Insurance

Case Study

Anvil Mining in the Democratic Republic of Congo

Since 2002, Anvil Mining Ltd. has operated the Dikulushi copper and silver mine in the Democratic Republic of Congo (DRC). Anvil, a Canadian company with its head office in Australia, is listed on both the Toronto and Australian stock exchanges.

In 2004, the DRC was still emerging from years of brutal conflict. Tensions remained high and the government lacked control over large tracts of the country. In September, the MIGA Board of Directors approved political risk insurance for the Dikulushi mine.

The following month Anvil provided logistical support to the Armed Forces of the Democratic Republic of the Congo (FARDC) to help suppress a small-scale rebel uprising in Kilwa, a nearby town. The FARDC used company resources to carry out a number of human rights abuses, including alleged extrajudicial killings of civilians. The United Nations estimates that 100 people were killed during the military offensive.¹

In 2005, after these human rights abuses occurred, MIGA's contract was issued for $13.3 million in risk insurance to RMB International (Dublin) Ltd. and Anvil Mining Ltd.² Following a hard-hitting media report on Australian television about the Kilwa incident, the World Bank directed its Office of the Compliance Advisor Ombudsman (CAO) to audit MIGA's support for Anvil Mining's project. Among its findings, the audit revealed that:

• MIGA did not explicitly consider whether the project might influence the dynamics of conflict or whether security provision for the project could indirectly lead to adverse impacts on the local community.
• MIGA essentially takes on faith that a client will implement the Voluntary Principles on Security and Human Rights–a code of conduct developed for the extractive industries by governments, civil society and industry. MIGA did not fully understand the implications for its client of implementing the Voluntary Principles and did not assess whether its client had the capacity to do so.

Weaknesses in MIGA's treatment of conflict and security issues were raised by the CAO in a 2002 review of MIGA. Recommendations to address these concerns were not fully addressed by MIGA in its due diligence for the Dikulushi project.³

On December 12, 2006, criminal proceedings were initiated in the DRC against three former Anvil Mining employees, one of whom is Canadian. They were charged with complicity in war crimes, namely having "voluntarily failed to withdraw the vehicles placed at the disposal of the 62nd Brigade in the context of the counter offensive of October 2004 to recapture the town of Kilwa" and of having "knowingly facilitated the commission of war crimes." The trial had reached no conclusions at the time of writing.