The Warlord and the Basketball Star: A Story of Congo's Corrupt Gold Trade
When an athlete-turned-humanitarian and an energy executive tried to buy gold in Kenya, they found themselves mired in Congo's dangerous world of conflict minerals -- and totally outmatched.
In 18 seasons in the National Basketball Association, Congo-born Dikembe Mutombo was a relentless defender, an 8-time all-star who accumulated the second-most blocked shots in the league's history and averaged a double-double in rebounds and points in each of his first 11 seasons. Mutombo became a star -- even during the NBA's Michael Jordan-Patrick Ewing-Karl Malone golden age -- because of his ability to intimidate. The 7-foot center owned the most feared and arguably most dangerous elbows in the league, and after every blocked shot, Mutombo would wave a taunting index figure at whatever hapless small forward or shooting guard had attempted to drive the lane against him.
But off the court, Mutombo was the kind of genuine role model that the decadent, late-90s NBA mostly lacked. In a time when players routinely skipped college for the pros, Mutombo finished a linguistics and diplomacy double major at Georgetown. An ugly labor dispute in 1998 convinced even many dedicated basketball fans that their favorite players were selfish and overpaid. But Mutombo, whose playing career overlapped with a horrific war that devastated his home country, dedicated himself to humanitarian pursuits. The Dikembe Mutomobo Foundation built a hospital in a poor area of Kinshasa, and Mutombo has worked with philanthropic heavyweights like the Clinton Global Initiative and the Bill and Melinda Gates Foundation.
"Dkembe's heart is enormous, and his bond to the people of his beloved DRC defines him, and clearly motivates his humanitarian work," says Caryl Stern, CEO of the U.S. Fund for UNICEF, in an email. Mutombo's charitable work wasn't aimed at drawing attention to himself, writes Stern. "Dikembe has proven himself to be someone who will put in the hours behind-the-scenes, away from the cameras."
Mutombo may be a renowned basketball player and humanitarian. But as a UN Group of Experts report published last December makes clear, he's not much of a businessman. Mutombo had linked up with Houston-based oil executive Kase Lawal, a respected businessman whom President Barack Obama had appointed to the Federal Trade Commission's Advisory Committee for Trade Policy and Negotiation. According to the UN document (and as first reported by The Houston Chronicle), the two attempted to purchase what they thought was $30 million worth of gold from dealers in Kenya -- only to find out that the gold (most of which was probably counterfeit) was in the possession of a notorious Congolese warlord, who ended up profiting handsomely off of Mutombo and Lawal's blind enthusiasm and almost total lack of due diligence.
The incident provides a glimpse into the complex situation in the eastern Congo, where gold traders attempt to make quick money off of the area's conflict-tainted mineral resources -- and end up exacerbating the region's long-standing misery. It's a reminder that the Congo gold trade is so dirty -- and so pervasive -- that even these prominent Americans ended up handing millions of dollars to a warlord who is widely considered to be one of the most brutal and dangerous men in Central Africa.
On December 2, 2010, Mutombo gathered a small group of men in a New York City hotel. He told them of an opportunity that could earn up to $20 million in a matter of weeks. His main audience was Kase Lawal, the CEO of Houston-based energy company CAMAC, and Carlos St. Mary, a former West Point football player and a trader in West African diamonds. Mutombo asked them to put together $10 million to buy, from dealers in Kenya, an unusually large amount of gold: 4.5 tons. That haul could be worth three times as much if Mutombo, Lawal, and St. Mary could arrange for it to be transported out of Africa and re-sold on the international market.
Mutumbo, though a humanitarian, presented this purely as an investment. The retired basketball star is also the titular CEO of the Mutombo International Group, a small outfit that mostly invested in retail around Atlanta. The gold must have seemed like an irresistible opportunity.
It should also have seemed too good to be true. "Immediately when you say you've got 4.5 tons, you pull back from the table," recalls St. Mary, who frequently buys diamonds in countries such as Liberia and Sierra Leone. "I work in places where if people have 10 grams of gold they run down to my office front so that they can sell that. I couldn't fathom 100 kilos, 10 kilos, let alone 4,000 kilos."
Still, with so much money to be made, St. Mary kept listening. The story was compelling. According to the Powerpoint Mutombo presented, which St. Mary has shared with The Atlantic and can be viewed here, the retired basketball player claimed that the gold was held in a village in Kenya. He said he knew exactly where the cache was, and he implied it would be easy to buy and move.
