Road to Reprisal: U.S. Agency Fired Congo Whistleblower

Last summer, a little-known U.S. government agency was considering a deal that sources say would have directed more than $100 million in U.S. funding to build and run a toll road and bridge in the Democratic Republic of the Congo and Zambia. The project would help link valuable cobalt mines in the Congo to the port of Dar es Salaam in Tanzania. 

An analyst from the agency, the U.S. International Development Finance Corporation (DFC), raised concerns that the project risked displacing nearly 10,000 people in Congolese villages and possibly more. To move forward would violate an agency policy “categorically” prohibiting it from funding projects displacing 5,000 or more people. After the analyst refused to sign off on the project, the agency fired him in August 2023, two sources told POGO.

This firing is one of several recent alleged or confirmed instances of reprisal at the agency. 

The Project On Government Oversight (POGO) is reporting these details for the first time based on accounts from two knowledgeable insiders (who asked not to be identified due to fear of retaliation), a publicly posted watchdog document that does not mention the countries involved or the analyst’s termination, and an internal memo obtained through the Freedom of Information Act.

“I can’t believe someone can be fired in a country like the U.S. for defending human rights,” said Emmanuel Umpula, the executive director of African Resources Watch, based in the Congo.

Umpula said that the Democratic Republic of the Congo (DRC) — a country deeply scarred by colonialism and instability — needs better infrastructure, including roads. He also wants business to come to the Congo, where most of the population lives on less than $2.15 a day despite the country’s massive mineral wealth.

But, he said, development should be done in ways that minimize adverse impacts to local communities and the environment.

At DFC, a rush to cut deals abroad is fueling tension inside the agency and threatening to undermine protections for the overseas communities the agency is supposed to uplift. The U.S. funds would have helped finance the project as the U.S. more aggressively counters China’s influence in Africa and scrambles to secure access to electric vehicle supply chains. DFC — with a mission of stimulating private investment in what it terms the “developing world” through loans and other means — is seen by Congress as a key way to respond to China.

A DFC official declined to discuss personnel matters at the agency but wrote to POGO that “DFC strictly prohibits retaliation and has strong measures in place to prevent it from taking place.” He also wrote that it thoroughly assesses the risks with every investment it considers. 

Update: A week after publication, on May 9, 2024, DFC sent a statement denying that any employee faced any "adverse employment action related at all to this transaction."

 “A Major Mistake”

The Congo and its southern Copper Belt is the source of 70% of the world’s cobalt, used to make rechargeable lithium-ion batteries that power smartphones, laptops, and other technology deeply woven into the modern economy. 

The 114-mile (184-kilometer), reportedly $850 million Kasomeno–Mwenda toll road is aimed at enhancing access to those mines. The project continues to move forward without DFC’s involvement.

A company, GED Africa, won what may be highly lucrative, decades-long concessions from the Congolese and Zambian governments to build and run the toll road. The owner of GED Africa’s investor and project sponsor, Duna Aszfalt, has been called a “hidden oligarch” with ties to Hungary’s autocratic leaders, and one of GED Africa’s owners is a Hungarian national, according to a LinkedIn profile and records provided by the Platform to Protect Whistleblowers in Africa. Duna has no prior track record in sub-Saharan Africa, sources say, which a GED Africa spokesperson confirmed. A spokesperson for Duna did not respond to multiple queries. GED Africa lists no other projects on its website, although the company’s spokesperson told POGO that its executive team “has extensive experience in the development and financing of infrastructure projects in Africa.”

Despite that experience, a source familiar with the project said that, as of last summer, “They had no environmental specialists. They had no resettlement specialists.” GED Africa’s spokesperson wrote in an email that “any gaps” in industry-wide best practices “have been addressed” and that the company has relevant experts.

Beyond the violation of DFC’s standards, the DFC analyst also found that the companies had not sufficiently consulted with local communities that would be affected by the project. 

