas revenues as most of 

the projects have been delayed, operating under costly extensions, 

and leading to cost overruns. 

Mr. Chairman, Ghana has shown the way, in spite of these challenges, and is fully determined to change course and escape the resource case, but important challenges still remain which need to be 

looked at. The United States can support Ghana and other African 

countries to address these challenges. 

The need to implement the extractive industry payment disclosure provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act is long overdue. The U.S. support for the implementation of an Economic Community of West African States 

Directive on Mining that includes transparency safeguards but also 

protection of free, prior, and informed consent for communities impacted negatively by these projects is also important. 

Finally, the U.S. should also support the building of strong institutions, including negotiation capacity and technical support, to 

help establish the geological data that enhances the value of these 

natural resources. If the U.S. is forthcoming with this support, I 

believe that Ghana and many other African countries would change 

a course and, therefore, would be ready to manage these resources 

efficiently and in the interest of their people. 

I thank you very much for the opportunity. 

[The prepared statement of Mr. Adam follows:]

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Mr. SMITH. Mr. Adam, thank you very much for your testimony. 

I would like now, Mr. Boldin, if you would proceed. 

STATEMENT OF MR. ANQUAN BOLDIN, AMBASSADOR, OXFAM 

AMERICA 

Mr. BOLDIN. Mr. Chairman, it is an honor to be here today. 

Thank you for your personal invite for me to testify. On behalf of 

myself and Oxfam America, I want to say thank you and the ranking member for holding this important hearing on natural resources in Africa. The issues you are discussing today are critically 

important to Africa’s future. There are experts here today who will 

talk about how natural resource wealth in Africa can be seen as 

both a blessing and a curse. I would like to share what I learned 

about how this resource wealth plays out in communities where 

these resources are extracted. 

During my visits to Africa, I promised the people I met that I 

would do everything I can to bring their stories back to the U.S., 

to the leaders who cam make improvements. This is why I am here 

today. I believe you have the power to really help people in Africa, 

and specifically Senegal. 

Earlier this year, I traveled to the Village of Sabodala in eastern 

Senegal. I met many warm and wonderful people there. They 

opened their community to me and shared their experiences with 

me; my wife, Dionne; and my friends Roddy White and Larry Fitzgerald. 

Sadly, the community of Sabodala and many others like it 

throughout West Africa has been directly and severely impacted by 

large scale gold-mining operations. Just a few years ago, the people 

of Sabodala farmed their land sustainably and rarely worried about 

whether they would have enough food to feed their families. In 

their spare time, many community members mined for small quantities of gold, just as they have for countless generations. They use 

it to supplement their farming income. And neither they nor the 

generations before them were ever dependent on the gold they 

would find in the ground for their livelihood. 

All that changed a few years ago. When the land they farmed 

was sold right out from up under them to a large mining company, 

the community, which had been farming the same land for generations, suddenly had nothing. They were given a choice: Accept new 

land high up on a hillside miles away from their homes or take a 

small one-time cash buyout that could not sustain their families 

the way the farm had for so many years. 

Every day, communities in Africa are losing their land and seeing little or no benefit from the enormous mining operations that 

are pushing them aside and moving into their backyards. No percentage of the revenue from the mine in Sabodala, which is bigger 

than several football stadiums and brings in untold revenues, ever 

makes its way back to the community. 

They pull rocks from the road, sometimes miles away from where 

they live. They break them in bowls with metal poles. They grind 

the rock into fine dirt. They sift the dirt to find gold dust. Then 

they use mercury to extract the gold by hand. It is a grueling, dangerous process, and it is absolutely no way to make a living. 

35

I told the people of Sabodala that I would bring their stories back 

to the U.S. I believe the U.S. Congress should call on Senegal’s 

President, Macky Sall, to take action to improve the conditions of 

mining-affected communities in eastern Senegal. President Sall 

should ensure that mining companies respect human rights, that 

mining revenue is managed in a transparent way, and that communities receive an adequate compensation and have a meaningful 

voice in decision-making about where mining takes place. 

The good news is that the countries of West Africa, including 

Senegal, are considering adopting a regional mining code that 

would apply to 15 countries in the region. I believe that adoption 

of this code would help strengthen protections for the human rights 

of people in mining-affected communities like Kedougou. I call on 

the Congress to support this and other measures to strengthen 

human rights protections for communities impacted by the oil and 

mining industries in Africa. 

One thing, one important thing, I respectfully request you all do 

right now is to sign onto Congresswoman Bass’ letter in support of 

the regional mining code. This letter can have a big impact in West 

African countries as they consider adoption of the code. 

As a professional athlete, I believe strongly in fair play. I believe 

that Congress can play an important role in helping ensure fair 

play for Africans and that the money produced by the gold, oil, and 

other resources that come out of Africa’s ground are used to help 

all Africans prosper. I hope that you will join me in taking action 

to ensure that this happens. 

Thank you, Mr. Chairman and the members of the committee, 

for your attention to this issue. 

[The prepared statement of Mr. Boldin follows:]

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Mr. SMITH. Mr. Boldin, thank you very much for your testimony 

and you and your wife for the visit that we did have, which I think 

was very, very meaningful to me and I know to Greg and the rest 

of my staff. So thank you again for your very concrete recommendations and for doing what you said you would do, bring 

back to the Congress and to the American people what exactly is 

going on in Senegal and in other places in West Africa. 

Mr. Alicante? 

STATEMENT OF MR. TUTU ALICANTE, EXECUTIVE DIRECTOR, 

EG JUSTICE 

Mr. ALICANTE. Chairman Smith, Ranking Member Bass, and distinguished members of this committee, thank you for this opportunity. 

In 1993, the military arrived in my village in Equatorial Guinea 

to suppress an uprising. They arrested and tortured all the young 

men in sight, publicly executed two of them. They burned down my 

family’s house. That evening I asked my father what we could do. 

His response to me was that it was nothing we can do. His words 

of defeat reflect the environment of gross human rights violations, 

absolute impunity in which I grew up. Five months later I came 

to the United States. I became a lawyer and have since worked for 

human rights and transparency in Equatorial Guinea. 

Imagine a tiny country of 700,000 people suddenly flourished 

with oil money, where the wealth per person is on par with that 

of Italy. Now imagine a place where nearly two-thirds of the population lives in extreme poverty. Infant and child mortality are on 

par with ravaged Democratic Republic of the Congo. Impossible as 

this sounds, these two scenarios describe the same country: Equatorial Guinea. It is a textbook case for the resource curse. 

Oil production in Equatorial Guinea began 20 years ago. Today 

Equatorial Guinea has the highest GDP per capita in Africa. However, despite this enormous wealth, the majority of citizens are 

mired in poverty without access to water or sanitation. The country 

is richer than Poland but has a child death rate 20 times higher. 

It boasts the largest gap between income and human development. 

It ranks among the lowest for primary school enrollment. 

The Obiang regime, in power since 1979, has a long record of 

human rights violations, including arbitrary arrest and torture. 

Freedom House ranks it among the worst of the worst. Corruption 

is endemic. 

Equatorial Guinea is among the least transparent countries in 

the world. Contracts for oil exploration and production were and 

continue to be negotiated in secret without an opportunity for national debate or informed consent. President Obiang has stated 

that oil revenues are secret, a state secret. He uses oil to monopolize economic, political, and military power. Oil revenues finance 

luxury purchases for the ruling family. According to the U.S. Department of Justice, between 2001 and 2010, President Obiang’s 

son allegedly spent more than $300 million on mansions, sports 

cars, and luxury items, far exceeding the amount that the country 

spends per year on health and education combined. He allegedly 

uses numerous anonymous shell companies set up in the U.S. to secretly move a sizeable portion of that money into the U.S. The DOJ 

39

has concluded that the money was acquired through corrupt means 

and has moved to seize some of those assets. 

Four American oil companies, ExxonMobil, Hess, Marathon, and 

Noble Energy, dominate the oil industry in Equatorial Guinea. 

Therefore, the United States has an opportunity to help reverse the 

resource curse in Equatorial Guinea. 

Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires oil, gas, and mining companies to publish the payments they make to governments for natural 

resources, aims to provide citizens of countries like Equatorial 

Guinea with much needed information to hold governments accountable for the use of natural resource revenues. Disappointingly, some American companies, like ExxonMobil, are supporting 

the lawsuit aimed to undermine 1504, suggesting that they prefer 

secrecy to transparency. 

