A holdings company from Central Europe owned by an oligarch from Moscow, whose key activity was producing ferro-nickel, decided to expand into mining activity, in order to reduce the dependence on its suppliers. One of the territories that it chose was the Democratic Republic of Congo (see instrumental trusts chapter).
As an initial strategic move, for simplifying the processes, it was decided for to establish diamond mining activity that would serve it as a “business card” for getting concessions for the main activity.
After a few visits to Congo, signing of a memorandum of intent and ordering mining equipment based on that memorandum of intent, the holdings company started to have doubts and asked to examine the situation using an attorney from outside of Congo who knew French.
With the assistance of a local law office, a quick situation assessment was done, revealing that the legal and accounting activity had not been productive for months, and the letter of intent for concessions was of no substance. The conclusion was that it was necessary to acquire alternative concessions in a matter of weeks, as the mining equipment had already been purchased was the way to a concession that did not live up to its name.
The local attorneys and other professionals, the local project manager, gave instructions to follow the directions they received, so that at the same time as the negotiations with the alternative concession holders and various regulators, negotiations were also held to improve the conditions of the order of the mining equipment and a forward-looking legal business structure was being prepared, as a solution to taxation, banking and currency control problems.
One of the challenges was building a model that would permit full ownership of the mines and equipment and accessories, although the intent of the law as worded was apparently for a different purpose, i.e., ensuring that the state and its citizens retain would control.
Also, a simple, uniform reporting system was established to manage local workers remotely, so that the owners could be reported on a regular basis.