By criticising the UN expert report, the former British prime minister is hampering the peace process in the eastern Congo
When a UN Group of Experts report found that Rwanda was supporting rebels fighting a deadly conflict in the eastern Democratic Republic of the Congo (DRC), a number of countries including the US and Britain cut or suspended foreign aid in protest.
Rwandan President Paul Kagame steadfastly denied supporting the Congo militias that have been wreaking havoc along the Rwanda-Congo border, but the evidence was strong enough to convince even some of Kagame’s biggest supporters that the western powers needed to send a message of disapproval.
That didn’t include Howard Buffett, Warren Buffett’s son, or Tony Blair. Buffett and Blair argued against the move, contending that reducing aid to Rwanda would just cause more harm than good to the unstable Great Lakes region of central Africa.
“Cutting aid does nothing to address the underlying issues driving conflict in the region, it only ensures that the Rwandan people will suffer — and risks further destabilizing an already troubled region,” Blair and Buffett wrote in a recent Foreign Policy article
This was followed by a report from the Howard G Buffett Foundation echoing the same points. The report went further by questioning the reliability of the UN experts – the group that originally reported evidence that the Rwandan government was supporting rebels in the eastern DRC.
It’s worth noting that the Buffett Foundation report was written by unknown authors and using unnamed sources. It attacks the UN experts and then makes the case that pointing fingers is counterproductive. Says the report; “Our Foundation is not interested in apportioning blame for what we view is a fundamental failure in the GoE process in 2012….”
“We will let the report – and the information on our website – speak for itself,” replied the foundation’s chief of staff, Ann Kelly when asked about the unnamed contributors.
Lake Partners Strategy Consultants and the Crumpton Group LLC are listed as organisations that worked on the report, but they too were unwilling to talk about the report or how they reached their conclusions.
So, I spoke to regional experts about the report both on and off the record and a consensus emerged. The Buffett Foundation report is simply inaccurate, they said. Despite its imperfections, the UN expert report provides sufficient evidence to prove Rwanda’s connection to the armed rebels in the DRC. Since the US and British governments have long been big supporters of Paul Kagame’s Rwanda, it’s reasonable to conclude it would have taken convincing evidence to prompt a suspension of foreign aid.
Many east Africa experts say Rwanda continues to destabilise the region and sap resources for reform. The actions by the international community and the ongoing UN peace talks and framework provide an opportunity to engage in meaningful change for the DRC, many say. Ensuring its success means preventing rebellion and holding all supporters accountable, these experts told me.
Meddling in the DRC
Accusations have been leveled at Rwanda in the past for its meddling in the region. Former Rwandan ambassador to Washington, Theogene Rudasingwa, explained to Newsweek in a January article how the Rwandan government extracted money out of the DRC:
“After the first Congo war, money began coming in through military channels and never entered the coffers of the Rwandan state,” says Rudasingwa, Kagame’s former lieutenant. “It is RPF (Rwandan Patriotic Front, Kagame’s party) money, and Kagame is the only one who knows how much money it is—or how it is spent. In meetings it was often said, ‘For Rwanda to be strong, Congo must be weak, and the Congolese must be divided.’”
In 2012, the anonymous group of UN experts found evidence that the M23 rebels benefited from coordination with and support from the Rwandan military. Further, the report cited that the level of support went all the way up to the Rwandan defence minister. The UK reacted promptly by withholding £16 million in aid promised to Rwanda. International development secretary Justine Greening announced the suspension of £21m in planned budget support for Rwanda at the end of November.
Military aid totaling $200,000 was withheld by the United States when the information first emerged in July, but sanctions stopped there. Human Rights groups joined members of Congress in December imploring the Obama Administration to put pressure on Rwanda. Germany held back €21 million in planned aid and the EU suspended €70 million in planned budgetary support.
“This is not a matter of aid stopping because of advocacy efforts, explained Aaron Hall, associate director of Research for the Enough Project. “Aid stopped because there was credible information from state intelligence reports that showed these connections are real and that Rwanda was in violation of the UN Arms Embargo on Congo and implicated in destabilising a neighboring state.”
A reliance on aid likely affords Rwanda the opportunity to spend money on arming and supporting the M23 rebellion, said academic Laura Seay in a blog post responding to Blair and Buffett’s FP article.