I respectfully ask this committee to take specific steps that would 

lead to improved governance in Equatorial Guinea, including first 

urging the SEC to issue strong rules in support of the Dodd-Frank 

1504; second, supporting the Incorporation Transparency and Law 

Enforcement Assistance Act that Congresswoman Maloney plans to 

introduce, hopefully tomorrow, to put an end to the anonymous 

shell companies so often used by corrupt government officials to 

move and hide illicit money; press the Government of Equatorial 

Guinea to respect civil society organizations and political opposition 

parties; expand the Magnitsky Act to cover kleptocrats and human 

rights violators globally; implement Presidential Proclamation No. 

7750 to deny U.S. visas to members of the Government of Equatorial Guinea. 

I look forward to the day that all Equatorial Guineans can fully 

and equitably benefit from our natural resources of our country. I 

thank the U.S. Government for working hard to bring that closer. 

And I thank you for holding this important hearing. Thank you. 

[The prepared statement of Mr. Alicante follows:]

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Mr. SMITH. Thank you so very much for your testimony. Thank 

you for your perseverance, obviously under very, very difficult and 

dire circumstances, and for being here to encourage us, give us a 

blueprint, as you all have done. 

Let me just ask. Three of you have mentioned section 1504 of the 

Dodd-Frank bill. To effectively implement it was mentioned, the 

need to implement, apparently the failure to do so. And I am sure 

there are some reasons why they have not gotten around to doing 

it, including court challenges. But if you, any of you, would like to 

expand upon what you construe to be the holdup as to why that 

very important provision has not been implemented? 

Ms. GILFILLAN. Thank you, Chairman Smith. I am happy to start 

answering that question. I know others on the panel can as well. 

The SEC actually issued rules, final rules, for section 1504 in August 2012. And they were very strong rules. They met the full intent of what Congress intended. Unfortunately, there was a lawsuit 

that was then filed by the American Petroleum Institute challenging section 1504. And that was done in the fall. And so right 

now, there is a court battle on that issue. And the court recently 

took a decision. The DC District Court recently took a decision that 

would require the SEC to go back and re-look at the rules. 

But one of the things that I would want to really put into context 

with this is that as this is happening in court, the European Union 

recently adopted transparency and an accounting directive that is 

very complementary to Dodd-Frank. And so with the combination 

of the U.S. and the EU now requiring mandatory disclosure, that 

covers 70 percent of extractive companies globally that are going to 

have to be more transparent. And that includes Chinese companies, 

Russian companies, American companies, and European companies. 

So I think there is overall a rising tide of transparency. I think 

the court battle is hopefully a temporary one, that the law remains 

the law of the land, and the SEC we hope will move forward with 

finalizing the rule based on in the next step of the process. 

Mr. SMITH. Do you have a sense when this might be concluded? 

Ms. GILFILLAN. No, I do not, but I know that the SEC came out 

with a strong rule and I think very strongly defended why they 

made provisions in the rule. And so we are hoping that they will 

move forward quickly with issuing a rule. 

I think that we are going to see the fact that Europe—Canada 

also wants to disclose. They have announced their commitment recently. Switzerland is thinking about it. Because there is all of this 

global momentum, I think that the pressure is really on the U.S. 

to keep on moving forward and not backwards. 

Mr. SMITH. Mr. Adam? 

Mr. ADAM. Yes. Mr. Chairman, thank you for this question. 

I think that the leadership the United States of America showed 

the world in passing these provisions in the Dodd-Frank Reform 

Act is commendable. And I believe this was what influenced the 

European Union to recently pass a similar law. 

The United Kingdom and France have indicated that they want 

to fast track the mainstreaming of the EU law into their national 

laws and to begin implementation of the law. And I am just wondering if the EU was just taking a cue from the leadership proVerDate 0ct 09 2002 17:02 Jan 13, 2014 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 Y:\WORK\_AGH\071813\81978 HFA PsN: SHIRL
51

vided by the U.S., why the U.S. was lax as far as pushing the implementation of these provisions. 

And so I want to encourage you and through you the SEC to also 

fast track the process. If they have to bring up new rules, they 

should do it as a matter of agency because African citizens, you 

know, citizens of African countries, cannot wait any longer while 

corporate corruption with the connivers of our governments are 

plundering the resources God has blessed us with. 

Thank you. 

Mr. SMITH. You know, unfortunately, our courts move so slowly. 

We just had, from my point of view, a setback, unrelated to today’s 

discussion. Back in the beginnings of the PEPFAR program, I 

wrote a provision into the bill to preclude funding to those groups 

that were not overtly against sex trafficking and prostitution. And 

a very workable way of dealing with women who are in brothels 

was worked out by USAID. And, despite that, it took 10 years for 

that provision to make its way to the U.S. Supreme Court. I was 

there during the oral arguments at the U.S. Supreme Court earlier. 

Unfortunately, they ruled against the provision that I offered 10 

years to the original President’s Emergency Plan for Aids Relief, 

which was a true setback, because I lead in this Congress on combatting sex trafficking. 

And even during the oral stage, Justice Roberts asked a question. 

And I am only saying this because fast tracking is something that 

once it gets into our courts, the chances are slim and none. Hopefully here it will at least be slim. And that is that Justice Roberts 

asked the question—and, again, this is unrelated but just to give 

it further insight as to why your frustration, which is shared by 

those of us on this side of the dais as well—and he asked a very 

good question. He said if an organization was doing wonderful 

work on clean water in South Africa during the years of apartheid 

and another group was totally against apartheid, one group, an 

NGO, was for it and we made a choice to go with the group that 

was anti-apartheid, would that be constitutionally suspect or could 

it be allowed? And the lawyer for the other side had no good answer. And, yet, they have ruled against our provision. But it took 

10 years, the point I am trying to make. 

Mr. Boldin, if I could ask you with regards to meeting with the 

farmers who were displaced, you mentioned that they were offered 

a cash buyout. Did they give you any indication how poor, how inferior, how inadequte that buyout was? How little money was it? 

Mr. BOLDIN. I think if I can remember, I think it was about 

$10,000, which we all know isn’t enough money to sustain——

Mr. SMITH. For a farm? 

Mr. BOLDIN. Yes. And, like I said, they were living off of their 

land. So that obviously is not enough money to sustain them. And, 

I mean, just from my experience, I mean, I think it obviously is unfair, but it is inhumane for people to be treated that way, to be literally living on top of a gold mine and have your land taken from 

you. And then the people that have taken your land from you come 

in and make millions, billions of dollars off of your land. So, I 

mean, we all know $10,000 isn’t fairly enough, you know, to be 

compensated for. 

Mr. SMITH. And it is your land, and it has the gold. 

52

Mr. BOLDIN. Exactly. 

Mr. SMITH. It has to be a double insult. 

Let me ask you, if I could, with regards to, what are those people 

doing now? You know, how displaced are they? Are they in abject 

poverty as a direct result of this? And did the government give any 

indication of trying to provide some kind of recompense tool? 

Mr. BOLDIN. Unfortunately, we didn’t have a chance to speak 

with government officials. You know, we talk to the local officials. 

And yes, they are in poverty, which is the reason why a lot of the 

locals are trying to take to mining to even put a meal on the table. 

And, like I described in my letter, you know, I had an opportunity to go through the entire process of trying to find gold. And, 

trust me, it is not fun. But this is what they are reduced to on a 

daily basis just to try to survive. 

Mr. SMITH. Mr. Alicante, you mentioned in your testimony and 

you list how the President’s family and friends have so egregiously 

benefitted from, you know, the wealth. The son of the President of 

Equatorial Guinea has allegedly used several anonymous U.S. shell 

companies to launder more than $100 million of corrupt funds into 

the United States to finance a number of luxury purchases. DOJ 

we are told is investigating that. Do you have any insight as to how 

well the investigations, not just on his case but some of these other 

cases, are proceeding by the U.S. Department of Justice? 

Mr. ALICANTE. Thank you, Chairman, for that question. 

Yes. We are in touch with some of the investigators in the Department of Justice. Our sense is right now the case, the judges in 

both cases—in the U.S., there are two cases, one in California, one 

in Washington, DC, the judges in both cases have required the 

DOJ to file additional documents proving probable cause and showing a direct link to Mr. Teodoro Nguema Obiang Mangue. 

In response to your earlier question, Mr. Chairman, about the 

holdup on 1504 and connected to this question, I think part of what 

we are hoping that you would do here is help create an environment in which transparency becomes an essential part, the quintessential part, of U.S. policy with countries like Equatorial Guinea. 

I mentioned in my remarks I alluded to the Incorporation Transparency and Law Enforcement Assistance Act, which Congresswoman Maloney will introduce. I think that the section 1504, the 

Foreign Corrupt Practices Act, and several different tools are what 

need to become part of how U.S. engages with countries or governments, like the ones in Senegal, Equatorial Guinea, Ghana, and 

others. 