GED Africa had hired a one-person consulting firm in South Africa and another person in Tanzania to assess the project. But they made fundamental errors, and quality control from DFC’s experts came late. When the agency’s analysts were brought in, they believed they were assessing the proposal at an early stage, when in fact it was much further along than they expected. 

“Projects come along quickly with short notice and staff have to scramble to assess things,” one DFC source said. “Sometimes you have just two days to flag anything significant.”

The consultants didn’t talk to government officials, engineers working on the project, or the “communities at large,” according to a 2023 watchdog memo POGO obtained. The memo said the consultants failed to address “the loss of community access to assets such as schools and hospitals, or access to resources such as firewood in the forests.”

All of that compounded a fundamental misstep: The consultants had mixed up the number of households with the number of people that could be displaced — a problem that was not spotted early on.

“They clearly made a major mistake here,” a source said. “It’s 1,500 households, not 1,500 people.” The average size of a household in this region of the DRC has ranged between about four and seven-and-a-half in the last 15 years. In other words, consultants told the agency that only 1,500 people would be displaced, according to the source, when in fact, the true number was “at least 9,419,” according to the memo.

And the consultants did not look at all the potential impacts. “They had only looked at the DRC side of the project,” a source said, not the Zambian side. DFC would later learn that the work did not meet international standards, according to the source, which require looking at all “associated facilities,” even if not directly financed by the project. The toll road project stops short at Tanzania’s border, connecting with an existing road — still far from Dar es Salaam, meaning there may be more impacts if other infrastructure has to be built.

But by this point, the project had already begun, using Duna Aszfalt and GED Africa’s own resources, a source said. Last summer, GED Africa would eventually admit that the consultants confused households with the number of people, according to a source, and said they would replace them.

Molly Concannon, the GED Africa spokesperson, told POGO in an email that the toll road “project is continuously evolving.” She said the project has changed since last summer to reduce displacement impacts and that the toll road’s current resettlement action plan shows the road will now affect less than 5,000 people and physically and economically displace only a subset of 500 people. The plan “includes compensation, rebuilding of houses and other structures, as well as economic restoration through various livelihood restoration programs,” Concannon wrote. She said that traffic in Tanzania will not be impacted.

Concannon also said that, in late 2023, GED Africa engaged the advisory firm ERM to support its implementation of the resettlement action plan and to ensure compliance with international standards. Concannon’s own role expanded last July beyond communications to include stakeholder engagement. “Often companies make the mistake of outsourcing engagement,” she said, explaining why her role expanded. She said there has been “robust coordination with all stakeholders including the communities, the governments and the engineering teams.” Government agencies in the Congo and Zambia did not respond to requests for comment.

Yet as of late July and August last year, the situation posed a number of red flags to the DFC analyst, who has decades of experience with the World Bank and other international development institutions.

Despite the analyst’s concerns at the time, a senior official told him in early August that agency leadership still wanted to move forward with the deal, which would entail waiving its social and environmental standards if the expected displacement exceeded 5,000 persons, according to a source. DFC did not refute the claim, which POGO provided to the agency in a written query (POGO gave DFC eight business days to respond).

Soon after, DFC terminated the analyst on Friday, August 11. That was just days before he and other DFC employees had been scheduled to meet with the agency's chief executive officer, Scott Nathan, the next Monday to discuss why they had recommended weeks earlier that DFC end its consideration of the deal.

After being fired, the DFC analyst again blew the whistle, this time to the agency’s office of inspector general, its official watchdog.

When inspector general staff inquired with DFC, the agency responded that it “was aware of the issue and had decided to recommend terminating DFC’s involvement in the project,” according to a brief summary posted online. While conceding due diligence problems, agency officials denied they were going to issue a waiver, according to the inspector general memo POGO obtained.

Unbeknownst to the fired analyst when he went to the inspector general (DFC cut off the analyst’s access to email and other information almost immediately upon notifying him of his termination), his agency colleagues still met with Nathan, and Nathan ultimately agreed to shutter DFC’s involvement. GED Africa’s Concannon told POGO that DFC ended its consideration of the project “due to policy reasons,” and that her company was unaware the agency had fired the analyst. According to a DFC official, the agency “made the determination that this project did not meet required standards for further consideration” due to various issues including “viability, credit, and development impact.”

