{UAH} Paradise Papers: US puts sanctions on billionaire over dealings in DRC

Paradise Papers: US puts sanctions on billionaire over dealings in DRC

US says Dan Gertler, whose affairs were exposed in leaked files, has amassed fortune through 'opaque and corrupt' deals

Ben Doherty and David Pegg

Fri 22 

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The US government has imposed sanctions on the Israeli billionaire Dan Gertler, whose African business dealings were exposed in the Paradise Papers, over "hundreds of millions of dollars' worth of opaque and corrupt mining and oil deals" in the Democratic Republic of the Congo.

In a strongly worded statement, the US president, Donald Trump, placed sanctions on 13 people and companies associated with them, declaring a state of "national emergency with respect to serious human rights abuse and corruption around the world".

In November, the Paradise Papers investigation unveiled new details of Gertler's mining deals in strife-torn but resource-rich DRC, in particular over a $45m loan in shares to one of his companies from the world's biggest miner, Glencore.

In imposing sanctions on Gertler, the US Office of Foreign Assets Control (OFAC) said the Israeli billionaire's corrupt dealings had deprived the state coffers of DRC of hundreds of millions of dollars. "Dan Gertler is an international businessman and billionaire who has amassed his fortune through hundreds of millions of dollars' worth of opaque and corrupt mining and oil deals in the Democratic Republic of the Congo," 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."

Because of Gertler's deals, the US OFAC said, in just three years, the DRC reportedly lost more than $1.36bn in revenues from the underpricing of mining assets that were sold to offshore companies linked to Gertler.

Twenty companies linked to Gertler, including the Gertler Family Foundation, have also been proscribed.

"Today, the United States is taking a strong stand against human rights abuse and corruption globally by shutting these bad actors out of the US financial system," the US treasury secretary, Steven T Mnuchin, said.

"Treasury is freezing their assets and publicly denouncing the egregious acts they have committed, sending a message that there is a steep price to pay for their misdeeds."

Contacted by the Guardian, Gertler declined to comment on the imposition of US sanctions.

The sanctions will increase pressure on companies to cut all links to Gertler and his companies. US citizens are prohibited from dealing with individuals and companies under sanctions.

Documents revealed within the Paradise Papers showed that several times over 2008 and 2009, Gertler was called in to negotiate with DRC authorities over the struggling Katanga copper mine in the south-east of the country, which was mired in stalled talks to secure a joint-venture agreement with the DRC's state-run miner Gécamines.

In 2009, Glencore, through a loan offer, took effective control of Katanga, but also kept Gertler's interest in the company by secretly loaning his company, Lora Enterprises, $45m in pledged shares for him to take part in the loan. Gertler, known for his close relationship with the DRC's president and key adviser, was also explicitly mandated with securing the mining agreement.

Glencore loaned Gertler the $45m on the express condition that it would be repayable if an agreement was not reached with DRC authorities.

Katanga ultimately won a mining agreement discounted by more than $400m on the initial signing price demanded by the DRC authorities.

Glencore and Gertler's dealings in the DRC were exposed in the Paradise Papers, a leaked cache of more than 13m documents, most of which came from within the law firm Appleby, which specialises in offshore tax structures for the global super-wealthy. The papers were obtained by the German newspaper Süddeutsche Zeitung, and published by the International Consortium of Investigative Journalists, the Guardian and more than 90 media partners across the world in November this year.

Gertler's involvement in the DRC spans nearly two decades. He was cited by a 2001 UN investigation that said he had given the DRC's then-president $20m to buy weapons to equip his army against rebel groups in exchange for a monopoly on the country's diamonds, and a 2013 Africa Progress Panel report said a string of mining deals struck by companies linked to him had deprived the country of more than $1.3bn in potential revenue.

Glencore cut ties with Gertler in February, buying him out of his share in their shared assets in the DRC for $534m.

That decision followed a September 2016 US Department of Justice deferred prosecution agreement against the New York hedge fund Och-Ziff which, while not naming Gertler, implicated "an Israeli businessman" precisely matching Gertler's description and running companies owned by him in bribing DRC government officials for tens of millions of dollars in order to win favourable contracts and terms.

Gertler has consistently rejected all allegations of wrongdoing and DRC has denied any involvement in bribery. It has praised Gertler's commitment to the development of the DRC.

In response to the Paradise Papersrevelations, lawyers for Gertler said in a statement: "Mr Dan Gertler is a respectable businessman who contributes the vast majority of his wealth and time to the needy and to different communities, amounting to huge sums of money. He transacts business fairly and honestly, and strictly according to the law."

Daniel Balint-Kurti, head of investigations for Global Witness, the anti-corruption NGO that first exposed Gertler's alleged dealings in the DRC, said the US sanctions would put pressure on both Gertler and Kabila's government in the DRC.

"Kabila has been delaying elections repeatedly. We've seen protests being cracked down on, generally a lack of tolerance for the opposition. If you wanted to pressure the government, then putting the screws on Gertler is a way to do that."

Balint-Kurti said the sanctions would also affect Gertler's other business partners, in particular Glencore.

"We've just seen with the Paradise Papers some big revelations about how close Glencore and Gertler were. Their business relationship went a lot further than Glencore ever admitted. Now we see sanctions being put on their most important business partner in the DRC, and that clearly has huge implications reputationally."

Balint-Kurti said the Paradise Papers revealed, for the first time, that Glencore was rewarding Gertler for acting as its intermediary with the Congolese government. "Those documents contained very important revelations for Glencore."

Glencore declined to comment on the US sanctions imposed against Gertler.

Global Witness said the US sanctions announcement was welcome, and potentially the start of further action against corruption in Africa.

"We hope that authorities in the US, Israel, DRC and the Netherlands consider opening criminal investigations. Western businessmen have been looting Congo for too long."

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