Mr. SMITH. Thank you for that. You mentioned in your testimony 

that the 2013 Africa Progress Report by Kofi Annan showed that 

Equatorial Guinea is richer than Poland but has a child death rate 

nearly 20 times higher. And I know some years back, the government and USAID had entered into an agreement and some $20 

million was spent on social programs. And I am wondering if you 

could shed some insight onto that; and it has failed. It didn’t proceed and go forward, you know, with all of that wealth, the fact 

that children are dying or having high morbidity rates is just appalling. Maybe you could just elaborate on that a little bit. 

53

Mr. ALICANTE. Indeed, that is the situation, Mr. Chairman, in 

which there is a vast amount of money coming from oil in Equatorial Guinea. And those of us from that country cannot understand why our nieces and nephews continue to suffer, despite this 

amount of money. My sense of the different programs is that those 

the government has claimed to have instituted have not gone anywhere. The government now has an economic plan, Horizon 2020, 

which is not even funded. The project that they have with USAID 

has not gone anywhere. So we don’t know what the government is 

doing in terms of social development inside the country. 

Mr. SMITH. Let me just ask you—and others might want to say 

something on this as well. We haven’t mentioned China. And China 

certainly has been ripping off Africa. I mean, it is no excuse for the 

foreign multinationals, including those of the United States, that 

take advantage and fleece governments and the people by extension. But we know China. 

And I remember Greg and I were actually in the DR Congo on 

one trip en route to Goma. And we heard story after story of roads 

being built in such a way to ensure that the Chinese Government 

was able to again extract minerals and things that they wanted. 

And the cost of that was the road. And whatever they found on the 

right and on the left somehow went into their pocket. And it is a 

huge problem. We know that Africa is looking for investment. And 

roads and infrastructure are at the top of the list, but the Chinese 

come in. And in exchange for that work, they end up in a very bad 

bargain in my opinion because we heard about—a number of them 

in DR Congo get these very, very precious minerals and metals at 

below bargain basement prices. If you wanted to speak to that? 

And, secondly, I would like to ask if you could—Corinna, you had numbers, actual numbers, for the DR Congo, $1.36 billion from the 

underpriced sales of cobalt and copper mining between 2010 and 

2012. One-point-thirty-six billion dollars was paid. Is there any estimate as to what the real market price would have been? You 

know, how far below the real cost is that? So if you could speak 

to the China issue, anyone who would like to, and then to that? 

Ms. GILFILLAN. Thank you, Chairman Smith. 

On the issue of China, just a few things on that. Global Witness 

has definitely looked at Chinese investment in the extractive sector 

in China because it has grown so much. We looked, for example, 

in the Democratic Republic of the Congo at a resource for instructor agreement there and looked into how there was nearly $24 million of a Chinese Government’s senior bonus payment that were 

not answered as far as regarding that payment. And so what we 

are finding is that though China is investing in the region, China 

is also vulnerable to these issues of corruption and conflict. And so 

any kind of corruption or conflict in these resource-rich countries 

can adversely affect China and their investment. And so one of the 

things that we are looking at, for example, is to try to engage with 

the Chinese Government to raise their awareness about transparency and how transparency can actually help in their own operations. 

I was actually just in Shanghai in May to basically talk with 

some of the policymakers in Shanghai about the work that we are 

doing on transparency. 

54

The other thing is that I think we are going to bring in some 

Chinese companies to be more transparent through implementation 

of the Dodd-Frank Act. You will have big Chinese companies like 

Sinopec and PetroChina that will have to disclose. So we will be 

bringing in Chinese companies that way. 

The Extractive Industries Transparency Initiative actually does 

have Chinese companies already disclosing in EITI. And you have 

that in countries like Mongolia and Nigeria. So at least you are 

bringing in Chinese companies and to an extent the Chinese Government and raising awareness about the importance of transparency and how that could adversely affect them. 

On the issue of the DRC and the selling of the secret mining assets, those assets, as I understand it, were sold at 1/16th of the 

value. So that was a huge—I mean, just tragically what a loss to 

Congo to have their valuable mining assets sold at 1/16th of the 

commercial market value. So that is just an example of what happens when you have these secret mining deals. You have these 

deals done in secret. And you are basically allowing these companies, sometimes companies you don’t even know who owns the companies, enter into deals with government elites, essentially robbing 

the country of billions of dollars. And so that is why we are calling 

for transparency, not just of revenues but transparency across the 

value chain. So you have transparency of bidding processes, transparency of contracts. We are hearing about how in Ghana, contracts aren’t made public. We are talking about transparency 

around who owns companies. Those are the kinds of transparency 

that we need that will hopefully prevent some of these really bad 

and harmful deals from happening. And we are hoping very much 

that the U.S. can help support more transparency in its foreign policy and through actively supporting the EITI and moving forward 

with Dodd-Frank. 

Mr. SMITH. Yes, Mr. Adam? 

Mr. ADAM. Yes. I want to touch on the China question. China’s 

relationship with Ghana’s natural resources is at three levels. First 

of all, the Government of Ghana signed an agreement with the 

China Development Bank for a loan facility of $3 billion. And that 

is the highest loan facility Ghana has ever constructed. 

But the difficulty with this loan is that it is collateralized against 

future oil revenues. And, therefore, when the loans are not used efficiently to develop the country, future oil revenues, and future development for that matter, are compromised. But the difficulty 

around this loan also is that a Chinese company, Bolsa, China 

Bolsa, has acquired a mining concession, what we call Awaso 

mines, to exploit bauxite. And two projects that are to be funded 

from the loan contracted from China are to benefit China, rather 

than Ghana because one of these projects is a real line which is to 

be constructed to the bauxite mine, which is now owned by a Chinese company, to enable them to exploit and transport bauxite. 

The second project is the expansion of the port where the bauxite 

will be shipped out. And both projects are funded from a loan contracted from the China Development Bank, which Ghana will have 

to pay with future oil revenues and which others said earlier will 

compromise future development. 

55

The second level of China’s relationship with our natural resources has to do with small-scale mining. Our country’s law does 

not allow foreigners to partake in small-scale mining, but a smallscale mining sector in Ghana lately has been dominated by Chinese 

workers. And we have recorded a series of human rights abuses, 

destruction of the environment, which led to the Government of 

Ghana setting up a task force of security agencies to arrest——

Mr. SMITH. What kind of human rights abuses, if you could just 

elaborate on that? What kind of human rights abuses? 

Mr. ADAM. Human rights abuses in the sense that the communities who are living near the exploitation of these resources, you 

know, their water has been polluted. Their farmlands are being 

mined. And they are not able to prevent the Chinese workers from 

mining on their farmlands, you know. And in some cases when 

they have complained, Chinese mine workers have used weapons 

against them. And we have actually recorded some deaths in those 

areas. 

So this angered the Government of Ghana. That led to the setting up of a task force of security agencies. And 501 Chinese workers have been arrested by the Government of Ghana, most of whom 

have been deported. But this has also brought about a diplomatic 

row between the Chinese Government and Ghana for which reason 

requirements for visas from China has been made more stringent. 

Some Ghanian traders go to China to bring in goods. And, therefore, because of the difficulties Ghana has faced, as a result of 

which Chinese mine workers are being deported, they have made 

stringent the requirements for acquiring visas to Ghana. 

There are some discussions between the two governments, but 

the indication I get is that the Chinese are able to find their way 

out. And this is why transparency is so important. But beyond 

transparency, the need to support civil society, the citizens who 

will bring pressure to bear on the government so that their government is able to contract loans, that would serve the interests of the 

country other than the lenders. And when I say this, it is not just 

the Awaso mine. Ghana is compelled to sell this oil to China alone. 

And, therefore, as part of the loan agreement, it is an optical agreement for oil. We cannot sell our oil to any other country of our 

choice except China. And so this is how they tie your hands, 

through loans like this. And if the citizenry are not given the support in the capacity to voice our consents, to put pressure to bear 

on the government to contract, you know, good loans, the country 

will suffer eventually. 

Mr. SMITH. Just one small question. How long, in effect, will be 

this requirement of selling all of the oil to China? 

Mr. ADAM. Yes, until we are able to repay the loan. And that is 

supposed to take a period of 10 to 15 years. 

Mr. SMITH. Wow. Okay. Would anybody else like—yes? 

Mr. ALICANTE. Mr. Chairman, if I may, I would like to reiterate 

the points that Mr. Adam has made about the importance of civil 

society because Equatorial Guinea is one of those cases in which 

transparency alone is not enough. Equatorial Guinea does not have 

an independent press. Equatorial Guinea has a congress, a Parliament, that is 99 percent the ruling party—Equatorial Guinea 

does not have an independent judiciary. Equatorial Guinea does 

56

not have a vibrant civil society. So the point that my colleague 

makes about supporting civil society, about building the infrastructure for good governance is critical before it is 1504 and EITI and 

other transparency mechanisms can be fully realized in a place like 

Equatorial Guinea. 

