Congo’s pricey passport scheme sends millions of dollars offshore

David Lewis | April 13, 2017 | REUTERS

The impoverished Democratic Republic of Congo has introduced biometric passports costing $185 apiece. But most of that money does not go to the state. Instead millions of dollars go to a private company in the Gulf – and sources say it is owned by a relative of President Joseph Kabila.

KINSHASA – One day in November 2015, President Joseph Kabila visited his foreign ministry and smiled broadly as a computer took his photograph and fingerprints. He was there to mark the launch of the Democratic Republic of Congo’s new biometric passport, fitted with a chip to store details of his identity.

Kabila and his aides have extolled the benefits of the passports, saying they will allow freer movement across an increasingly security-conscious world. In private, the organisers of the deal have another reason to celebrate: It presents an opportunity to make hundreds of millions of dollars off some of the poorest people on the planet.

The passport is among the most expensive in the world, costing each Congolese applicant $185. A UK passport costs half as much, and a U.S. passport $110.

Yet according to documents reviewed by Reuters, the Congolese  government will receive just $65 from each passport. Instead, most of the money will go to Semlex, a firm based in Belgium that is producing the travel documents, and to a small company in the Gulf.

That Gulf company, called LRPS, receives $60 for every passport issued, according to documents relating to the deal between the Congo government and Semlex. LRPS is registered in Ras Al Khaimah in the United Arab Emirates (UAE), a jurisdiction where details of ownership are often kept secret.

According a person with direct knowledge of the passport deal, LRPS is owned by Makie Makolo Wangoi, who is believed to be a close relative of Kabila. This source said that Wangoi travelled to the UAE in June 2015 to complete the transfer of LRPS shares into her name. Documents referring to travel arrangements and the share transfer indicate that Wangoi owns LRPS, though the evidence is not conclusive.

Reuters sent questions about LRPS to Wangoi’s email address but received no reply. The Congolese presidency did not respond to Reuters inquiries about the passport scheme and the ownership of LRPS. Nor did Semlex respond to requests for comment.

After these various inquiries were sent, a senior Congolese security official contacted Reuters and said he would provide responses on behalf of Kabila, Wangoi, and others. He later said all questions should be referred to the CEO of Semlex, Albert Karaziwan, and supplied no further comment.

Karaziwan did not reply to emails or text messages sent to him. Lawyers for him declined to comment, citing possible legal action over a person involved in the passport deal for allegedly disseminating misleading information. Reuters gave Kabila and others multiple opportunities to say whether any of the information about the passport deal in this article was misleading. They did not respond.

The surprising cost of Congo’s passports is highlighted by a rival proposal from a separate Belgian company called Zetes. In that document, reviewed by Reuters, Zetes outlined plans in 2014 to supply biometric passports to Congo for $28.50 each. Zetes confirmed making such an offer.

Over time, Congo’s $185 biometric passports could generate hundreds of millions of dollars for LRPS and Semlex while diverting potential revenue away from an unstable and impoverished state. According to the United Nations, the average per capita income in Congo is just $680 a year.

The Congolese state needs all the funds it can get and has previously missed out on revenues from big corporations: A 2013 report by the Africa Progress Panel said Congo appeared to have lost out on $1.3 billion in revenues from five mining deals since 2010 because state companies had “systematically” undervalued assets when selling concessions to investors. Those deals involved complex transactions between big enterprises; in the passport scheme, the state is losing out on revenue that comes directly from ordinary citizens.

Kabila was due to step down in December but elections have been postponed, leaving him in charge as domestic opponents assert his authority has run out. Dozens of people have been killed in violent clashes between protesters and police.

During Kabila’s rule, some of his close associates have acquired considerable wealth through interests in numerous businesses in the country, according to the corruption watchdog Global Witness. In December, the news agency Bloomberg detailed a network of about 70 companies – not including LRPS – that it said were linked to members of Kabila’s family, including Wangoi.

Kabila did not respond to requests for comment on that story either, but officials close to Kabila have denied Congo is losing out in deals that favour officials or businessmen close to the president. They have also defended his family’s involvement in business, saying they are private citizens who have a right to engage in commercial activities.

IDENTITY EXPERT

Over the past 20 years, Semlex has become a leader in providing identity and travel documents for African nations. From its headquarters in an imposing building on Avenue Brugmann in Brussels, it has supplied clients stretching from Guinea-Bissau in Africa’s west to Kenya in the east and Madagascar in the Indian Ocean.