The Democratic Republic of the Congo remains a high priority for the DFC, with Nathan — a former hedge fund executive and Biden White House aide who raised at least $100,000 for Joe Biden’s 2020 campaign — leading a U.S. “presidential delegation” to meet the country’s leader this January. 

The agency is still very interested in the Congo’s resources. Reuters reported in February, citing Nathan’s deputy, that “DFC could more than double its investment in the mining sector in African countries, including DRC.”

Mining Fueling Displacement and Abuses

Shortcomings related to project due diligence and the agency’s firing of the analyst are “very disturbing,” according to Stephanie Amoako, policy director at the nonprofit Accountability Counsel.

“These processes are in place for a reason: to ensure these institutions don’t harm the communities they’re supposed to help,” said Amoako, whose group works to ensure that international development institutions consult communities. 

An “institutional culture” that heeds inconvenient facts and concerns even if they slow down deal-making is important, she said.

One such harm is displacement, already rife in the Congo due to the interrelated causes of internal conflict and mining — which has fueled other concerns such as child labor.

Umpula, with African Resources Watch, told POGO that while companies typically claim to consult communities in the southern Congo when their projects might affect them, communities often say that doesn’t happen. They rarely file complaints, though, because of barriers such as the need to travel and to hire attorneys. He said communities often deem compensation inadequate when they are displaced and that people rarely want to be uprooted.

“We’re still fighting injustice everywhere, including out of the country,” Umpula said.

Back in Washington, the former DFC analyst who raised concerns is retirement age and elected not to challenge his firing, sources said. When reached by phone, he declined to generally comment but said he viewed his termination as reprisal and asked not to be named because he feared management might take further action against him.

DFC told POGO that Nathan played no role in firing the analyst. “The CEO is not involved or made aware of such actions unless they concern one of his direct reports,” an agency official wrote.

“A Climate of Fear”

Insider accounts and government records portray DFC leadership as repeatedly expressing hostility toward protecting employees for disclosing problems. 

Sudhir Paladugu, who was then the head of DFC’s labor union, told POGO in January that “there is a climate of fear.”

The allegations have attracted congressional attention. “We have received reports of retaliation against employees,” wrote the four co-chairs of the Congressional Labor Caucus in December 2023. 

“Not only would such retaliation be illegal, but such actions would also fly in opposition to the Biden Administration’s stated goal of being the most pro-labor Administration in history,” wrote Democratic Representatives Donald Norcross (NJ), Debbie Dingell (MI), Steven Horsford (NV), and Mark Pocan (WI).

The concerns go beyond individual reprisal claims. New federal survey results show a ten-percentage-point drop last year in DFC employees who say they can disclose problems without fear of reprisal, the third steepest employee engagement plunge of all agencies. At least a dozen agency attorneys have left since the fall of 2022, some of whom disagreed with leadership’s approach to managing its workforce, according to sources and a review of LinkedIn profiles. 

The agency is being pushed to quickly approve deals especially to counter China, which has led to conflicts with staff who some appointees have said are too risk averse. But it doesn’t take an insider to realize, as one law firm has warned, that the pressure “to invest and beat foreign competitors” will tempt “some to cut corners, lie, and cheat.” Regarding the toll road project, one source told POGO competition with China animated some of the push behind the deal.

When new political appointees took over the agency earlier during the Biden administration, one insider told POGO, “they were not happy with what they saw as foot dragging by middle-level staff.” A major flashpoint happened last year as agency leaders encountered resistance to a significant reorganization.

Some career staff felt Biden appointees were making “major changes that they felt were going to be harmful,” said the insider. “The political appointees won’t be around forever, and career staff will be left holding the bag,” Amy Bailey, a former DFC attorney, told POGO.

Sources told POGO that some believed the changes could weaken vetting of overseas deals, some of which could pose legal and reputational risks for the agency — and the potential for U.S. funding fueling harms on the ground.