China is not invested in the oil industry in Equatorial Guinea. 

China is invested in the construction industry in Equatorial Guinea. But one point I make to people in the United States is that 

there is a certain reputational value that comes with operating 

with the United States. President Obiang and his government 

know that, but there is a reason why President Obiang spends millions of dollars in lobbying here in Washington, DC. They know 

that it is important to keep their businesses with the United 

States. And that for me is a leverage point. That to me is why Congress can actually help address the resource curse in a place like 

Equatorial Guinea, despite the threat of China. 

Mr. SMITH. Ms. Bass? 

Ms. BASS. Well, I have to tell you that some of the testimony 

today is a little discouraging, I guess, especially from a country like 

Ghana, which I want to ask you some question about. But, you 

know, I just refuse to view this as Africa’s curse because to me, if 

you say that, then you are almost saying that there is nothing that 

can be done about it. Any other time we would look at the unbelievable natural resources as a blessing. And I think that it is important to have that frame of mind because policy can change. 

These situations can change. So, anyway, that is my little editorial 

statement, but did you want to say something? 

Mr. ALICANTE. Sure. Congresswoman Bass, certainly. Resources 

in Equatorial Guinea, the oil itself, the gas itself, we consider those 

a blessing. Our problem, again, is the governance——

Ms. BASS. Right. 

Mr. ALICANTE [continuing]. The lack of an accountable government, the a lack of a transparent—we have one of the most closed 

societies in Equatorial Guinea. And that is what turns oil itself into 

a curse. 

Ms. BASS. Sure. 

Mr. ALICANTE. So I agree with you. 

Ms. BASS. Absolutely. And, you know, one issue I want to take 

up in general with all of the panelists because, you know, I am sitting here in Washington, DC. I want to know about U.S. corporate 

involvement and U.S. practices. And you do make some mentions, 

especially in your recommendations. 

You said a few minutes ago, I think, that education, working 

with the Chinese—and I guess I am curious as to why you think 

that educating the Chinese about transparency—I mean, I think 

they would know, right, why the—go ahead. 

Ms. GILFILLAN. Well, actually, for Global Witness, we do investigations into what governments are doing and companies are 

doing as far as the trade in natural resources. And so we are not 

just educating the Chinese Government. We are actually doing investigations, basically looking at Chinese investment in Africa and 

how that affects Africa. That is why we did look at the resource for 

infrastructure deals that China did, for example, in the Congo. And 

we found a lot of problems with that with the bill at the——

57

Ms. BASS. Would they be receptive to the investigations, 

even——

Ms. GILFILLAN. Well, we are kind of having a dialogue with 

them, but it is not necessarily translating into any huge policy 

change yet. I think what we are also advocating, though, is for regulations. And that is why Dodd-Frank is so effective, because it will 

bring in Chinese companies. Any Chinese company registered with 

the SEC will have no choice but to comply with Dodd-Frank, the 

same with the EITI. Any Chinese company operating in a country 

that is part of the EITI, that Chinese company will have to participate in EITI. It will have to disclose information. 

So at Global Witness, we are approaching a lot of different tools. 

We are doing investigations to expose the problems, whether it is 

the Chinese companies or Chinese Government. We are doing policy measures that will bring in the Chinese. And we are also doing 

dialogue with the Chinese Government, like we do with all governments and with companies. 

Ms. BASS. Thank you. 

Ms. GILFILLAN. As far as company involvement, I think that that 

is a very crucial question. And I also want to respond to your question or your comment about how this isn’t all, we have to look at 

these resources as a blessing. And I think one of the things that 

I wanted to get across in the testimony was that there are some 

good things going on. We are kind of——

Ms. BASS. Those definitely are a——

Ms. GILFILLAN. There is a lot of momentum on transparency. 

And we are beginning to see through the EITI and through other 

mechanisms where citizens are starting to use this data and go to 

governments and say, ‘‘Wait a minute. What is going on with our 

resources?’’ And, for example, with EITI, if you talk about Nigeria 

and even Liberia because of EITI, they are actually looking at what 

are the companies say they pay to the government? What is the 

government saying that they are receiving? And they are finding 

missing money. For example, in Nigeria, they found about $800 

million that was going missing. And they were able to rectify that 

through the EITI. So and we are seeing——

Ms. BASS. They found the money and people were arrested or 

what? 

Ms. GILFILLAN. I am sorry? 

Ms. BASS. They found you said $800 million. 

Ms. GILFILLAN. Well, in that case, sometimes it was an issue of 

collection, not even keeping track of what companies should be paying. So it is even things like that, you know, basic things like that, 

where you can find some problems in the system. 

And then we are seeing that civil society groups are starting to 

engage with governments. For example, in Tanzania, I know that 

there were civil society groups and parliamentary review that 

found problems with the collection of taxes and royalties. And 

through those efforts, they found loopholes. And they have done a 

law. They have done some efforts to close a loophole, the loophole. 

So I think as more of this data comes out, we are seeing citizens 

using that. Parliaments use that as well. So I think there is some 

reason to be optimistic in that we have got this data coming out. 

I think what is really important is that the transparency tie needs 

58

to move forward. And we cannot just focus on revenues, but we 

need to focus across the value chain. We need to look at allocation 

of licenses, contracts, making that all public. 

The United States Government has such an important role to 

play. And we would like to see the U.S. Government make natural 

resource requirements, transparency requirements, an integral 

part of its assistance, so to say to resource countries, ‘‘We will give 

you aid, but we would like to see some progress on transparency.’’

As far as companies, it is very important for companies to be 

more transparent about their operations. And we are seeing some 

companies do that. For example, Newmont, a huge mining company that operates in Africa, they actually realize——

Ms. BASS. That is a U.S. company? 

Ms. GILFILLAN. Yes, a U.S. company. Sorry. Yes. 

Ms. BASS. Where? 

Ms. GILFILLAN. Sorry? 

Ms. BASS. Where? From where? 

Ms. GILFILLAN. I think it is based in Colorado. Yes. So they realized in the 1990s, for example—I think it was one country was Indonesia. They were realizing that. They were paying their taxes to 

the government. And they realized that communities weren’t—they 

didn’t know how much Newmont Mining was paying to the government. And so there was a lot of concern. And so Newmont thought, 

‘‘Well, maybe we need to publish the taxes, et cetera, that we are 

paying to the government. Otherwise, this helps to build trust with 

the communities. Otherwise, if we don’t publish that information, 

then communities, rightfully so, are going to be like ‘Wait a 

minute. These are our resources. Where is the money going when 

you are here in our communities? Where is the money going?’ ’’ So 

that is why Newmont Mining is now publishing the payments that 

it is making. 

I think another really important aspect of this, though, is not 

just on the transparency of whether it is the contracts or the revenues but also on the human rights side of things. What are the impacts on mining, for example, in mining to communities? And I 

know that Oxfam, you know, is working a lot on free prior informed consent. So that is really having meaningful dialogue with 

communities and giving them the opportunity to be able to decide, 

you know, whether they want extractive and how it should be done. 

So I think that that is another thing, but it is a positive movement. 

Some mining companies are starting to embrace that principle. 

So I think we are seeing some positive movement by some companies. I think other companies, like the oil companies, the big, you 

know, oil companies, Shell, BP, Exxon, Chevron, are kind of putting their heads in the sand. And they are not wanting to be transparent, at least not with Dodd-Frank. But they are actually already 

signed up to transparency to an extent because they support the 

Extractive Industries Transparency Initiative. So there is kind of 

a disconnect with the position, but I think that the tie globally is 

for transparency. And all of these companies are going to have to 

be transparent under Dodd-Frank and through EITI. 

Ms. BASS. Thank you. Thank you. 

Mr. Adam, you had mentioned when you were talking about 

Ghana and you describe Ghana positively in the sense that, you 

59

know, there are movements toward transparency and things are 

getting better. But one of the things you pointed out that I wanted 

to ask you if you would talk a little bit more about was it sounded 

like a capacity issue, as opposed to a political will issue. And I 

think you talked about Ghana was unable to implement accountability measures and wanted to know if you could speak a little 

more about that. What is holding it back? Is there a way the U.S. 

can be supportive? 

Mr. ADAM. First of all, let me say two things about U.S. corporate involvement in Ghana. We have three companies, Newmont 

and Anadarko and Kosmos, but I want to talk about Kosmos in 

particular. Kosmos’ involvement in Ghana has been positive and 

negative somehow. 

Ms. BASS. What does Kosmos do? 

