Kuramo Capital Management embroiled in a legal battle over ownership of PHC Oil palm plantations in the DRC

Recently planted oil palm plantation near Lokumete in February 2020; modified with additional graphic. (Photo: Oskar Epelde)
Oakland Institute | 22 June 2021

Kuramo Capital Management embroiled in a legal battle over ownership of PHC Oil palm plantations in the DRC
  • A legal battle has erupted over the ownership of the Plantations et Huileries du Congo (PHC), an oil palm firm, which controls over 100,000 hectares of land in the Democratic Republic of Congo (DRC).
  • After acquiring majority ownership in the PHC plantations from European development banks in 2020, former partners have turned on each other with legal action underway across four jurisdictions for control of the company, valued at US$100 million.
  • As the power struggle plays out in court, the conditions faced by the local communities continue to deteriorate — their demands for the return of the land are ignored, arrests and violence by PHC security continue to be perpetrated, and plantation workers have not been paid.
Oakland, CA — A shocking legal battle has erupted over the ownership of PHC, an oil palm company, which controls over 100,000 hectares of land in the Democratic Republic of Congo (DRC).
Whereas local communities have been deprived of their land and face horrific human rights abuses by the company, the key individuals and investment funds behind it and the DRC government — a minority shareholder of PHC(link is external) — have launched legal action against each other over the ownership of the plantation. Four court procedures are underway in Delaware, New York, Canada, and DRC.
In March 2021, the Oakland Institute released In King Leopold’s Steps, exposing the investors bankrolling PHC through their investments in Kuramo Capital Management (KCM) — the investment management firm controlling the PHC plantations. The investors include the Bill & Melinda Gates Foundation Trust, the South African Government Employees Pension Fund and Public Investment Corporation, the Royal County of Berkshire Pension Scheme, the University of Michigan, the University of Washington in St. Louis, Northwestern University, and the Kamehameha Schools, among others.
Court documents reveal the details of the ownership dispute over PHC, which has pitted KCM’s Founder and Chief Investment Officer Walé Adeosun and Kalaa Mpinga of Mafuta Investment against Larry Seruma of Nile Capital Management (NCM) and Nile Global Frontiers, a partner of KCM since 2017(link is external).
Adeosun and KCM have filed several complaints against Seruma, seeking to remove him from management as well as for significant financial damages. The Delaware complaint labels Seruma’s actions as a “brazen ownership heist as it deprived Kuramo of its beneficial interest in PHC,” and goes on to accuse Seruma of “a pattern of stealing assets and opportunities rightfully belonging to Kuramo and the consortium, concealing information of fraudulent or criminal activity by Seruma…[which] potentially could constitute criminal acts under the laws of the [DRC].” The DRC government, which owns 24 percent of PHC, has additionally taken legal action against Seruma and accused him of “abuse and destabilization of the social organs of PHC.”
Seruma has brought two proceedings against KCM seeking legal authority over the plantations and claims that “Adeosun wants the upside potential of PHC for himself and wants to get me out of the picture. He wants more money.” In his complaints, Seruma has accused KCM of failing to satisfy its existing funding commitments and raised serious questions about KCM’s financial health.
The legal battle stems from the financial stakes of controlling the PHC plantations. “Both parties in the New York case admit to wanting to claim a company that they value at approximately US$100 million, and for which they paid just a small fraction,” said Devlin Kuyek, researcher at GRAIN.
Before KCM assumed control over the plantations, several European development banks held the majority of shares in PHC through Feronia and invested over US$150 million in the company from 2013 to 2020. When Feronia filed for bankruptcy in 2020, the development banks agreed to pass the assets they held in PHC to a private equity fund controlled by the KCM for a cash payment of US$500,000 and agreed to write off large portions of their remaining debt. The deal was conditional on the new owners investing US$10 million in PHC and implementing a revised environmental and social action plan. The new owners also committed to pursue a mediation process with the International Complaints Mechanism that had been agreed to between the company, the development bank funders, and nine local communities in January 2019.
“Regardless of the court's determination of who has legal authority over the plantations, this legal battle makes it clear that both parties are only focused on maximizing profits and not the welfare of the communities,” said Frederic Mousseau, Policy Director at the Oakland Institute.
As the internal power struggle plays out in court, the conditions faced by the local communities continue to deteriorate. “Plantation workers have not been paid for months and the minimal social and infrastructure services that existed when Feronia Inc. owned PHC are no longer being provided,” said Jean-François Mombia Atuku, of the Réseau d’information et d’appui aux ONG (RIAO-RDC).“Meanwhile the new owners of PHC have been pressuring community leaders to sign agreements with the company that undermine the mediation process with the International Complaints Mechanism that began over two years ago," he continued.
As the legal cases unfold, violence perpetrated by PHC plantation security guards has continued unabated. On February 15, 2021, Blaise Mokwe, a 33-year old villager, was falsely accused of stealing palm fruit from the plantation and beaten by PHC security guards. He died from his injuries a few days later. The same month, 20-year old Efolafola Nisoni Manu and another young man were accused of stealing plastic chairs from the plantation by security guards who reportedly sent soldiers to arrest them. While being transferred to prison in a PHC-owned motorized canoe, the two young men were allegedly handcuffed and beaten. According to local sources, Efolafola Nisoni Manu was then thrown into the water and killed. Local NGOs have called for an international investigation into these murders. Seven community members who were arrested in February 2021 for protests against the plantation still remain in jail.
Letters sent by the Oakland Institute to KCM’s investors informing them about the severe human rights abuses and land theft taking place on the plantations remain unanswered. “The investors and the so-called development banks have turned a blind eye to what is happening on the plantations. The current battle around the ownership of the company sheds a new light on the motives and the characters of the individuals and funds who control the plantation. Far from the claimed goals of development and prosperity for the DRC, the legal battle makes it clear that this project is about greed and continued colonial exploitation,” concluded Mousseau.
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