Construction firm chases oil taxes, royalties in $1BN Congo debt row

Construction firm Commisimpex has gone to a French court in its fight with the Congo Republic over what it says are more than $1 billion in unpaid bills, the latest step in a decades-old saga that has weighed on the nation’s economy.

Commisimpex, which worked on construction and public works projects from the early 1980s until a Congolese court ordered it into liquidation in 2012, wants Total, Eni and other energy firms to pay taxes and royalties to the company instead of paying the state.

Commisimpex, which has pursued Congo in courts in Europe and the United States for nearly two decades, launched its latest legal challenge in October 2016 at the commercial tribunal in the Paris suburb of Nanterre, documents seen by Reuters showed.

Details of the case have not been publicised by any parties involved until now, a sensitive time for the government as it starts another round of talks with the International Monetary Fund on support for an economy battered by weak oil prices.

The legal saga has weighed on Congo’s sovereign rating and forced a temporary default on a Eurobond this year.

Commisimpex has won several other court cases abroad, but Congo has not paid. In 2012, Congo said the firm owed 1.3 billion euros ($1.54 billion) in social security payments built up over 30 years. A Congolese court then ordered the firm into liquidation.

The construction firm filed its latest petition to the French commercial tribunal and served a summons to the Congolese unit of France’s Total and other firms informing them of its action.

A Commisimpex spokeswoman said the firm was pursuing $1.25 billion in unpaid bills and interest.

Commisimpex is seeking to activate a guarantee on oil field revenues it says it secured in 1986 as collateral against debt, the summons sent to Total showed.

Commisimpex said Congo used “as security all revenues, and notably all moneys owed, royalties, taxes rights, etc. whether present, future or eventual originating directly or indirectly from … hydrocarbon deposits.”

It applies to the Likouala, Loango, Tchibouela, Emeraude, Yanga, Sendji and Sendji Compl. oil fields, which were then operated by Elf Aquitaine SA, Elf Congo, Agip and Agip Congo.

Elf was later absorbed into French giant Total, while Italy’s Eni took over Agip.

Commisimpex’s petition lists Elf Aquitaine, Total E&P Congo, Eni and Eni Congo as defendants.

A lawyer for Elf Aquitaine said it would not comment on the case. Eni declined to comment. A spokesperson for Total did not immediately respond to a Reuters request for comment.

Five smaller firms – Congorep, SNPC, Kontinent Congo, AOGC and Petro Congo – which acquired stakes in the fields at a later date are also listed.

Petro Congo said it was not aware of the case. The other companies did not respond to telephone calls and emails.

Congolese government spokesman Thierry Moungalla said: “The Congolese state will, of course, defend its position which is that these taxes cannot be subject to seizure.”

He described references to a guarantee in the Commisimpex documents as “allegations” and said it was up to the company to present proof to the court.

Oil accounts for about three-quarters of Congo’s revenues, and weak global crude prices have hit the country hard. Losing taxes or royalty payments would add to the economic pain.

Congo has opened talks with the IMF to support its economy. But Congo’s debt load has come under scrutiny by the IMF, which last month said Brazzaville had not fully disclosed its debt situation during a visit by IMF officials in March.

An IMF delegation began another week-long visit on Tuesday during which it said it would finalise its debt assessment.

Rating agency Standard & Poor’s said last week it would consider raising Congo’s foreign currency ratings if the government reached a settlement with Commisimpex.

Earlier this year, Commisimpex briefly secured the freezing of a $21 million coupon payment Congo made to holders of its $363 million Eurobond. But its effort to secure the funds was unsuccessful, a U.S. court ordered them to be released, but the move temporarily pushed the bond into default.

($1 = 0.8469 euros)

Additional reporting by Valentina Za in Milan, Bate Felix and Emmanuel Jarry in Paris, and Christian Elion in Brazzaville; Editing by Tim Cocks and Edmund Blair

Related Content

Coronavirus – Libya: COVID-19 Situation Report (27th May 2020)

Download logoHighlights As of 26 May 2020, there are 75 confirmed cases of COVID-19 reported in Libya, including three deaths. In May, 1,009 incidents of access constraints have been reported, 67 per cent were directly or indirectly related to COVID-19. Priority health response activities include support for health rapid response teams, personal protective equipment, lab diagnostic kits and supplies, establishment and support to isolation sites, as well as capacity building and ed