Mr. ADAM. Kosmos Energy is an oil company from Texas area, 

yes. Okay. 

Ms. BASS. Go ahead. 

Mr. ADAM. So the first issue is Kosmos once spewed toxic mud 

in Ghana’s waters. Our laws provides for polluter pay principle. 

That is, the polluter will have to be responsible for the pollution. 

But our Government didn’t have the capacity to establish the extent of pollution. And so that led to difficulties between Kosmos 

and the Government of Ghana. Even though Kosmos eventually 

paid about 15 million U.S. dollars as compensation, it exposed the 

weaknesses of our country as far as environmental management is 

concerned. 

But the other side, which I think is positive, is that our Government used to argue against contract disclosure on the excuse that 

it would compromise commercially sensitive information. And that 

will put the government in the light of our latent contracts, but because Kosmos had to list on one of the U.S. stock exchanges as a 

requirement, they have to disclose their contracts. And so we went 

back to our Government and said, ‘‘The reason for which you were 

holding the contract is no longer valid’’ because Kosmos by listing 

under a U.S. stock exchange has disclosed the contract. And that 

then compelled our Government to disclose the contract and six 

other contracts. And this is what I think is very positive, the fact 

that——

Ms. BASS. Because they were listed on the stock exchange? 

Mr. ADAM. New York, yes, New York Stock Exchange. 

Ms. BASS. Could you explain that again? 

Mr. ADAM. Yes. 

Ms. BASS. They listed the contract and then Ghana was able to 

expose what was in the contract? 

Mr. ADAM. Yes. They listed under U.S. Stock——

Ms. BASS. Right. 

Mr. ADAM [continuing]. New York Stock Exchange. 

Ms. BASS. Right. 

Mr. ADAM. And that required them to disclose all information——

Ms. BASS. Oh, I see. 

Mr. ADAM [continuing]. Relating to their operation, including the 

petroleum contracts. So our Government didn’t have the moral justification for holding the contracts confidential any longer. 

60

Ms. BASS. Right. 

Mr. ADAM. And this I think was very positive. The fact that 

Kosmos listed on the New York Stock Exchange that compelled our 

Government eventually to disclose the contract and six other contracts, which we think is very positive. 

But, coming to your question, the issue in Ghana is both our political will but also a capacity issue. We are relatively doing better 

within our region in terms of capacity. And, therefore, our governance structure seems to be working, even though there are challenges, including budgetary challenges, sometimes political interference. I think that our democracy is quite strong. And the citizenry is also quite awake. Civil society is very active. 

Apart from that, our citizens are mighty strong when it comes 

to voicing our concerns. And our Government has been open as far 

as providing the space for dialogue with citizens. So these are some 

of the measures that have pushed Ghana forward in terms of how 

we manage our resources and the governance around our resources. 

But, as I said, there are risks involved. And some of the risks are 

associated with the fact that we haven’t developed some of our petroleum-related legislation to the level that would support openness. So far we do not have provision on open and competent bidding process for oil concession in our law because the industry is 

also new in Ghana. We are into 2 years of production. 

We also do not have mandatory disclosure. The disclosures we 

have had so far were at the discretion of the minister. And so if 

you have a different minister who has a different policy, it means 

that contracts will not be disclosed any longer. 

And the issue we are worried about is the budget that the new 

institutions we are establishing to protect the integrity of our oil 

resources is not given. The Petroleum Commission is the regulator, 

supposed to be an independent regulator. The Public Interest and 

Accountability Committee is supposed to conduct independent assessment of how the oil revenues are used, but they are not given 

resources to work. And that is problematic. If you create any institutions by law and you are not providing resources for them to execute the mandate, then if you had those institutions, they are better for you. And that is the risk that we are going into. 

Compared to Nigeria, where the vested interest is too entrenched 

and where the elite class has already been built, we have yet to see 

the building of certain elite class because the industry is still new, 

but if it has happened in Nigeria, it could happen in Ghana. The 

potential for oil to also——

Ms. BASS. Right. 

Mr. ADAM [continuing]. Weaken our institutions is also high. And 

so we want to support citizenry, the civil society, so that we are 

empowered beyond where we are to hold our Government and 

other companies operating in Ghana accountable. 

Ms. BASS. And, you know, the U.S. supporting civil society is 

clear. Are there ways that you think the U.S. could be supportive 

in terms of building the other ways, building the accountability 

structure? 

Mr. ADAM. Yes. The U.S. can support it in many ways, first of 

all, providing technical support to the institutions in Ghana workVerDate 0ct 09 2002 17:02 Jan 13, 2014 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 Y:\WORK\_AGH\071813\81978 HFA PsN: SHIRL
61

ing in the natural resources sector. For instance, our revenue authorities need capacity to be able to conduct petroleum auditing. 

Ms. BASS. Do we do that? We need to do it or we need to do more 

of it? 

Mr. ADAM. At the moment, no. 

Ms. BASS. What did you say? 

Mr. ADAM. No. 

Ms. BASS. We don’t do it? 

Mr. ADAM. Yes. You have to do that. You have to support us. 

Ms. BASS. Did anyone else want to comment about the general 

questions? 

Mr. ALICANTE. Definitely the question of U.S. oil companies’ involvement in Equatorial Guinea, as I mentioned during my remarks, the major companies are American companies. American 

companies arrived to Equatorial Guinea in a time where there was 

no law. There was no legal regime regulating the activities of oil 

companies or anything that was going to affect the industry as a 

whole. 

They had an opportunity to help set the environment for fair 

play that Mr. Boldin referred to. That did not happen. And right 

now what we are seeing is that many of these companies are the 

ones that are siding with the American Petroleum Institute to ensure the 1504 does not become the law of the land, sending a clear 

message that they prefer to operate in that type of secret environment. 

In a situation like Equatorial Guinea, I think critically one thing 

that is missing is political will from the government, which is why 

I think, as Mr. Adam talked about, support for civil society is supposed to create independent institutions that can hold governments 

accountable. Support to create free press is critical for countries, 

resource-rich countries, in Africa in order to help reverse the resource curse. 

Ms. BASS. So what kind of support do we provide for civil society 

in Equatorial Guinea? Do you know? 

Mr. ALICANTE. Right now, very minimal. It is partly because of 

the challenges of the government that we are dealing with. 

Ms. BASS. Right. I mean, to me—and it is interesting. The chair 

spoke that earlier today we acknowledged President Mandela’s 

95th birthday. And a lot of the presentations talked about the history of the anti-apartheid movement in the United States. You 

know, it is one thing for us to talk about how people in other countries should hold their governments accountable, but I think if we 

have U.S. businesses behaving in this way, then we need to look 

at their level of accountability. And there is a long history here in 

our country of holding our businesses accountable. And I think it 

is important that we look at what is happening in Equatorial Guinea and look at ways that we might be able to be supportive. DoddFrank is great, but there are other things as well. 

Mr. ALICANTE. Indeed. I mean, I think I can point to at the very 

least two critical things that the U.S. can do. Certainly ensuring 

that government, of people in government, in Equatorial Guinea do 

not travel to the United States I think is critical, you know——

Ms. BASS. Don’t travel to the United States what? 

62

Mr. ALICANTE. Denying visas to members of the EG Government, 

the Equatorial Guinea Government, whether it is through Presidential Proclamation 7750 or whether it is by finding a way to expand the Magnitsky Act, which I referred to, I think that is critical. 

But, besides that, I mean, I think definitely supporting with funding organizations based in the country I think is critical. My understanding is that U.S. State Department has a number of programs 

where there is cultural visitation, cultural ambassadorships, and 

different programs. They allow for members of civil society in 

places like Equatorial Guinea where the government makes it impossible for civil society to operate to come to other countries or go 

to other countries in Africa and network with people working on 

some of these critical issues. 

So there are a number of ways which are brought to the attention of people in the African Bureau and DRL, the Department of 

Democracy, Human Rights, and Labor, which we are hoping begin 

to find ways to support civil society underground. 

Ms. BASS. You know, Botswana is often held up as a country that 

has been a great steward of their natural resources; in particular, 

the diamonds. I don’t know if anybody on the panel is prepared to 

comment about that, but I did want to kind of shift to ask what 

do you as members of the panel think are good examples on the 

continent where people have been good stewards? Mr. Adam? 

Mr. ADAM. Yes. I think that Botswana is a good example, indeed, 

but this is as a result of two factors: One, because of the provisions 

in their law that promotes transparency; and, secondly, because of 

their investment policy, they are able to invest the revenues that 

are coming from their natural resources in areas that promote the 

highest return. Education is one of the priorities in Botswana. And 

so through education, you are building even a more critical citizenry that will continue to demand accountability of you. And that 

compels you to be more transparent and more accountable. That 

has been the secret behind Botswana. And Ghana, as I said earlier, 

is following this path by making laws that promote transparency 

and accountability, but the difficulty in Ghana is whether we are 

able to implement some of the regulations and the rules that we 

are developing. 