Blair and Buffett also ignore the fact that having so much aid support frees up other resources for the Rwandan government to use in its military adventures in the Congo. Were Rwanda not wasting money on supporting the M23, Kigali would be able to fund many of the excellent development initiatives that were previously funded with aid dollars.
Other nations reacted to the report by withholding or delaying portions of aid to Rwanda. For a country that relies on foreign aid to account for over 40% of its budget, the cuts were a significant action by the international community. According to experts that I spoke with, the disruption in aid flows to Rwanda are working to the extent that Rwanda is no longer supporting the M23 rebels and is participating in the regional peace framework.
The aid cuts are having a direct economic impact. The Rwandan finance ministry revised its GDP growth expectation down from 7.8% to 6.3%, reported the Economist.
Too Much Finger Pointing?
The Buffett Foundation report makes it clear that it does not have interest in assigning blame.
“Our Foundation is not interested in apportioning blame for what we view is a fundamental failure in the GoE process in 2012; we will leave the point-counterpoint on questions of fact to others,” says the only bold section in the report’s introduction.
It calls for the cooperation between regional, state and international actors in order to resolve the many problems that exist in the DRC. Kagame has taken a similar tactic when asked about the issue of Rwanda’s involvement in the M23 rebellion.
“The blame game doesn’t help anyone,” said Kagame to Christiane Amanpour when she confronted him about Rwanda’s involvement. “It’s not just an issue of M23 or one other problem. It’s a number of problems that are together that we need to sort out.”
Former US assistant secretary of state for African affairs Jendayi Frazer made the same case to Al Jazeera saying, “I think the key issue here is to look forward and see how to resolve this. The pointing of fingers has never helped to resolve the crisis in the Great Lakes region.”
According to the Buffett Foundation report, the UN experts place too much attention on the role of Rwanda and not enough on the systemic problems in the region. Hall refuted this, saying that the mandate of the UN experts is to track illegal arms trafficking and trade to rebel groups.
Jason Stearns, director of the Rift Valley Institute’s Usalama Project, agreed with Hall, adding: “The (report) does place most weight on the M23, but I think that is fair, given that this rebellion was the largest source of instability in the region in 2012. But the GoE does spill a lot of ink discussing criminal networks within the Congolese army, as well as support to other armed groups.”
Stearns added that there are questions to be raised about the lack of collaboration with the UN peacekeeping mission and the governments of Uganda and Rwanda. However, the Buffett Foundation does nothing to carry out a “serious” evaluation of the UN report. There is room for improvement in the report, he says, but the broad conclusions are basically sound.
The Buffett report also points to the breakdown of the relationship between the UN experts and the governments of Rwanda and Uganda. “It is not significant who was first to withdraw cooperation,” it says. “The failure in process undermines the credibility of the findings, limiting potential policy prescriptions that could reduce violence in the Great Lakes region.”
Stearns refuted this, saying that the breakdown of the relationship may have been tied to the fact that the experts uncovered information that Rwanda and Uganda did not like. Journalist David Aronson took a stronger tone in accusing Rwanda for the breakdown in its relationship with the group:
“[T]here’s zero doubt about who broke off the relationship between the GoE and the Rwandan government. The Rwandans did,” wrote Aronson in his blog.
The Way Forward
The attempt to discredit the experts’ report and shift the conversation away from Rwanda’s involvement in the DRC has worked to some extent. Donors are responding by channeling aid through non-government actors. Greening announced at the start of March that £16 million in UK aid money will make its way to humanitarian groups working in Rwanda rather than the government. Germany also reversed course and unblocked the $26 million it suspended in 2012.
Critics of the Buffett Foundation report agree that the causes of instability in the DRC are multifaceted and require a host of solutions. “The Congolese government has certainly played a very negative role in the conflict, often arming armed groups and failing to crack down on criminal networks within its own security forces,” explained Stearns.
That means that any lasting peace deal will require engagement from a diverse sets of interests with the Congolese government. “It appears as if the government in the first line is not interested in reforms. The non-existence of any meaningful security sector reform approaches tells the tale,” said Christoph Vogel, Mercator Fellow on international affairs.
“I have not witnessed any peace effort in DRC so far, that has tried to – either by carrots or sticks – seriously embrace political elites that have been engaging in incitement, funding, or protection of illegal and armed activity in the DRC.”