Coronavirus – Africa: COVID-19 hygiene measures must be enforced in schools set to reopen in West and Central Africa, says Save the Children

Schools in Burkina Faso, Mali and Senegal that closed to contain the spread of COVID-19 reopen in about ten days. As thousands of children prepare to return to school across West and Central Africa, it is essential that hygiene measures required to slow COVID-19 are in place, says Save the Children. About 12 million children have been affected by school closures across Burkina Faso, Mali and Senegal. Whilst welcoming the decision of authorities to reopen schools, the agency is warning they m

Coronavirus – Africa: Southern and Eastern Africa COVID-19 Digest (27 May 2020)

Download logoHIGHLIGHTS Several countries in Southern and Eastern Africa have reported a significant uptick in daily cases over the past week, including Kenya and South Africa. All countries in Southern and Eastern Africa have now been affected by the pandemic, with Lesotho recording its first case on 13 May. Cross-border transmission is a rising concern. The pandemic has gained considerable pace in the region: numbers of people who contracted COVID-19 rose from 6,848 in 24 coun

Coronavirus – Africa: Global Education Coalition facilitates free internet access for distance education in several countries

Download logoMajor mobile telephone operators that are part of UNESCO’s Global Education Coalition have stepped up efforts to improve connectivity by providing free access to online educational content for students in all regions of the world affected by Covid-19 induced school closures. “While the Global Education Coalition supports both online and offline solutions, aiming towards connectivity for all is an important imperative, especially when our data shows that 43% of the wor

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

Rwandan entrepreneurs treated to Covid-19 business survival boot camp

Access to Finance Rwanda in partnership with the African Management institute, the Private Sector Federation and others, has launched a new webinar series dubbed, ‘The Business Survival Bootcamp’, through their website, SME Response Clinic. The program is designed to help entrepreneurs navigate the unique challenges that have presented themselves as a result of the Covid-19 pandemic and is slated to begin next week. Head of Programs at AFR, Jean Bosco Iyacu joins CNBC Africa for more.

How can Africa’s private equity firms weather the COVID-19 storm?

East Africa's share of private equity transactions has slowly been rising over the years, but this growth momentum has now been disrupted by the Covid-19 pandemic. What will it take for private equity firms in the region to weather the Covid-19 storm and bounce back? David Owino, Managing Partner at Ascent Capital joins CNBC Africa for more.

RDO’s Mugwaneza on the need to invest in post-harvest agriculture technology

Rwanda’s agriculture sector employs 80 per cent of the population and contributes 33 per cent to her GDP growth. Now, with Covid-19, many farmers have incurred losses due to difficulties in the market and agriculture players have reiterated the need for investing in post-harvest agriculture technologies. Diana Mugwaneza, Programs Officer at Rwanda Development Organization, joins CNBC Africa for more.

PMA: CBN to roll over T-bills worth N59.4bn

The Central Bank is expected to roll over maturing treasury bills worth 60 billion naira in today’s Primary Market Auction. Gbemisola Bello-Aromire, Fixed Income Dealer joins CNBC Africa to discuss sentiments in Nigeria’s fixed income and FX markets....

Trending Now

Why A V-Shaped Recovery Is Unlikely: Mark Zandi

Moody’s Analytics Chief Economist Mark Zandi says investors are too optimistic about a quick economic rebound from the coronavirus pandemic. He explains what policymakers should do to boost the recovery and discusses longer-term changes in the econ

Abel Sithole appointed as CEO of South Africa’s PIC

On Wednesday, South African Finance Minister Tito Mboweni announced the appointment of Abel Sithole as the Chief Executive Officer of the Public Investment Corporation (PIC) and Executive Director on the Board of Directors.

91-year-old business titan’s mission to raise R108mn to feed the hungry

The old saying, “Age ain’t nothing but a number” has never been more true for 91-year-old business veteran Solly Krok. The entrepreneur who built the Gold Reef City casino, South Africa’s only Apartheid Museum and events facility Summer Place is not done yet. His latest business venture involves putting his legs to the test. Solly plans to walk 91 km to raise over a million rand to fund hunger and food security in South Africa, made worse by Covid-19.

Kenyan government under fire over coronavirus quarantine centres

Kenya’s government is facing growing criticism over quarantine centres it set up to curb the spread of the coronavirus, with witnesses saying some are squalid and expose residents to the risk of catching COVID-19.
- Advertisement -