Ms. BASS. Oh, go ahead. I am sorry. 

Ms. GILFILLAN. Yes. I was just going to agree with the example 

of Botswana, although I think that it could still be stronger transparency measures. One thing on the issue of holding companies to 

account, I think that is a really important issue. And I just wanted 

to follow up on that because I know for Global Witness, we do a 

lot of work, as I mentioned before, looking at companies that could 

be complicit in corruption. 

And in the United States, the Foreign Corrupt Practices Act is 

very much an important law for holding companies to account for 

bribery. And that is one of the things that we are looking for as 

far as the U.S. Government really being proactive as far as investigating some of these major corruption cases, some of the ones 

that I have outlined today, actually, the one in Guinea, which I understand the U.S. Government is investigating. 

There is a case in Nigeria as well about Shell giving payments 

to the Nigerian Government that then went to a company called 

63

Malibu Oil and Gas that we found out was controlled by the 

Abacha-era oil minister, Dan Etete. And so there are some real corruption concerns related to that case. It is a very active case or controversial issue in Nigeria. And that is an example of where we 

think the U.S. should be investigating more and looking for issues 

of corruption. 

I think Tutu Alicante had mentioned the case of Riggs—I forgot 

the bank’s name now. It has been a while, been around for a while. 

It used to be a big institution in DC. But for Riggs Bank and how 

that was followed up on, there wasn’t really—a full FCPA investigation of the Riggs Bank did go down related to some issues 

around that. But I just think that the FCPA is encouraging that 

the administration has been prosecuting a lot of companies where 

it is merited, but we do think that there could be more done, especially in these extractive cases where you have just huge amounts 

of money that are involved and potentially serious corruption 

issues. So I think that is a very important way to hold companies 

to account. I just wanted to follow up on that, on your point. 

Ms. BASS. Does anybody want to comment on the role of the African Union? I mean, I can imagine what its potential is, but what 

about what it is doing now? 

Mr. ADAM. Yes. The African Union is concerned about how natural resources have been managed so far. And they now see natural resources as one of the important growths that could transform African economies. And so they have developed and published 

what we called African Mind and Vision, which defines the framework for exploiting Africa’s natural resources. And the vision has 

a very strong transparency component but also very strong investment policies on how revenues from natural resources can be invested to support the growth of Africa’s economies. 

The African Mind and Vision has been endorsed by African heads 

of state, but as an institution, we all recognize the weaknesses of 

that institution. And whether they can be able to push the mind 

and vision, as excellent as it is, into the laws of member countries 

is another issue. The fact is that some countries in Africa are doing 

well in governance, others are not. And the African Union doesn’t 

have that leverage to be able to carry everybody along. And this 

is why in my testimony I was also calling for the strengthening of 

the regional level initiative, the African Union, the ECOWAS so 

that they are able to justify why their member states must adopt 

good practices and good governance practices in the management 

of the natural resources. 

Mr. ALICANTE. Mr. Adam has addressed the points that we were 

going to raise. I think to say the African Union has faced its challenges, you know, is really to state the obvious. The fact that President Obiang was the chair of the African Union a couple of years 

ago sends a clear message of what one should expect of the African 

Union. Nevertheless, the fact that the U.S. has an Ambassador and 

has a presence in the African Union to me represents yet another 

opportunity, where Members of this Congress can actually pose the 

African Union to do certain things, to stand by the principles of 

transparency by the principles of democracy and human rights. 

Mr. SMITH. Mr. Marino? 

Mr. MARINO. Thank you, Chairman. 

64

And I want to thank the witnesses for being here. Like my colleagues, I am very concerned about—and I will use the term loosely—investments being made in Africa around the various countries 

within Africa, particularly by China, which plans to spend over $23 

billion in Nigeria to build oil refineries; Iran, at least 6 countries 

they are talking about building oil refineries; and Egypt as well. 

And it is disconcerting given the fact that we are talking about 

China, a Communist country, and Iran, a radical dictatorship, are 

having such a footprint on the continent of Africa. And I think 

there have to be some answers. This has to be done globally, I 

think. The free market and banking industry is saying, you know, 

‘‘What is happening with this money?’’

I have been to Ghana. I have been to Liberia. I know Ghana is 

in a little better shape than Liberia. But we are talking about billions and billions of dollars in investments by these countries, Communist countries, and terrorist-backed countries. And still the 

United States is still pumping about $5 billion to $6 billion a year 

into countries in and around Africa for humanitarian purposes. 

And I guess I am making a statement more so than asking a question as to what are the terms of these loans. 

I understand first billionaire, on the continent, Dangote, is worth $20 billion now, just accumulated about $12 billion over the last 

couple of years, securing a $41⁄2-billion loan from overseas banks to 

build an oil refinery. I hope that is a good thing for the continent 

and the countries because of jobs and money coming into them, but 

we need to keep a close watch on what is taking place there given 

the fact that we are dumping almost $6 billion a year for humanitarian needs. If anyone wants to respond to my thoughts on this, 

I would be glad to hear it. Please? 

Ms. GILFILLAN. Thank you, Representative Marino. 

We completely agree with you on the point of the fact that the 

United States is giving aid to these countries. We are not opposed 

to the aid, but I think one of the questions that is concerning is 

that if you are giving aid to a country that is rich in natural resources but those resources and their revenues are being squandered, then you are subsidizing corruption essentially. 

And so, you know, I think that is why we are very, very much 

focused on, one, the issue of transparency, transparency around 

deals, the terms of the deals, who is benefitting from the deals, because, at least if you bring that out into the open, that is a very 

powerful way of deterring corruption and giving citizens, Parliaments, and others the ability to challenge that or to say, ‘‘What 

is going on here?’’ And so that is transparency all across the value 

chain. That is transparency when you are having bidding, biddings 

for these rights. Oftentimes the bids are secretive. There is not 

transparency around the bidding processes. And that just fuels corruption and allows the kind of deals that you are potentially talking about. So I think that is one really important thing that we can 

do to try and stop those kinds of harmful deals from happening. 

The other thing is as far as U.S. assistance to resource-rich countries, I think that we do need to look at the assistance that we are 

giving and whether we want to tie certain conditions or requirements. If we are giving assistance to a resource-rich country, where 

there is a lot of corruption and mismanagement, do we to have 

65

some benchmarks for that country to have to meet, requiring greater transparency, open that kind of thing——

Mr. MARINO. Let me stop you there because, you know, as a prosecutor for 18 years—now, I am not accusing anyone of corruption 

at this point because I don’t have facts indicating that. I could 

make a supposition of some type, but I have always followed the 

money, whether that is in organized crime or drug dealing or selling arms illegally to countries that we shouldn’t, that an individual 

shouldn’t. But I am concerned because being on Foreign Affairs and 

on the NATO Parliamentary Assembly, I see a great deal that is 

taking place that the United States alone cannot have an impact 

on. 

This is an international crisis, I think. And I have studied for the 

longest time China and the Soviet Union. And we used to think at 

one time foolishly that China wanted to take the world over militarily. Well, they don’t have to do that anymore. They can do it financially and economically. China’s investments around the world 

are staggering. Who is investing in Afghanistan? Other than the 

U.S. being there and some allies, China is dumping tons of money 

into Afghanistan, not for tomorrow, not for next year, but 5 or 10 

years from now, because they know, China knows, the natural resources that are valuable natural resources that only Afghanistan 

has. And China is going to get its arms around that. I think it is 

doing the same thing in Africa. 

And there is a parallel here that is I think a paradox because 

at this point, I have seen how poor the conditions are. Liberia, for 

example, has one of the highest infant mortality rates in the world. 

But when a country comes in and starts dumping money and eventually figures, ‘‘Well, we will build a hospital here. We will build 

a school there,’’ I do not blame the people of those countries wanting that. But there is an ulterior motive. 

And internationally this is going to have to be handled. Internationally the United Nations should be looking into these matters 

as well, but, you know, we know we are not going to get very much 

service from the United Nations in situations like this. 

So I am in a quandary here. I mean, we could simply say it 

would be foolish for us to say the U.S. is going to stop all humanitarian aid to countries in the continent of Africa. I don’t know if 

China or Iran or Egypt would step in and continue aid, humanitarian aid, with their resources. I kind of guess that that may not 

happen. 