"Mr. David [Kapuadi] and Mr. Stephane Kapuadi brought to us a time sensitive yet lucrative deal," reads one slide of the Powerpoint. David and Stephane, who are from the family of Mutombo's wife, were in the room for the New York meeting. The Powerpoint simply stated that the "gold is safely stored in Nairobi where Mr. David and partners are seeking a buyer." According to the presentation, David and Stephane had personally verified that the gold was real and would be able to hand it over to any buyers immediately.
Mutombo's presentation must have sounded promising at the time. But, reading it now, knowing how badly the deal would go, his omissions can seem glaring. He suggested that his in-laws had access to the gold, but didn't say who actually owned it. He referred to "partners" who had some unspecified control over the gold, but didn't say who they were or what they wanted.
When The Atlantic tried to reach Mutombo through his foundation, a representative said that neither the former basketball star nor his charitable foundation would be commenting. Kawal's company, CAMAC, responded to similar requests with this statement: "CAMAC is a law-abiding company and we disagree with the representations made in the UN report. We have already answered questions on this and see no reason to address it further."
St. Mary admits that he didn't press for details during the meeting. As a family friend of Lawal's and a longtime acquaintance of Mutombo's, he says, he didn't want to get pushy with either. "I probably should have looked at things a little closer," he says, "but when you put the pedigrees of those people together there's stuff you overlook."
Lawal agreed to fully finance the $10 million deal and to give Mutombo and St. Mary, who would supervise the transaction, a cut of the eventual profits. Lawal immediately sent St. Mary to Nairobi on a private jet, where David Kapuadi introduced him to the mysterious "partners" from Motumbo's PowerPoint presentation: Eddy Michel Malonga, who was named as the gold's owner on a Kenyan export form, and a man who introduced himself only as "Benoit." According to the UN report, Malonga is part of a Kenya-based counterfeit gold ring active throughout central Africa. "Benoit," according to both St. Mary and the UN panel, was most likely Yusuf Omar, a counterfeit gold smuggler.
For the moment, the gold appeared to be legitimate -- Malonga took St. Mary to a refinery to show him purified samples. But the sellers insisted the deal couldn't be completed in Nairobi, according to St. Mary. The majority of the gold, they admitted, wasn't even in Kenya. The sellers demanded a $5 million dollar deposit, then gave Lawal the choice of picking up the gold sometime later in Kampala, Uganda, or getting it immediately at Goma, the capital of long-troubled North Kivu province in the eastern Democratic Republic of Congo.
If Lawal had had any idea just how costly and ethically murky this transaction was going to become, he might have backed out. But it's understandable why he wanted to keep going. St. Mary had just handed $5 million of his money to a pair of shady gold dealers about whom they knew very little, and they still had nothing to show for it. But, with $5 million sunk already, Lawal's enthusiasm for the deal still hadn't dimmed.
Looking at his company's performance that year, it's easy to see why he would be so eager to believe things would work out. CAMAC's stock hovered at a little over $2 a share by mid-December, down from $5.07 that April. And while CAMAC controlled over $400 million in assets, it had just $22 million on hand in November of 2010, according to public filings, only a little more than the projected $20 million Lawal thought he could make off of the gold. The company reported nearly $188 million in losses for 2010, leaving Lawal in need of an easy payday. He had an office in Kinshasa and expected that a deal in the DRC would be seamless.
According to St. Mary, Lawal didn't think the exchange -- the remaining $5 million for more than four tons of gold, which everyone still assumed was real -- would take longer than a single afternoon.
Fred Robarts, an author of the UN experts report, told me that the sudden change in venue, along with the exchange of large amounts of money in Nairobi, should have been a tipoff that Lawal and Mutombo were likely being scammed. "These guys have an international network," Robarts says of the Kenyan-based smuggling and counterfeiting ring that Omar and Malonga were a part of. "And they use quite elaborate means to convince their buyers. They have a network of people within the region who play various roles -- customs officers, and so on. They can probably get a hold of fairly convincing documentation as well."
Which they did. Before St. Mary left New York for Kenya, Reagan Mutombo, Dikembe Mutombo's nephew, and David Kapuadi provided him with Congolese export forms authorizing the transfer of 73 grams of gold to Kenya. These forms confirmed that the gold had legally crossed an international border, and could therefore be bought and sold, in the opinion of both the Kenyan and Congolese governments.
