Daniel Gertler and the Looting of the Democratic Republic of Congo

[Karl Radl]

Daniel Gertler and the Looting of the Democratic Republic of Congo

In my previous article on the Israeli billionaire Daniel Gertler I am examined the source of his wealth (the diamond trade) and his entry into the politics and economics of the Democratic Republic of Congo in 2000. (1) In said article I further detailed Gertler's systematic use of corruption to expand his mineral holdings to a monopoly (and his personal wealth accordingly), while he has also acted as the gatekeeper for Israeli military and security support for the repressive regime of President Joseph Kabila.

I also pointed out that Gertler had previously exported uncut conflict diamonds from Angola to be cut in Israel then sold on as legitimate diamonds to unsuspecting global non-jewish consumers.

In addition the fact is that Gertler's DGI Group is using the same laundering process they perfected in Angola to move conflict diamonds from Congo to Israel to then be sold on using Israel's position at the head of the international diamond trade as cover.

Gertler has systematically bribed and schmoozed his way into the confidence of Joseph Kabila inducing him to purchase some $700,000 in arms from the Israeli government in 2001 (2) and accept two senior IDF officers (Avigdor Ben Gal and Meir Dagan) sent to Congo to re-organize his armed forces and security infrastructure. (3) Gertler was also a guest of Kabila's at the latter's wedding in 2006 and was close to Kabila's financial advisor Augustin Katumba Mwanke. (4)

Our boy has also not been idle in expanding his business interests in Congo well beyond his area of expertise: diamonds. He claims to have found reserves of some 5 million ounces of gold in a remote area of Congo and has licenses from the Congolese government to extract it. (5) It is worth noting that while it is claimed as a 'joint venture' between Gertler and partners: it is over three quarters owned by Gertler and the other quarter of the venture is owned by Kabila's Congolese state.

This is easy to show by pointing out that the two companies appointed to work the alleged new gold deposits Moku Goldmines AG (Moku) and Société Minièrede Moku-Beverendi SPRL (SMMB) are almost entirely owned by Gertler's Fleurette Group subsidiary. Moku is 97% and SMMB 65% owned by Gertler with the Congolese state of Kabila only owning 35% of SMMB. (6)

In other words: Kabila's government gets only about a quarter of the profit that the Moku/SMMB joint venture stands to make, while Gertler gets approximately three quarters of it. The corruption in such a deal is patently obvious where Congo is making a fairly minimal profit from its own valuable resources, while Gertler stands to make an absolute fortune.

In addition to this it is worth noting that other gold companies operating in the Democratic Republic of Congo have gotten into trouble for illegally purchasing gold from rebel factions, which then use the profit to fund their insurrections. (7)

A similar point could also be made concerning Gertler's operations in Congo (whether in regards to diamonds, gold, oil or copper) in that they are essentially profit making concerns for Joseph Kabila's despotism and fuel his ability to make war and commit atrocities against those who disagree with his rule.

Further to Gertler's discovery of alleged new gold fields in a 'remote part' of Congo. Oil of DRCongo, which are part of Gertler's Fleurette Group, have claimed to have potentially discovered a new large oil field in the north-east of the country. (8) The area concerned (North Kivu) is at the centre of the decades long civil war, which is based on along tribal lines and has seen sustained ethnic cleansing by both sides.

Notably the oil deposits concerned (around Lake Albert in North Kivu) had already been purchased as concessions by Tullow Oil (9) and Heritage Oil. (10) The concessions were stolen by the Congolese state (on an invented pretext) (11) and re-sold first to the Divine Inspiration Group (12) and then Gertler's Oil of DRCongo. (13)

Perhaps the worst of it is that Gertler's companies (i.e. Oil of DRCongo, Caprikat and Foxwhelp) involved in the farrago around the oil deals have no known track record with oil exploration and/or extraction, but are simply start-ups that are based in the British Virgin Islands, which is a favourite tax haven used by Gertler. (14)

This provides significant circumstantial evidence of corruption in how these concessions were awarded. Since they were suddenly stripped from established oil companies with good track records on invented pretexts and then awarded to start-up offshore companies with no track record in the oil industry that President Kabilla's jewish friend happens to own and be on the board of.