So simply just pulling money out and stopping aid is not the answer. And the United States is going to need input from other 

democratic countries as well on how we—it is none of our business 

to a certain extent on what is being done with the funds and the 

profits, but I think from a humanitarian standpoint, we have to at 

least, someone has to, show the rest of the world what is happening with these profits and who is walking away with it. 

That said, I have no questions. If any of the other gentlemen 

would like to comment on my statement? Please? 

Mr. ADAM. I will start. Mr. Chairman, one of the factors that increased China’s entry into resource-rich countries is because for 

those resource-rich countries, they have come to realize that increased resource world increases their leverage, increases their 

66

strength, they become more creditworthy. And, therefore, they can 

go and pledge their oil, minerals for loans from China, as opposed 

to the international development, financial organizations like the 

World Bank, IMF, and some other private banks, but through the 

equitable principals who will demand certain governance requirements as a condition for granting them the loan. This I believe is 

what has pushed some of them to go into China. 

And so if the U.S. will withdraw their support on humanitarian 

grounds, citizens are going to suffer for the mistakes of their governments. And I think that one of the ways to go about it is to support increased democratization in these countries. When citizens 

are given greater democracy and greater participation, when reforms about governments are pursued in those countries, citizens 

can hold their governments to account and then influence who 

their governments go into a relationship or a contract with. 

Mr. MARINO. I understand what you are saying there, but we certainly don’t want a situation. We don’t want a continued drawn-out 

civil war, like we have seen in Liberia. We certainly don’t want any 

civil war. But, once again, I am perplexed on the way we go about 

this unless democratic countries around the world coalesce and 

come up with some type of plan to address these issues and to call 

countries like China and Iran out on what they are doing and let 

the rest of the world know, are these legitimate transactions? What 

is happening with the funds that are being generated there? Please 

go ahead. 

Ms. GILFILLAN. Can I just respond? And I agree wholeheartedly 

with what Mr. Adam said. And I think for humanitarian aid, that 

is very crucial to Africa. 

But one thing on where this money goes, I think another effective policy tool is really combatting the illicit flows that are going 

out of Africa. And you had mentioned your background. And I 

think that that is a very interesting tool for the United States to 

use, is that you have all of this corrupt money that is exiting Africa 

and going out into the U.S. financial system. In fact, there are estimates from the Global Financial Integrity that you have $1.4 trillion in illicit financial flows going out of Africa. 

And what we are finding through our investigations and what we 

have heard about Equatorial Guinea and other places is when you 

have these corrupt deals, then these government elites basically 

take the money and siphon it off and put it offshore in the United 

States and other places. 

So I think in answer to your question, one really important policy 

tool is for the United States to do everything it can to prevent corrupt and illicit money from entering into the U.S. and there are 

several ways we could do it. One is through our anti-money laundering laws. We can enforce those much more effectively. 

Another thing we can do is require transparency around who ultimately owns companies here in the United States because I think 

corrupt money can come into the United States and other places 

through anonymous shell companies. So those kinds of reforms 

could really make a difference and address one of the issues you 

are talking about, which is where does all of this money go. If we 

make it difficult for it to go to the United States, then maybe it 

67

has more of a chance of actually staying in Africa and contributing 

to development there. 

Mr. MARINO. I agree with you to a certain extent, but don’t forget 

when we look at trade, just simply trade, from here in the United 

States around the world, 95 percent of our trade, the people who 

are going to buy our products live outside the United States. So it 

is going to be difficult for the United States, which we should be 

following the money in the United States to see if it is laundered, 

but that is not going to solve the problem. They are just going to 

go to another country. They are going to make investments back 

in China. Who knows what is going to happen in Iran? They are 

financially in a bad position now. But I just don’t think the United 

States is going to have that much of an impact on following money 

that is invested from these types of countries here in the United 

States. 

So, with that, I yield back the time that I do not have left. 

Mr. SMITH. Thank you very much, Mr. Marino. You know, this 

committee is blessed with very effective and very credentialed 

members. It is worth noting that when it comes to prosecutions, we 

do have a former U.S. Attorney in Mr. Marino. And he has been 

a very effective member of this committee. And I am grateful for 

his leadership. 

I do have just a few final questions before we conclude. Mr. 

Boldin, you mentioned in your testimony the need for a regional 

mining code. And I wonder if you might want to expand upon that 

a bit or anyone else on this distinguished panel, which would apply 

to 15 countries in the region. It is suggested that it would be a 

value-added. It would give a much more useful tool to this whole 

effort to promote transparency and accountability. If you would like 

to expand upon that or any of the other members of the panel? 

Mr. BOLDIN. Yes. I think just adopting the regional mining code 

not only promotes transparency, but it also puts everybody on a 

level playing field. You know, as for me, you know, Mr. Marino 

said, you know, that we are dumping foreign aid into these countries and it is not our business. But, to be honest with you, if we 

are dumping that kind of money into a country, I think it is our 

business to make everybody accountable on the money that is being 

spent in those countries. I think the U.S. does a great job outside 

of this country as far as helping others, but I also think that we 

have to spend responsibly as well in other countries and make 

other countries accountable for the money that we are dumping 

into their countries. 

Mr. SMITH. Thank you. 

Anyone else? Mr. Adam? 

Mr. ADAM. Mr. Chairman, one of the important safeguards in the 

African ECOWAS mandate and directive is the protection of communities affected by the exploitation of these resources. When the 

companies and government want to exploit their resource, they do 

not seek the consent of the communities. There are some countries, 

like Ghana, that have laws which empower the government to 

compulsorily acquire the land and farmlands belonging to the people. What they do is to pay compensation, which in most cases is 

very low because they are determined by government agencies, as 

opposed to market rates. And so communities are disadvantaged. 

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They are paid one of compensation, but they will have to suffer for 

the rest of their lives. And, therefore, the ECOWAS mandate and 

directive seeks to protect the rights of communities by requiring 

government and companies to seek their consent before even a development of a filled or a minor area is done. 

And this, I think communities are looking up to the implementation of the directive. What some countries have done is just discuss 

it, the directive, but they do not mainstream it into their laws. And 

when you discuss the directive, that doesn’t necessarily make it a 

law. Even though the original intention of the drafting of that mining code is for African, West African, countries to mainstream the 

directive into their laws, they don’t do that. And so if they are supported to enforce these directives in ensuring that the member 

states appreciate the value of the code, I think that communities 

would be protected. And, therefore, human rights abuses would be 

limited and communities eventually will also benefit. 

And this brings to mind the issue of project by project reporting 

because these communities are suffering. And, yet, they don’t even 

know how much revenue the state is collecting in respect of the exploitation of the area. And so when we have project by project reporting, that will further empower communities to demand of their 

government how much they are receiving from projects in their 

areas and also to constitute the basis for demanding what is due 

them as far as promoting their own circumstances is concerned. 

Mr. SMITH. Ms. Gilfillan, you made a statement, part of your second recommendation was to make the transparent and responsible 

management of natural resources an integral part of U.S. foreign 

policy objectives. And then you give very specific examples on page 

12 of your testimony. My question is, is the Obama administration 

doing that right now in July or is this a hope that you have that 

they will do it? And has any other previous administration been responsive in that regard? 

Ms. GILFILLAN. In the past, we have very much focused on looking at the U.S. aid to resource-rich countries, more focused on, for 

example, the World Bank and how the World Bank is actually looking at natural resource governance and lending to resource-rich 

countries. But in relation to some of the U.S. assistance, right now 

I don’t believe that they are doing that. In particular, I would like 

to point out some of the programs that the U.S. has. For example, 

the U.S. Energy Governance and Capacity Initiative, which is an 

initiative led by the State Department that is focusing on helping 

increase capacity of governments, particularly emerging countries 

with emerging oil/gas sectors. And these kinds of initiatives are 

very important, you know, to help promote governance in the sectors in Africa and elsewhere. But we would like to see more of this 

type assistance be explicitly linked to transparency commitments 

and progress made in achieving them. 

If the U.S. is going to be providing assistance, then I think that 

assistance will be more effective if there are benchmarks for a 

country to demonstrate that it is making progress. So I think we 

would like to see more efforts. By that, I think the U.S. can also 

exert its influence through the World Bank, through the IMF, to 

try and make sure that those institutions are looking at natural reVerDate 0ct 09 2002 17:02 Jan 13, 2014 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 Y:\WORK\_AGH\071813\81978 HFA PsN: SHIRL
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source governance and trying to integrate those in its lending programs in resource-rich countries. 

Interestingly enough, the IMF has done that, for example, in the 

Congo, where they did withhold part of a loan because of concerns 

around corruption in the sector, in the extractive sector, in DRC. 

So there are examples of where that has been done, but we generally would like to see it done in a more consistent manner. 