According to the forms, the gold came from the conflict-torn Goma region of eastern Congo. In September of 2010, DRC President Joseph Kabila had imposed a domestic ban on mineral exports from the Congo's eastern provinces, the point of origin for so-called "conflict minerals," natural resources extracted from squalid mines whose mineral yields fund militia activity in the region. Kapuadi's "partners" might have gotten around the ban by claiming they were re-importing gold that originated in Kenya. It is also possible that Mutombo and Lawal either didn't know about the ban, or knew about the ban and simply didn't care. And it's possible that all the documentation, which also included a Kenyan "certificate of ownership" establishing Malonga as the gold's true owner, was simply forged. "Every damn thing they had was fake," St. Mary claims. "But it looked official."
That the gold (or what Lawal, Mutombo, and St. Mary believed to be gold) might have originated in Goma, and was apparently still in the Eastern Congo, should have been a glaring red flag, a sign that either the gold or its owners were somehow involved in the illicit mineral trade. Twenty million dollars in potential profit was enough to convince Lawal and Mutombo to overlook the possibility that they were getting themselves into something risky and possibly unethical. Instead, Reagan Mutombo went to Goma to oversee his uncle's side of the deal. A few days later, on February 4, 2011, Lawal sent St. Mary to Goma on a leased Gulfstream jet, along with several CAMAC employees and nearly $5 million in cash.
It wasn't until the plane landed in Goma that St. Mary realized just how deeply involved the Congolese army was in the transaction. "When we got there they came on the plane and took our passports," says St. Mary. "They said 'the general wants to see you.' We said, 'general who?' At that point nobody had even told us. They said 'Bosco wants to speak to you now.'"
Bosco Ntaganda is one of the most infamous figures in Central Africa. A former official in the military wing of the Rwandan Patriotic Front, Rwanda's current ruling party, Ntaganda now serves as both the leader of the National Congress for the Defense of the People (CNDP), a powerful and Rwanda-supported militia that is now allied with the Congolese government it once fought, and a general in the Congolese army. He was indicted by the International Criminal Court in 2006 for his enlistment and use of child soldiers in the early 2000s, during the violent closing years of the second Congolese civil war.
When Kabila's government decided in 2009 to integrate the CNDP insurgents it had been fighting for two years into the country's armed forces, it ended a seemingly endless war of attrition. But Kabila also gave Bosco Ntaganda even more power than the general already had. After an agreement between the governments of the DRC and Rwanda (the details of which remain secret to this day), Kabila put Ntaganda in charge of the army's campaign against the FDLR, the Congo-based Hutu militant group that the Tutsi-led Rwandan government accuses of sheltering fighters responsible for the country's 1994 genocide, and considers an ongoing threat to national security.
Ntganda has since waged a brutal campaign on the Rwandan and DRC governments' behalf, according to Jason Stearns, author of Dancing In The Glory of Monsters, a history of the DRC's recent conflicts. "At the end of 2009, and through 2010, the eastern Congo saw an escalation on par with the worse violence of the war," he says of the years after Ntganda began leading the campaign there, with "thousands of women raped" and over a million civilians displaced. "Many of those abuses were carried out by the Congolese army," says Stearns, "and many of those units were spearheaded by CNDP officers."
When the team's Gulfstream arrived in Goma, Congolese troops were waiting for them. / Carlos St. Mary
According to Melanie Gouby of the Institute for War and Peace Reporting, Ntaganda runs the eastern Congo as his own mafia-style fiefdom. "You can't do much without going through him," she says. "He can move his troops the way he wants around the region to secure mineral smuggling and mineral deals. Any cash coming out of the mines goes into his pocket." The UN says it believes that Ntaganda is linked to Yusuf Omar, the probable real name of the "Benoit" who took $5 million from St. Mary in Kenya. Ntaganda is on the U.S. Treasury Department's Office of Foreign Asset Control list of sanctioned individuals. Any American caught doing business with him could face a fine of up to $1 million or up to 20 years in prison.
After landing in Goma, St. Mary and the small group of CAMAC employees traveling with him were taken to a hotel owned by Ntaganda. "When we get to the hotel the yard is littered with soldiers and [Ntaganda] comes in looking like Crocodile Dundee with a bolo collar and a leather hat and vest on," recalls St. Mary. Ntganda announced that he was the actual owner of the gold they had come to buy, and that the exchange would take place at the Goma airport the following morning.
St. Mary realized that his chances of leaving the country with four tons of gold were fading. "I told Bosco, you took almost five million from us in Nairobi. We don't have one gold bar. Give me just one reason to trust any of you in this room," says St. Mary. "And he looks me in the eye and says, 'We didn't kill you this morning.'"
