By Thomas Biesheuvel , Mark Burton , and William Clowes
The U.S. sanctioned Israeli billionaire Dan Gertler, one of the biggest individual mining investors in the Democratic Republic of Congo, in what it calls a clampdown on human-rights abusers and corrupt actors.
The U.S. Treasury said Gertler has used his close relationship with the country’s president, Joseph Kabila, to amass a fortune through corrupt and opaque deals. Between 2010 and 2012 alone, Congo reportedly lost over $1.36 billion in revenues from the underpricing of mining assets that were sold to offshore companies linked to Gertler, it said.
“Gertler has used his close friendship with DRC President Joseph Kabila to act as a middleman for mining asset sales in the DRC, requiring some multinational companies to go through Gertler to do business with the Congolese state,” the U.S. Treasury said in a statement.
Under the sanctions, any assets held by Gertler within U.S. jurisdictions will be blocked and U.S. individuals are prohibited from engaging in transactions with them.
The U.S. “is taking a strong stand against human rights abuse and corruption globally by shutting these bad actors out of the U.S. financial system,” Treasury Secretary Steven Mnuchin said in the statement. “Treasury is freezing their assets and publicly denouncing the egregious acts they’ve committed, sending a message that there is a steep price to pay for their misdeeds.”
Gertler’s representatives at his office in Ramat Gan, Israel, and a public relations firm in London, said they could not immediately respond to the U.S. action. Glencore complies with all applicable sanctions, a spokesman for Glencore said by phone.
Gertler, whose grandfather co-founded Israel’s diamond exchange 70 years ago, arrived in Congo in 1997. The then 23-year-old soon secured a monopoly on the country’s diamond sales from Laurent Kabila, the then-president and father of Congo’s current leader, whose rebellion had just overthrown the three-decade-long regime of Mobutu Sese Seko.
That deal was later canceled, but Gertler has since invested in numerous sectors including copper, cobalt, gold and oil, as well as agriculture and banking. He has faced accusations of doing deals with the government for Congo’s abundant natural resources which are lucrative for him and his associates, but deprive the cash-starved national treasury of much needed funds.
Gertler, who has been a long-term partner of commodity trader and miner Glencore Plc, has been under increasing scrutiny for his deals in Congo. Glencore is a major investor in the country and has created thousands of jobs, helping the nation become Africa’s top copper producer. However, its business with Gertler has been contentious.
Last year, hedge fund manager Och-Ziff Capital Management agreed to pay U.S. authorities $412 million to settle charges that it participated in a bribery scheme involving Congolese officials. Och-Ziff’s partner in Congo, described by the Securities and Exchange Commission as “an infamous Israeli businessman,” paid millions of dollars in bribes to government officials over a 10-year period to win access to mining assets, according to the settlement. A person familiar with the matter identified that partner to Bloomberg as Gertler. Glencore wasn’t accused of any wrongdoing.
In February, Glencore cut ties with Gertler and bought out his stake in Katanga Mining Ltd. and the Mutanda mine in Congo. Royalties from the assets acquired by Gertler from state-owned miner Gecamines in 2011 and 2015 weren’t sold to Glencore in the near-$1 billion deal.
The Swiss commodity giant was forced to respond to renewed questions last month about its operations in Congo after leaked documents known as the Paradise Papers revealed new information about its historic partnership with Gertler.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.
— With assistance by Jonathan Ferziger