That just isn't funny.

It is corruption: pure and simple.

All told; there has been a slightly amusing sting in the tail for Dan Gertler as the Congolese government fired a shot over his bow in 2012 concerning the fact that he wasn't pumping oil and making them money fast enough. They therefore threatened to do what they did to Tullow and Heritage Oil to Gertler (15) and in January 2014 Gertler sold out one of his oil concessions and companies, Nessergy Ltd, to the Congolese state for $150 million, which is 300 times what he originally paid for it. (16)

This, however, is likely to be part of Gertler's strategy to keep President Kabila and the Congolese state on-side (even though they are making a loss (17) it is a financial speculation on future oil production and commodity pricing on their part) (18) so he can continue exploiting and profiting from the resources of Congo at knock-down prices for longer, which is suggested by other news reports from the Congo. (19) Incidentally this is a strategy which Bloomberg have documented, discussed and praised Gertler for. (20)

In contrast to Gertler's dealings in oil; his venture into copper and cobalt mines in the Congo have made Gertler a lot of money, but at the same time caused him a series of considerable headaches due to the widespread publicity surrounding the duplicity involved in how the concessions were awarded and the ongoing international investigations into his business affairs that have resulted.

Between 2010 and 2012 the Congolese state sold off most of its major copper and cobalt mining concessions in secret and at knock-down prices, which were at least $1.36 billion undervalued. (21) These were sold primarily to international mining giants like GlencoreXstrata who secretly funnelled large sums of money in the form of 'loans' to Gertler before the official undervalued sale was made. (22) These were in turn financed by the jewish-owned and operated hedge fund Och-Ziff (23) and who have since also been connected to similar deals involving Gertler as a middle-man with the tyrannical regime of Robert Mugabe in Zimbabwe. (24)

There is no known evidence of such (and I have little doubt that both Glencore and Gertler have been deliberately burying what they can of it), but it is logical to suppose that Gertler passed on some of the money from the 'loans' in the form of dividends to high-ranking Congolese officials, as well as among others the (then as now) South African Housing Minister Tokyo Sexwale, (25) who had 'invested' in Gertler's companies.

To illustrate what we know of what happened it is useful to work through an example (iron ore though this time).

Take the Kolwezi iron ore concession. This had been awarded to First Quantum, a Canadian company, who sunk $700 million into developing the concession (26) [this was later officially amended to $430 million in their court documents] (27), but in late 2009 just as the mine was in the final stages of gearing up to begin production. The Congolese state stepped in and began pressurizing First Quantum only to suddenly revoke the concession in January 2010. (28)

The Congolese state then passed the Kolwezi concession over to a new company that was owned by the state-run Gecamines Ltd (30%) and the Highwinds Group (70%). Highwinds were based in the British Virgin Islands and was one of DGI International's subsidiaries. (29)

The subsequent transactions occurred:

In August 2010 'Gertler presided over a simultaneous set of transactions that saw both the completion of the grab and the flip, as follows: Camrose – the Gertler company in which [South African housing minister] Sexwale and company had invested – acquired the Highwind group and then sold half of Camrose to the London-listed Eurasian Natural Resources Corporation – so putting Eurasian and Gertler in joint control of Kolwezi.' (30)

Eurasian Natural Resources Corp (ENRC), a British company, then realized that the $175 million 'consideration fee' they had paid to Gertler and the Congolese state (through Gecamines) would be immediately seen for what it probably was: a bribe. (31)

Accordingly ENRC promptly filed a 'suspicious activity' report regarding the transaction with the British government in order, in all probability, to cover their backs and give them a point of evidence on which they could argue they acted in good faith if the deal was ever subject to significant scrutiny.