Ntaganda demanded that St. Mary's team take at least some of the money they'd left on the plane and give it to him to hold temporarily, supposedly to cover customs, documentation, and routine bribes. St. Mary, along with one of Ntaganda's colonels, was sent to the airport to retrieved a suitcase with $3.1 million from the CAMAC Gulfstream -- money that, it would turn out, neither St. Mary nor the Congolese government would ever see again.
Later, when Ntaganda allowed the UN Group of Experts to interview him for their report, he claimed that the entire deal had been a setup, and that he was simply working with the DRC government to entrap gold smugglers. Sure enough, the day after St. Mary's arrival, customs officials seized Lawal's chartered plane, arrested everyone on board, and took the remaining $2 million St. Mary had brought with him. But even if Ntaganda is technically telling the truth, it still appears likely that he profited off of the deal, and probably took an active role in the scam.
The interwoven strands of bribery and corruption in this incident are difficult, if not impossible, to disentangle. Numerous high-ranking government and military officials seemed to be on the prowl for kickbacks on February 5, the day St. Mary and the CAMAC employees were supposed to leave Goma. The officer in charge of civilian intelligence for North Kivu, as well as the head of the presidential guard in Kinshasa, both searched the CAMAC Gulfstream. The military was deployed at the Goma airport, and Ntaganda, the most powerful man in North Kivu, was nearby. No one moved to halt the looming deal or alert outside authorities, the involvement of which would only ruin any opportunity for extortion.
What brought the entire episode to a premature end was one small detail someone seemed to have overlooked. "Everybody had been involved and bought off," says Stearns, the Congo historian. "But there was one poor, low ranking-officer at the airport who didn't know anything about this. He saw this official getting off the airplane and said, 'Sir I'd like to inspect your bags.'" After a brief physical struggle, the bag tore open, revealing the remaining $2 million in cash. The plane was impounded shortly afterwards, and its passengers were officially placed under arrest.
Stearns believes that Ntaganda played a late but integral role in the scam. "His importance in this particular case is that he was used by a bunch of Congolese businessmen, who were basically trying to scam a bunch of American businessmen, as muscle to protect the transaction." But he did more than simply act as muscle: Ntaganda was the intended recipient of the $5 million on the plane, according to the UN report. The general had contacts with Yusuf Omar and the gold smugglers whom St. Mary had met in Nairobi, according to multiple sources with direct knowledge of the deal. The UN report also strongly implies that Ntaganda himself ended up keeping the $3.1 million that had been transferred to him the day before the plane was raided. Five days after the events at the Goma airport, Ntaganda was asked to produce the suitcase of money that his colonel had taken off the plane. According to the report, Ntaganda gave customs officials a bag with $3 million in counterfeit bills, "printed on yellow copy paper, with all bills having the same serial number." Robarts believes that Ntaganda "was certainly trying to profiteer, and he certainly made some money out of this transaction."
Millions of dollars in cash, strewn across the Gulfstream seats, would later be confiscated by Congolese officials / Carlos St. Mary
CAMAC CEO Kase Lawal, who was in Houston receiving constant updates from both St. Mary and the CAMAC employees he had sent with him, appears to have known, by the time money started exchanging hands in Congo, that they were doing business with Ntaganda. According to the UN report, St Mary told the group of experts that both he and CAMAC Nigeria Vice President Mickey Lawal, who is Kase's half-brother, had "informed Kase Lawal about the general's ownership, providing his name" in the hours before the $3.1 million in cash was taken off the airplane. Still, there's no indication that Lawal attempted to stop the deal; according to the report, he "appeared relieved" to learn that his point-men were finally dealing with what he believed to be the gold's true owner. "Far from being dissuaded when they found out about his involvement" Stearns says of Lawal's reaction upon hearing of Ntganda's role in the deal, "this seemed to be an encouragement because they thought they were dealing with the real power broker."
And even if Dikembe Mutombo, following events from afar, was unaware of Ntaganda's involvement, his nephew Reagan had arrived in Goma ahead of St. Mary, and likely was. "[Reagan] was there in Goma," says Robarts. "He actually preceded the others. I think it's impossible that he did not know about Ntaganda and his role, at least as it emerged."
In a second statement sent to The Atlantic, a CAMAC spokesperson writes that "Kase Lawal and CAMAC deny that CAMAC funds were a part of any illegal payment" and that the company disputes any parts of the UN report "that allege a connection between CAMAC and Bosco Ntaganda." The statement adds, "It is important to remember that the Congolese government filed no charges and that neither CAMAC nor Dr. Lawal have made any admission of wrongdoing."