“There was a lot of pushback from staff,” the insider said. “A lot of the legal office basically quit around that time. A lot of experienced people left.” A Wilson Center report last fall similarly noted the departure of legal and finance employees. 

Agency leaders delayed the reorganization to get more staff feedback.

A DFC official said the agency has since implemented its reorganization, which will improve the agency’s ability to monitor and evaluate projects and conduct due diligence. He also highlighted a public statement from February affirming the agency’s commitment to whistleblower protections.

But some insiders are not convinced given their experiences over the last few years. The situation at DFC, insiders say, shows that a lack of government guardrails can increase risks for the very communities the agency was created to help.

“Time and Time Again”

Last year’s episode involving the toll road came roughly a decade after DFC’s predecessor agency, the Overseas Private Investment Corporation, suffered a reputational black eye for funding a project in Liberia that led to complaints of sexual abuses of local women, environmental degradation, and worker injuries. Those problems emerged after the U.S. embassy in Liberia warned it had “significant concerns” about the project.

After substantially confirming the allegations, agency management said it would ramp up due diligence. In 2018, Congress created DFC, mandating it use “best practices with respect to transparency and environmental and social safeguards.” 

Two years later, several groups, including three from the Democratic Republic of the Congo and one in Zambia, recommended that DFC learn from the Liberia experience. 

Despite its legal mandate, DFC has not always adhered to its own standards, or even properly explained when it waives them. One 2020 DFC waiver for a project in India — where there have been three deaths on project sites — was “not adequately“ supported, according to DFC’s watchdog last fall.

“We’ve seen the real harm that can happen when there is pressure from institutions to move money quickly without enough due diligence,” Amoako, with the group Accountability Counsel, said. “We see that time and time again.”

In 2021, Nathan, DFC’s CEO, acknowledged during his Senate confirmation the need to listen to “sometimes under-represented or marginalized communities.” 

Yet over two years later, DFC’s office for handling local grievances is understaffed and lacks detailed, up-to-date procedures on handling complaints, according to Amoako. A DFC spokesperson says the agency is working to hire another full-time staffer for the office.

DFC points to updates made to its environmental and social policy and procedures, which an agency official said are intended “to align” the policy “with current best practice within the peer development finance institution community.” However, Caroline Vesey with the nonprofit Bank Information Center wrote last year that a stronger policy “is of little use without proper implementation and accountability” — underscored by the toll road case.

Further, the agency’s inspector general has recently written that it is hamstrung because it does not have law enforcement authority, which recently introduced bipartisan legislation would address if passed into law. 

Unlike the toll road situation last year, some DFC-funded projects have hewed much closer to best practices, an insider said, pointing to a recently approved rail project connecting the Democratic Republic of the Congo and Zambia to Angola’s port of Lobito that has been trumpeted by the Biden administration.

Despite some successes, an insider said there’s still a broader problem with insufficient in-house staffing and expertise.

DFC’s issues aren’t isolated to the toll road case or to social and environmental assessments. The agency forged ahead with a $41 million deal involving a land developer in the Middle East despite knowing about falsified financial statements submitted by the company behind the project, according to an inspector general report POGO obtained through the Freedom of Information Act.

When the inspector general began asking questions, the developer canceled the deal in 2022 “to avoid interviews.” In the wake of the probe, the inspector general told DFC it needs a program — common throughout federal government — to protect itself from “individuals and entities who demonstrate a lack of honesty and integrity.” DFC finalized rules for this program early last month, according to an agency official. Those rules state that, among other reasons, “DFC may debar a person or entity for refusing to engage in efforts to remediate identified environmental, social, and human rights harm stemming from their activities.”

Then there’s the issue of whether agency leaders listen when concerns arise.

“Even when you raise concerns,” the insider said they’re “often sort of shunted aside or isolated or overruled.”

Rachel Geer assisted with translation and reporting.

POGO updated this story on May 9, 2024 with a denial from DFC that any action was taken against any employee in connection with the toll road project. DFC sent its denial a week after POGO's story was published.