Landing a contract in Congo – one of the continent’s most populous nations, with some 70 million people – had the potential to be highly rewarding for the firm. Documents seen by Reuters, including correspondence between Semlex and the government and agreements between individuals and firms involved in the deal, paint a picture of how the contract was pulled together.

A key figure was Semlex CEO Karaziwan, who founded the company in 1992 and whose family owns all but a small percentage of the business. Karaziwan is a Belgian of Armenian origin, born in the Syrian city of Aleppo. He owns a turreted castle in Belgium and has business interests from real estate to restaurants. His main focus is technology and security for governments, particularly in Africa.

Between October 2014 and June 2015, Karaziwan engaged in a series of communications with Congolese authorities, including several letters addressed directly to Kabila, according to documents reviewed by Reuters. On Oct. 16, 2014, Karaziwan sent Kabila an outline of his company’s expertise, saying Semlex was able to offer biometric passports at a cost of 20 to 40 euros each ($21.50  to $43), thanks to having its own printer in Lithuania.

Five days later, Karaziwan sent another letter to Kabila. This time he invited two senior officials from Kabila’s inner circle, Moise Ekanga Lushyma and Emmanuel Adrupiako, to Dubai for meetings to discuss a possible contract.

Ekanga has headed the Congolese government office overseeing billions of dollars of cooperation between Congo and China. Adrupiako is an influential financial adviser who has worked with Kabila since 2001. One official with detailed knowledge of the workings of Kabila’s presidency described Adrupiako as the informal “treasurer” in his office.

In early November 2014, Semlex said it could produce passports at $50 apiece, according to the documents seen by Reuters. In a letter sent to Kabila on Nov. 13, the price had risen to $120.

In March 2015, Karaziwan was invited to Kinshasa, DR Congo’s capital, by the foreign minister to finalise a deal. By the end of May, a proposal for Semlex to provide passports for five years was cleared by the budget ministry.

On June 11, 2015, Karaziwan and Congo’s Foreign Minister Raymond Tshibanda and Finance Minister Henry Yav Mulang signed the final contract. Semlex agreed to invest $222 million in the project. The Congolese government would charge citizens $185 per passport, a steep rise from the $100 cost of the country’s previous passports.

On the day the passport was launched, Karaziwan, Tshibanda and a group of Semlex workers posed for a photograph, seen by Reuters: In the middle was Kabila, grinning broadly.

Weeks later, the prime minister of Congo at the time, Mapon Matata Ponyo, wrote to Foreign Minister Tshibanda complaining that he had only heard about the passport deal in the press. In the letter, reviewed by Reuters, Matata Ponyo asked for more details on the contract to see whether it met requirements for transparency. He never received a reply, a spokesman for Matata Ponyo said.

A senior official at the body that regulates government contracts in Congo, the Autorité de Regulation des Marchés Publics, said the passport deal should have gone through a public tender. “This did not happen,” said the official. “It was handled directly by the Ministry of Foreign Affairs. The contract should have been published.”

THE SPLIT

The June 11 contract provides that $65 from each passport be earmarked for the Congolese state. The remaining $120 was allotted to a consortium that includes Semlex Europe, based in Brussels; Semlex World, based in the United Arab Emirates; Semlex’s Lithuanian printer; and the UAE entity called LRPS.

That $120 was further divided up by two other agreements, also dated June 11. According to one contract, a Kinshasa-based firm called Mantenga Contacto Trading Limited was allotted $12 from each passport in return for handling much of the project’s human resources issues, including supplying staff. Mantenga acknowledged Reuters inquiries but supplied no comment.

The three Semlex firms involved in the deal were allotted $48 per passport.

That left $60 out of the $120 allotted to the consortium. According to documents seen by Reuters, that $60 from each passport issued was allocated to LRPS. In return, LRPS would help with administration, logistics and the relationship with the government.

LRPS was represented in the talks with the government by Karaziwan, the boss of Semlex, according to the contract between Semlex and the Congolese government.

Reuters was unable to verify the current status of LRPS. But its certificate of incorporation with authorities in Ras al Khaimah shows it was set up on Jan. 14, 2015, as Semlex was negotiating the passport deal with Kabila’s representatives. The document does not say who owned the company when it was created. But a second document – an agreement to transfer shares – indicates that later in 2015, LRPS was owned by Cedric Fevre, a Frenchman based in Dubai who is a business associate of Karaziwan.

Though this computer-created document is unsigned, metadata embedded in it shows that it was created in the UAE in 2015 and printed on June 25 that year. That was the day that Fevre transferred all 10,000 shares in LRPS to Wangoi, according to the source with direct knowledge of the passport deal.

