Banro seeks return of Congolese gold assets

Toronto-based Banro (YBE-V) will submit a proposal to government officials from the Democratic Republic of the Congo in an effort to resolve a long-standing dispute over the government’s seizure of gold concessions belonging to Banro’s Congolese subsidiary, Societe Aurifere du Kivu et et du Maniema S.A.R.L. (Sakima).

Banro will submit a memorandum of understanding to the DRC in an effort to retrieve the assets. The announcement follows discussions between Banro and DRC government officials at the recent U.S.-Africa business summit in Philadelphia, Pa.

“Discussions were very cordial,” says Arnold Kondrat, executive vice-president of Banro. “There is a definite change of attitude in President Joseph Kabila’s new government.”

Banro holds 93% of Sakima, with the remainder held by the DRC. Sakima has 47 mining concessions covering 10,270 sq. km in the DRC. The concessions host four known gold deposits: Twangiza, Kamituga/Mobale, Lugushwa and Namoya. The total proven and probable gold resource is said to exceed 12 million oz.

In July 1998, the government expropriated the subsidiary’s gold assets, citing two “irregularities” involving the dates on which certain ministerial orders were issued. Specifically, the orders authorizing Sakima to explore the concessions preceded the decree that created Sakima. For its part, Banro says the government previously reviewed these orders and confirmed that they complied with DRC law.

Banro initially took its case to a tribunal constituted by the International Centre for the Settlement of Investment Disputes (ICSID). However, ICSID refused to exercise jurisdiction over Banro’s claims.

In December 2000, Banro’s American subsidiary, Banro American Resources, filed an action against the DRC government pursuant to the Foreign Sovereign Immunities Act (FSIA) in an effort to seek a remedy for the expropriation of the assets.

FISA allows U.S. companies to sue foreign governments in American courts without the benefit of diplomatic immunity, under certain conditions. Banro feels that the conditions in this case — that is, that the DRC government holds a 7% interest in Sakima and is now engaged in commercial activity relating to the expropriated assets — warrants such an action.

In September 2001, Banro filed for judgment of default against the DRC for US$400 million at the U.S. District Court in Washington, D.C.