Congolese experts argue that the continued rebellions make it difficult for such reforms. “[I]gnoring Rwanda’s role in the Kivus as a source of conflict will make the situation worse, not better. And continuing to fund a government that spends its own resources on rebels who rape women and conscript child soldiers is unconscionable for most taxpayers in donor states,” said Seay.
A UN led regional framework was signed in Addis Ababa by 11 African countries, including the DRC, Rwanda and Uganda, in February. Despite the challenges, there is a feeling of optimism in response to the UN framework. With neighbouring countries participating and the global community engaged, it appears that now is the time to take permanent steps towards peace.
“There is a unique opportunity given the engagement locally, regionally and internationally to change the security situation in the DR Congo through the UN framework,” says Hall.
Shares representing 1% of conglomerate’s class A stock bought from estate of unnamed investor
Billionaire Warren Buffett’s conglomerate Berkshire Hathaway spent $1.2bn buying its own shares from the estate of an unnamed investor. The anonymous purchase was made at $131,000, or 117% of book value. Berkshire said it bought 9,200 Class A shares from “the estate of a long-time shareholder”. The shares represent 1% of Berkshire’s Class A stock.
Buffett – known as the Sage of Omaha – has always been reluctant to conduct share buybacks and agreed to it last year only after Berkshire hit historically low valuations. In its most recent filing, Berkshire said it had not made any repurchases in the first nine months of 2012, and spent just $67.5m on buybacks in 2011.
Berkshire’s Class A shares rose after its announcement, up 2.8% at $134,500.
The repurchase came less than a month before the looming “fiscal cliff”, automatic tax rises and spending cuts set for 1 January that the White House and members of Congress are negotiating to avoid.
Among other levies, the estate tax is expected to rise in the new year package by as much as 20 percentage points.
Buffett was a signatory to an open letter released on Tuesday that called for a lower starting point for the tax and a higher tax rate, beginning at 45%.
“We believe it is right to have a significant tax on large estates when they are passed on to the next generation. We believe it is right morally and economically, and that an estate tax promotes democracy by slowing the concentration of wealth and power,” the 33 signatories wrote in the letter released by the campaign, United for a Fair Economy.
Buffett has been publicly campaigning for more than a year for higher taxes on the wealthy, even lending his name to a proposal called the “Buffett Rule” that failed in Congress.
Bill Gates heads list of America’s wealthiest with $66bn – but social media titans like Mark Zuckerberg slip down rankings
Social media? So last year. Youth? Overrated. The new Forbes list of the richest Americans shows that old money endures, and that the would-be kings of the second dotcom age have been served.
The top three American billionaires in this year’s Forbes poll have a combined age of 206. Bill Gates, 56, heads the poll again with a fortune of $66bn, $7bn more than last year. This is his 19th year in a row at the top. Warren Buffett, 82 and the last man to oust his friend Gates, comes in second at $46bn and Oracle’s Larry Ellison, 68, is third at $41bn.
Conspicuous by their absence in the top ranks are the new tech titans, most notably Mark Zuckerberg of Facebook. The social media media moguls lost a combined $11bn in one year, according to Forbes. The biggest loser was Zuckerberg, whose net worth has dropped $8.1bn, more than anyone in the list this year, and which prompted a fall from 14th place to 36th.
Not that Zuckerberg is poor. The 28-year-old is now worth $9.4bn, the same as News Corp chairman Rupert Murdoch, 81. Nor is Zuckerberg alone among his social media peers in losing cash this year. Mark Pincus, the founder of Zynga – the gaming firm behind Words With Friends and Draw Something – has also been burnt, as investors found the games to be less addictive than they first thought. Zynga’s shares have fallen more than 66% since their debut last December. Pincus made his debut in the list last year and is out this year.
But the social media backlash didn’t dent the fortunes of America’s wealthiest. The average net worth of a Forbes 400 member is $4.2bn this year, up from $3.8bn in 2011. The total combined net worth of the 400 Club was $1.7tn, up from $1.5tn in 2011. Canada’s gross domestic product (GDP) was an estimated $1.7tn in 2011.
Net worth increased for 241 members, and decreased for 66 members. There were just 45 women in the list, up from 42 last year. The wealthiest was Alice Walton, one of the heirs to the Walmart fortune and whose $26.3bn made her the eighth richest person overall.