What CAMAC has not done is deny Lawal's personal involvement in funding or arranging the deal. The Houston Chronicle reported that the botched transaction, between the $10 million exchanged in Goma and Nairobi, the costs of bailing out St. Mary and his employees, and the rented Gulfstream, ended up costing Lawal about $30 million.
The chance to make quick money off of cheap and probably tainted Congolese minerals was enough to draw two prominent Americans into a multi-million dollar deal with an indicted war criminal. But in the corrupt world of the east Congo mineral trade, the only thing that was particularly unusual about this incident was the backgrounds of the prospective buyers. Traders, smugglers, militants, and foreign merchants attempt to turn a quick profit on east Congo conflict minerals on a daily basis. And, much of the time, they succeed.
The DRC's Ministry of Mines estimates that 80 percent of the country's overall gold exports are smuggled out illegally. Regulations in the U.S. and most European countries, meant to curb both tax evasion and the conflict mineral trade in places such as Congo, mean that commercial gold can only be imported with some documentation accounting for its provenance and proving it is legal to export. But in Dubai, which is home to the largest gold market on earth, this isn't the case. "There are zero regulations on declaring gold imports into that country," says Aaron Hall, a policy analyst with the Enough Project. "You can just take gold into the country and there's no record of it coming in or being processed."
The Dubai government does keep some partial statistics on its gold imports, but even these incomplete numbers suggest that an astounding amount of smuggled gold is making its way into the United Arab Emirates. According to the UN report, Dubai logged 6,600 kilograms of gold originating in Uganda and Kenya (worth around $363 million on today's market) entering the Emirate in 2010, compared to only 157 kilograms from the Congo. This is a strong indication, according to regional experts who spoke to The Atlantic, that gold from the DRC's war-torn, gold-rich east is being trafficked through neighboring countries and into the Gulf. "The majority of gold smuggled out of the country ends up in the same place. Most people are washing it in Dubai," says Hall, adding that smugglers and militants have little trouble getting Congolese gold out of the country, and laundering it through Uganda or Kenya. "The problem in Congo is that there are no institutions and really no oversight of gold mining on the ground. Nearly every mine in the eastern Congo is militarized."
Some are not. Last year, the Canadian company Banro produced its first gold bar from a government-sanctioned, fully regulated industrial mine in the eastern Congo. Gouby, of the Institute for War and Peace Reporting, says that prospective buyers can legally purchase Congolese minerals if they're willing to follow UN and DRC government guidelines meant to help "track the minerals to the point where they're negotiated," thereby ensuring that they're conflict-free. But, for individual buyers like Mutombo and Lawal, ethical mineral trading in the Congo requires a level of on-the-ground due diligence that's probably not possible. "If you're a basketball star you can't really go to Congo and say 'let's do this and that,'" says Gouby. "You have to know the region and know how to verify these things."
Banro's mine is a sort of experiment, an attempt to see if conflict-free mining in the Congo can be profitable. But for now, most of the DRC's mining sector is informal or artisanal, and activists and scholars still debate how the region's conflict mineral trade can best be reduced. A provision in the 2010 Dodd-Frank financial reform bill mandates that the Securities and Exchange Commission regulate possible conflict minerals in American products, a measure that critics claim has regulated one of eastern Congo's few profitable industries out of existence, without actually attacking any of the structural causes of the DRC's ongoing misery.
The conflict mineral trade funds, and thus worsens, some of the Congo's worst problems: its corruption, its proliferation of guns and militias, labor exploitation, and some of the weakest governance and poorest security in the world. Yet the conflict mineral trade is a symptom, rather than a cause, of the DRC's ills. Riven by decades of conflict and governed by a predatory and ineffectual state, the DRC is still a country where the government's employment of Ntaganda and other bloodstained ex-insurgents who also work in the conflict mineral business is, ironically, considered a lynchpin of the fragile regional peace.,
Whether Mutombo and Lawal were aware of it or not, they initiated a deal that has likely enriched the same people who turned the eastern Congo into one of the most violent places on earth. But that's not the most amazing thing about this incident. After all, these sorts of deals go through all the time: the buyers are experienced enough not to get caught and, if they are caught, they're usually not presidential appointees or famous basketball stars. And that's exactly what makes this story so remarkable. Replace the two high-profile Americans with savvier mineral merchants, and it's practically routine.