A second source, who was aware of the deal without having direct knowledge, also said Wangoi became the owner of LRPS.

The person with direct knowledge of the passport deal said that the only signed copies of the LRPS share-transfer agreement are held by Fevre and Wangoi. Reuters has not seen a signed copy, and Fevre and Wangoi did not respond to questions for this article.

Wangoi is little known outside the Kabila family. Corporate records confirm she is a shareholder in several companies with other Kabila family members. In two of these firms, Congo-based Shaba Impex Sprl and Shaboil Sprl, Wangoi uses the name Makolo wa Ngoy Kabila in the registration. Two people familiar with the president’s circle said Wangoi is one of Kabila’s many sisters. She was identified as a Kabila sister in the Bloomberg investigation into the business interests of the president’s family. Another source, who has studied Congo and Kabila for many years, said she could be a niece.

The passport contract runs for five years. It doesn’t stipulate how many passports will be made, but in recent years Congo has issued around 2.5 million of its old passports annually. A person with direct knowledge of the Semlex operation said the Belgian company had produced 145,000 of the new biometric passports by the end of January 2017, which would earn LRPS nearly $9 million.

In another document reviewed by Reuters, Semlex said that it would be able to supply Congo with 2 million passports a year, once the operation was fully up and running. That suggests the Belgian company could receive nearly $100 million a year from the deal, while LRPS could receive $120 million a year.

ELECTION DELAY

Kabila was due to step down in December at the end of his second term in office, a move that would have marked Congo’s first peaceful transfer of power. But the government said it needed more time and money to organise elections, and Kabila has remained president.

Dozens of people have been killed in protests over the election delay while a fresh rebellion in the south has killed hundreds more. On Dec. 31, mediators from the Catholic Church secured an agreement from Kabila’s camp that the vote will be held this year and Kabila will not seek re-election. Months on, the deal has still not been implemented and the church has walked away from the mediation process.  Kabila himself has not publicly declared his position. His opponents say several efforts to push back the vote show he is in no hurry to yield power.

Whether or not Kabila stays in power, LRPS looks set to continue to make money from every passport issued in Congo. According to Article 14 of the contract for the deal, the agreement remains valid even if there are “institutional changes” in the country.

Payments to the president’s adviser

By David Lewis

In June 2015, the Belgian company Semlex signed a deal to supply biometric passports to the Democratic Republic of Congo, according to documents reviewed by Reuters. A few weeks later two companies based in the United Arab Emirates made payments totalling $700,000 to private bank accounts held in the name of Emmanuel Adrupiako, a Kabila adviser who helped handle the passport deal, according to bank documents and emails reviewed by Reuters.

The two UAE-based companies have connections to Semlex, but it isn’t clear whether the payments were related to the passport deal. Adrupiako did not respond to requests for comment.

One of the UAE-based companies was named Berea International and the other Cedovane, both registered in Ras Al Khaimah. Officials at the emirate’s corporate regulator, RAK Investment Authority, would not comment on either of the companies, citing confidentiality rules.

However, Reuters reviewed an “incumbency certificate” for Berea – an official document issued by the RAK Investment Authority that gives basic information about a business. It states that Semlex CEO Albert Karaziwan is a director, secretary and sole shareholder of Berea. Another director of Berea is Karaziwan’s associate Cedric Fevre. Fevre is also a director of Cedovane, a Cedovane document shows.

The payments to Adriupiako went through United Arab Bank (UAB). A copy of UAB documentation seen by Reuters shows that on July 29, 2015, Cedovane paid $300,000 to an account Adrupiako holds in Quebec with the Royal Bank of Canada. The reason given for the $300,000 payment was “loan agreement,” according to the document.

Royal Bank of Canada declined to comment. Fevre did not respond to requests for comment about Cedovane.

A few weeks later, on Aug. 25, Berea paid $400,000 to an account Adrupiako has with Jyske Bank in Denmark. That payment triggered concern in Copenhagen. When Jyske Bank asked for further information, Adrupiako told the bank the money was to pay for a four-storey building Berea was renting off him as it set up shop in Kinshasa, according to bank emails and a Berea contract reviewed by Reuters.

Jyske Bank said it could not comment, citing client confidentiality. UAB said in a statement to Reuters that it had followed the requirements set by its regulator in handling payments.

A Reuters reporter visited the address in Kinshasa where the rented building was said to be located. The reporter found a four-storey building still under construction and there was no sign that Berea had any presence there.