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Congo News: How gold smuggling profits warlords not Congo

Texas banker Kase Lawal says he lost $30 million in botched Congo gold scam.

Clone of Congo conflict goldEnlarge
A gold miner displays a gold nugget in Mongbwalu, Congo. A United Nations report details how gold smuggling benefits warlords and foreign businessmen but leave Congolese miners impoverished. Gold and other mineral deposits, which are numerous in the volatile north-east of the country, have become a catalyst to much of the conflict in Congo. Numerous militias and warlords have vied for control of the mineral rich eastern Congo for decades, creating instability and continued bloodshed. (Spencer Platt/Getty Images)

NEW YORK — A Texas oilman lost $30 million after financing a botched deal to buy 1,000 pounds (475 kg) of smuggled gold from the Democratic Republic of Congo, according to a report by United Nations investigators.

The transaction ultimately profited a Congolese warlord wanted by the International Criminal Court for recruiting child soldiers, according to the report. The investigation was mandated by the UN Security Council to probe links between mineral trading and illegal armed groups in eastern DRC.

The gold smuggling deal gone wrong is an example of many other deals in which gold and other valuable minerals are illicitly moved out of Congo by warlords, according to human rights groups.

Much of that trade involves General Bosco Ntaganda who was indicted by the International Criminal Court on war crimes charges in 2006 and was also placed under Security Council sanctions. Under a peace agreement, Ntaganda is now a general in the DRC army and has used this clout to expand his control of mines and create alliances with regional dealers selling real and counterfeit gold, the investigators found.

More from GlobalPost: Congo army accused of multiple abuses

“Ntaganda’s participation in such deals has not dissuaded gold buyers hopeful of obtaining large profits from buying at low prices,” the investigators state in their 400-page report.

They say that Kase Lawal, CEO of CAMAC oil company in Houston, along with former NBA star Dikembe Mutombo and a US diamond dealer named Carlos St. Mary hoped to make a $10 million profit from the deal.

Kase Lawal, 57, is a Nigerian-born American who propelled CAMAC's rise to a $2.4 billion private company — said to be the second-largest African-American-owned business in the US. Lawal was appointed to a trade advisory post by the Obama administration, and has held similar positions in Rebublican administrations.

The scheme, which was hatched at a New York City hotel in December 2010, according to the report, involved buying the Congo gold in Nairobi, Kenya, circumventing a then-existing ban on exporting minerals from the DRC.

The plan initiated with Mutombo, the investigators state. He reportedly planned to use the profits from the deal to fund his humanitarian activities. The former Houston Rockets player hails from the DRC and has built a hospital and research center in the capital Kinshasa. The Dikembe Mutombo Foundation refused to comment, a spokeswoman said, adding that Mutombo himself plans to address the matter in the near future.

“Lawal agreed to finance the deal, with St. Mary conducting the business in Kenya and the two splitting profits with Mutombo,” the report states. “Throughout the process, Lawal made no inquiries regarding the exact origins of or conditions in which the gold had been extracted and transported from the Democratic Republic of the Congo to Kenya.”

The ban on the mining and export of minerals from the DRC was imposed by Congo President Joseph Kabila in September 2010 with the stated aim of cutting off funding for armed groups in the mineral rich eastern part of the country. But rights groups say it was flouted by armed groups such as Ntaganda's, which controled key border crossings where minerals were transported and which used the ban to consolidate and expand his control of the mineral trade. The ban was lifted in March 2011.

More from GlobalPost: Congo tries to halt illegal gold mining

Some of the alleged participants dispute the details, but the UN's investigation relates the shady, big-ticket cash-for-gold deal in extensive detail. 

According to the report, when St. Mary traveled to Nairobi in mid-December 2010 to conduct the transaction, he handed over $4.8 million in CAMAC funds to an intermediary who then disappeared only to later resurface and tell St. Mary that the initial payment was meant for a “general” and the transaction should be completed in Goma, eastern DRC’s biggest city and Ntaganda’s home turf.

In January 2011, St. Mary traveled to Goma with a lawyer he had hired in Kenya along with an employee of the Nigerian-arm of CAMAC to view the gold. They were brought by two colonels of the DRC army to a house that was also guarded by members of the national army. St. Mary said he briefed Lawal on