The Waltons occupy four of the top 10 slots, but are not the only example of family fortunes at the top of the list. Charles and David Koch, industrialist billionaires and favourite funders of all things rightwing, came in joint fourth, with a combined fortune of $62bn.
The youngest man on the list, Facebook’s Dustin Moskovitz, 28, and the oldest, David Rockefeller Sr, 97, shared 151st position with fortunes of $2.7bn. Also in at 151 was Oprah Winfrey.
Forbes managed to cajole $126bn worth of billionaire to pose for its latest cover celebrating their philanthropy. Gates, Buffett, Winfrey are all there. And Jon Bon Jovi. He’s not on the list, but a video explains – sort of – that he’s there because he gives a lot to charity.
Warren Buffett, often billed as the world’s most famous investor, last week bought 63 local US newspapers for $142m (£90m).
This acquisition, by Buffett’s Berkshire Hathaway group, has been trumpeted as illustrating some kind of counter-intuitive faith in the future of newsprint.
But one of America’s best media commentators, Jack Shafer, isn’t buying that line. Forget any romantic notions, he writes, Buffett “buys when he sees value that others don’t.”
He backs this up with a lengthy analysis of the reason for Buffett’s previous forays into newspapers. In a word, profit.
Shafer reminds us that as recently as 2009, Buffett was bad-mouthing newspapers, saying that “they have the possibility of nearly unending losses.”
Yet he bought the Omaha World-Herald for $200m in November. And earlier this month he told investors he thought there was a future for community newspapers, adding: “I think the economics will be ok.”
Shafer is not entirely baffled by Buffett’s change of mind, taking into account the Sage of Omaha’s financial acumen. He writes:
“The Omaha deal looks like equal parts home town boosterism and faith that the properties retain some franchise cachet…
The Media General deal is slightly harder to decode… most of the towns where Buffett is now the press lord are backwaters… These small dailies and weeklies still retain franchise status because they cover local issues nobody else does, and they make money.
It’s worth noting that Buffett did not purchase Media General’s Tampa Tribune, an unprofitable paper in competition with the Tampa Bay Times… with no franchise value on the horizon.”
He cites media analyst Ken Doctor, who regards the Media General deal as “more a feat of financial engineering than a newspaper deal” because it includes a $400m loan and a $45m line of credit at 10.5% interest in exchange for warrants that would give Berkshire Hathaway almost 20% of Media General.
And Andrew Edgecliffe-Johnson of the Financial Times points out that the warrants obtained by the “well-meaning billionaire” are worth $19.5m.
So, once Media General dumps the Tampa Tribune, the company will essentially be a profitable TV station owner, a business that Buffett knows and likes. Then there is the valuable newspaper real estate too.
Shafer concludes: “Buffett’s recent newspaper acquisitions don’t indicate the industry has returned to health. But if he starts selling, you’ll know that it’s dead.”
Source: Shafer’s Reuters blog
With its profits collapsing, the door-to-door cosmetics company faces a possible takeover bid from rival Coty
There’s a bad smell hanging around Avon’s New York headquarters and it’s not a waft of its £8-a-bottle perfume Scentini Nights.
It’s more likely to be Celine Dion’s Pure Brilliance, one of the many celebrity scents churned out by mass market perfume maker Coty. Coty is stalking the care-worn make-up giant Avon, and is now ratcheting up the pressure by dangling a new $10.7bn (£6.6bn) bid before shareholders.
Last week Coty signed up the veteran investor Warren Buffett, who has joined its large roster of celebrities including Beyoncé, Sarah Jessica Parker and Kate Moss. However, rather than lending his name to an aftershave, Buffett, one of the world’s richest men, is putting some of his financial muscle into the deal.
The offer was an improvement on last month’s gambit of $10bn. At that time Avon used the line of defence its 6.4 million sales people know all too well, slamming the door in Coty’s face.
But the higher bid makes it harder for Avon’s new management team, led by Sheri McCoy, the respected Johnson & Johnson executive parachuted into the top job last month, to rebuff Coty’s attentions. She is frantically drawing up a turnaround plan but her cause wasn’t helped by the poor first-quarter results she inherited, with profits of $26.5m – far below the $143.6m recorded a year ago – and adrift of the numbers expected by analysts.
