The Democratic Republic of Congo government has been losing artisanal gold worth up to $38 million annually due to alleged smuggling by Chinese companies in collusion with officials from the provincial administration.

Instead of the money being used to improve the health and education sectors in Shabunda town in South Kivu — where they are desperately needed — they have ended up in the pockets of provincial administration officials and militia groups who continue to destabilise eastern Congo.

The UK-based activist group Global Witness claims in its latest report titled River of Gold that in just one year, up to $17 million of gold produced by Kun Hou Mining, a Chinese-owned company, went missing and was likely to have been smuggled out of Congo into international supply chains. The report also shows that almost $500,000 worth of Kun Hou’s gold was exported to a Dubai company through official channels.

Global Witness also claims that armed groups, known as Raia Mutomboki, received at least two AK-47 assault rifles and $4,000 in cash from Kun Hou Mining, which operates mechanised gold dredging machines along the Ulindi River in Shabunda territory in South Kivu Province of eastern Congo.

Furthermore, the same armed group made up to $25,000 per month by extorting illegal tax from local miners.

“There were over 500 cases of malnutrition reported in Shabunda town in 2014 and yet the significant revenues generated by this gold boom benefited armed men and predatory companies instead of the Congolese people,” said Sophia Pickles, senior campaigner at Global Witness.

The report has questioned the government’s capacity to enforce its mining laws and guidelines on the supply chain developed by the Organisation for Economic Co-operation and Development (OECD) and the United Nations in 2012.

The supply chain guidelines seek to ensure companies respect human rights and do not contribute to conflicts through their mineral purchasing decisions and practices. They also seek to tackle the link between violent conflict, human-rights abuses and the trade of minerals around the world.

“The DR Congo government must enforce its laws to ensure that mining companies in the country do not produce or trade gold that has funded armed militia groups.

Any company breaking these laws should be held accountable and provincial administrations who fail to properly govern the minerals sector must also be held liable,” said Ms Pickles.

There is an estimated $28 billion worth of gold that is yet to be extracted from the soil in eastern DR Congo. However, the majority of the country’s gold wealth is misused by armed militia groups, bandits and corrupt officials.

Research shows that for over a decade, illegally mined gold from eastern Congo has been entering international supply chains because many companies are not checking their supply chains to look for red flags like conflict-financing, despite current laws requiring them to do so.