Mr. SMITH. Finally? And then if you have any closing statements 

you would like to make? As we all know, section 1502 mandates 

that the SEC issue regulations requiring publicly traded companies 

to disclose the origins of illicit conflict materials. And 1504 requires 

resource extraction issues to disclose payments made to foreign 

governments. 

Now, the SEC obviously promulgated regulations. They are enjoined in court. We don’t have any idea—at least I don’t, and perhaps you do—as to when that court case may be ultimately resolved one way or the other. In your view, any of you, was DoddFrank drafted properly if it falls? Do we have a fallback that you 

would recommend? You know, it is not too soon to be thinking. You 

know, the idea is transparency and accountability. What do we do 

if the court were to find this to be unconstitutional? 

Part of the lawsuit that has been brought by the National Association of Manufacturers, they point out that the SEC requirements 

are extremely burdensome when it comes to tracing minerals back 

to the smelter or refinery. It seems to me, you know, we have got 

to be realists about, you know, the perfect sometimes is the enemy 

of the good. Is there a way of making sure that we know where 

these materials are coming from, these minerals, that could gain 

constitutional muster? 

Ms. GILFILLAN. As far as your first question about were sections 

1502 and 1504 done properly, I think that there were many years 

of deliberations in Congress where the issues of extractive industry 

transparency and conflict minerals have come up, both in hearings, 

both on the House and the Senate sides. I know that for Global 

Witness, we have worked on this issue since the late 1990s. And 

I have certainly been in Washington since 2004 working with Members of Congress in both the House and the Senate on both of these 

issues: On conflict minerals, on extractive industry transparency. 

So there were hearings done in both issues. 

There was legislation introduced. It was bipartisan and particularly Senator Lugar and Senator Brownback along with Senator 

Cardin. And Senator Feingold, actually, is no longer there, along 

with Lugar. But, anyway, they were some of the champions of 

these pieces of legislation in the Senate side. And so it was a bipartisan effort. There was a lot of deliberation. There was legislation 

out there before that was then put into Dodd-Frank. So we do believe that there was a lot of careful thought given to this. 

We are seeing it really enforced now with all of the other countries like the European Union that basically has adopted a similar 

provision. And we saw the Africa Progress Panel report that just 

came out this spring that pretty much embraced the whole idea of 

mandatory reporting that is in Dodd-Frank. 

As far as what is our backup, just on the section 1502 case, that 

there has been no decision on that. Oral arguments were heard 

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about a couple of weeks ago, but there is no decision on that. So 

we don’t know where that is. 

But I think the reality for section 1504 is that the rest of the 

world is moving toward transparency. So Europe has adopted it, as 

I said. Canada has announced they are adopting it. I think other 

countries are going to be moving forward as well. The G–8 just 

made a commitment to doing it as well. So I think that it really 

is here. And I think that we are hopeful that the SEC will be able 

to move forward with finalizing the rules and having implementation as soon as possible. We certainly believe that the SEC did the 

rule and did it in a way that was consistent with the congressional 

intent in the statute. 

Just on section 1502 on the conflict minerals provision, there has 

been a lot of progress since that provision came into effect. We 

have never seen so much attention focused on the Congo and trying 

to stop conflict minerals. Since Dodd-Frank, we have seen so much 

action from companies, from the Congolese Government, from other 

actors in the Congo. For example, the DRC Government now has 

a law requiring all companies in the trading in the mining sector, 

to carry out due diligence to avoid sourcing conflict minerals. That 

is the biggest that we have seen. That is a huge development. And 

before Dodd-Frank, we really didn’t see much meaningful progress 

by the Congolese Government. So I think that that is huge. 

Another thing that is very important is that all of the private 

sector is really galvanized and working to comply. Now, obviously 

there are challenges with knowing your supply chain, but we have 

got major companies, like AMD, H.P., G.E., that are actively involved in developing these joint industry initiatives that are now 

going on to be able to trade supply chains. 

So I think it is very, very positive what is going on on the 

ground. We certainly work with, for example, the Conference of 

Catholic Bishops in the Congo, who has testified here in Congress. 

And they continue to believe that Dodd-Frank is incredibly important to break the links between minerals in conflict. It will enable 

people in the Congo. Because of the conflict in the mining areas, 

lots of people have not been able to pursue other livelihoods, like 

agriculture, for example. 

And so the Catholic bishops believe there that if you have DoddFrank if you kind of break this link between minerals in conflict, 

you will be able to have people going back into other livelihoods because the mining sector is not particularly a great livelihood for 

people. It is slave-like conditions. It is very, very horrible working 

conditions. 

So I think we are in that transitional period where we are moving forward with the implementation. But we have seen demote 

militarization of mining areas. We have seen a lot of progress and 

a lot of important impact. So I would just want to, you know, make 

that clear that that is what we are finding. And we are very much 

hoping that the U.S. will move forward. 

And Europe also is now considering a similar type of provision. 

So that is encouraging, too. 

Mr. SMITH. Thank you. 

Would anyone else like to make a final comment before we conclude? 

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Mr. ALICANTE. Sure. Not much to add to what Corinna had to 

say about Dodd-Frank 1504, only to say that, as I mentioned earlier, the rate of importance of creating a whole environment in 

which transparency is valued and is protected in the United States, 

which in my mind means also ensuring that anti-money laundering 

laws are taken seriously, ensuring that incorporation transparency 

to avoid illicit money coming into the United States to shell companies is taken seriously, ensuring that the EITI, for instance, Equatorial Guinea is in the process of reapplying, so ensuring that 

Equatorial Guinea is only considered after certain key benchmarks 

have met in the country and also balancing all of these efforts in 

transparency with efforts to promote human rights, to promote 

good governance in these resource-rich countries. 

And, again, Mr. Chairman, I want to thank you very much for 

these wonderful opportunities to speak on this issue. 

Mr. SMITH. Thank you, Mr. Alicante. 

Mr. ADAM. Yes. 

Mr. SMITH. Mr. Adam? 

Mr. ADAM. Mr. Chairman, I also want to thank you very much 

and to reiterate that Ghana has shown the way, the willingness to 

govern the management of these resources transparently and also 

to invest the revenues from oil and other minerals efficiently. But 

Ghana still needs support in terms of institutional building. 

There are other countries that are emerging: Liberia, Sierra 

Leone, Guinea, if Ghana is successful. I believe that it will have 

a spillover effect on these countries so that we can enhance improved governance of natural resources in the area. 

Finally, some of the contracts which we describe as bad deals are 

producing oil, which is consumed by many important countries, including the U.S. I understand in the U.S., the oil you consume, 

about 12 percent of that is from some African or West African 

countries. And if some of the oil you consume is coming from badly 

negotiated contracts, contracts that are tainted with corruption, I 

think that the U.S. will be promoting corruption if you continue to 

consume that oil. And, therefore, as part of your bilateral relationship with countries where you are getting your oil from, you will 

play a very important role if you help them to improve on the governance around the contracts so that you will be consuming clean 

oil. And then we will be setting an example why other countries 

around the world should consume clean oil as well. I want to thank 

you once again for the opportunity. 

Mr. SMITH. Yes? 

Mr. BOLDIN. I would just like to say thank you on behalf of myself and Oxfam for lending your ear, for allowing us to make our 

voice heard today. So thank you. 

Mr. SMITH. Thank you, Mr. Boldin. Thank you. 

Ms. GILFILLAN. Sorry. I had forgotten I really wanted to also 

thank you, Chairman Smith. And thank you for your longstanding 

leadership on this issue, on transparency of extractive industries. 

I know that you and your staff have really been committed to this 

issue. And I think that that is very important. So I want to thank 

you for all your leadership. And we look forward to working with 

you more on these issues. 

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Mr. SMITH. I want to thank each and every one of you. You have 

provided extraordinary insight and recommendations that are very 

specific. This is an activist subcommittee. So I can assure you we 

will follow up with what you have conveyed today as well as previously, but I think today now, you know, we are at a turning point 

in many ways on this whole issue. Good has been accomplished. As 

you said, the Europeans are now taking up this cause very 

robustly. 

And I especially, Anquan, want to thank you because the meeting we had just a few weeks ago, you know, we were going to do 

this at some point, but you just brought it all to a head and said, 

you know, let’s go ahead and bring this information forward to hold 

all of us accountable. That includes the executive branch as well 

as the legislative branch. We don’t have much influence on the judicial branch, but let’s hope they get their act together and rule 

soon and hopefully favorably. So thank you again for your leadership. And I am sure the people back in Senegal have to be much 

pleased by your keeping your promise to keep their interests ever 

in front of the minds of Americans. Thank you all. 

And the hearing is adjourned. 

[Whereupon, at 4:41 p.m., the subcommittee was adjourned.] 

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