The revised offer of $24.75 a share, up from April’s offer of $23.25, was set out in a letter to the Avon board from the Coty chairman, Bart Becht, which was made public on Thursday. Becht is the former chief executive of UK household goods giant Reckitt Benckiser.
Best known for taking home a £91m pay package in 2009, Bart is not a man who takes no for an answer; he has sidestepped the board by appealing directly to Avon investors, hosting a call with more than 200
Annual meeting for Berkshire Hathaway group comes this year as questions swirl about the Sage of Omaha’s health
Private jets, chauffeur driven cars and even some economy flights will deposit some 35,000 people in the Nebraskan capital to make their annual pilgrimage to see Warren Buffett, the world’s most famous investor and the man known to his fans as the Sage of Omaha.
But with the 81-year-old now being treated for cancer, questions are being asked about how long “Buffettpalozza” can survive and what his eventual departure will mean for Berkshire Hathaway, the investment firm he founded.
Berkshire Hathaway’s annual meeting has a profound impact on Omaha. The hotels are booked out months in advance, taxis are rare, and the streets throng with wealthy investors. There are parties, discounts at Borsheims, a high end jewelry store Buffett owns, a barbecue. All ahead of a meeting in a stadium arena Saturday morning where Buffett and his curmudgeonly sidekick Charlie Munger, 88, will answer questions for about five hours.
At Gorat’s, Buffett’s favourite steakhouse, owner Debbie Branecki expects to serve 2,000 diners this weekend, at least five times the normal weekend.
“It’s such a great event,” she said. “There’s nothing like it in the world. I think he really wants people to have fun.”
Buffett has dined at Gorat’s for decades, he likes a medium rare T-bone steak and a Cherry Coke (Berkshire owns part of Coca-Cola). He often takes his friends there. Branecki recalls spotting him and Bill Gates, Microsoft’s co-founder, outside the restaurant puzzling over why Buffett’s car wouldn’t start. “I don’t think either of them had a clue what was going on,” she said. Fortunately their security were soon on hand to help.
But this year more than most Berkshire’s shareholders must face an uncomfortable truth: Buffett can’t go on forever.
Last month Buffett announced that he had early stage prostate cancer. He said he was told by his doctors that his condition “is not remotely life-threatening or even debilitating in any meaningful way”.
Earlier this year Buffett announced that an individual had been chosen to take over for him when he can no longer handle the chief executive duties, but he didn’t say who that was.
The cancer and succession news come at a time when Berkshire’s share price has underperformed the stock market. Buffett, whose investments nclude American Express, Coca Cola, Tesco and a portfolio of insurance firms, has long argued against short term investments. But that argument only raises more questions about succession.
For the first time this year Buffett will be quizzed by financial analysts during the meeting as well as taking questions from the audience and from hand picked journalists. Succession is certain to be a key topic, especially as the AFL-CIO Reserve Fund, a union-affiliated Berkshire investor, has tabled a vote asking the
board to disclose its succession-planning policy.
Tim Vick, senior portfolio manager at Sanibel Captiva Trust, said Buffett’s health would be the number one issue for investors this year, closely followed by succession.
“I think investors need reassuring about what is going on with him and at the company,” he said.
Vick said Berkshire’s recent share price performance was “disappointing”.
“I think Berkshire is under valued. It’s clear that the Buffett premium is gone. The market just doesn’t trust his ability to pick stocks,” said Vick.
In part he said this was due to Berkshire’s size. The holding company is now valued at over $200bn. “Buffett has done a very good job of managing expectations in the last few years but it takes a billion dollar deal to move the needle for this company now,” he said.
But there’s still no doubting Buffett’s long-term record.
“Over the last 45 years, the annualized return on book value [for Berkshire] has been 20% relative to say, a 9% return for the S&P 500 [Index]. So, definitely he’s kind of the special sauce that makes Berkshire a wide-moat firm,” wrote Gregg Warren, a senior equity analyst at Morningstar, in a research report.
And in Omaha people are hoping there’s plenty of years to come for his annual jamboree. Branecki’s father, Louis “Pal” Gorat, was a childhood friend of Buffett’s and was offered the chance to invest in the late 1950s. He turned it down. “It was a lot of money at the time,” said Branecki. It would have been a lot more now, not that she is complaining. “I don’t think he’s going anywhere,” she said. “This is too much fun.”