That this was the case is indicated by the fact that they were still trying to desperately defend themselves along this line in 2012 (32) even though it is as plain as a pikestaff that they were guilty of at least negligence and at worst out and out corruption.

Further evidence of general corporate complicity comes from the fact that Gertler reciprocated his behaviour but in reverse by purchasing the Congolese state's Gecamines shares in several Glencore ventures in the Congo (33) (at well-below market value). (34) This means that Glencore (and in all probability ENRC as well) was directly in business with Gertler across a whole range of different projects and concerns and almost certainly knew what Gertler was doing (as they'd be stupid if they didn't) and were happy to go along with so long as there wasn't too much scrutiny.

Indeed the Kolwezi concession also turned out to be rather expensive for ENRC in monetary terms as it eventually settled out of court with First Quantum for $1.25 billion. (35)

ENRC learned the costs of doing business with Gertler the hard way and other firms should pay heed to what happened.

This has ironically also stung, among others, Apple. Who were discovered using Congolese copper and cobalt to make their iPhones in China and have, like ENRC, been trying to minimize the damage by claiming ignorance (and thus also general incompetence). (36)

That hasn't stopped Gertler though as it emerged in April 2014 that he had 'loaned' Gecamines (i.e. the Congolese state) some $196 million via his newly-created corporate subsidiary African Dawn Finance Ltd, which was to be used to open up the untapped Deziwa and Ecaille C copper concessions. (37)

This loan is only short-term and is being charged at a generous 6% interest rate, which suggests that, as previously discussed, Gertler is using the loan as lever to keep the Congolese state happy so that he can continue to enjoy 'special favours' (via his personal friendship with President Kabila) and profit from stealing Congo's resources.

Fortunately pressure has been increasing on Gertler with among others; the British Serious Fraud Office poking around his affairs and the International Monetary Fund stopping aid to Congo, because of its dealings with Gertler's Fleurette Group.

An idea of just how much pressure Gertler is coming under is that while he claims he is whiter-than-white (and g-d knows it). (38) He is having to publicly disclose large amounts of information to 'explain' everybody else's 'misunderstandings', which include the charge that he made some $1.3 billion in profit from his transactions with Glencore, ENRC and others. (39)

We can only hope that other firms avoid doing any kind of business with Gertler in the future and it also goes to show that you can never, ever trust a jew.

References

(1) http://semiticcontroversies.blogspot...-trade-in.html
(2) http://www.rough-polished.com/en/database/10375.html
(3) Ibid.
(4) http://www.csmonitor.com/World/Afric...blood-diamonds
(5) http://jewishbusinessnews.com/2013/1...pect-in-congo/
(6) Ibid.
(7) http://www.ft.com/cms/s/0/54270f8c-4...#axzz3QaLr6SBP
(8) http://www.newsmax.com/Finance/Congo.../11/id/588064/
(9) http://www.csmonitor.com/World/Afric...blood-diamonds
(10) http://www.globalwitness.org/library...ption-concerns
(11) http://news.bbc.co.uk/1/hi/business/7377383.stm
(12) http://www.globalwitness.org/library...tion-concerns; http://www.csmonitor.com/World/Afric...blood-diamonds
(13) http://www.globalwitness.org/library...ption-concerns
(14) Ibid.
(15) http://www.globes.co.il/en/article-1000760267
(16) http://www.reuters.com/article/2014/...0KW3WW20140123
(17) http://www.globalwitness.org/library...-offshore-firm
(18) http://www.reuters.com/article/2014/...0KW3WW20140123
(19) http://oilprice.com/Latest-Energy-Ne...il-Fields.html
(20) http://www.bloomberg.com/news/articl...congo-poorest; also documented in http://www.ft.com/cms/s/0/dce3c89a-b...#axzz3SUe6LZ00
(21) http://www.globalwitness.org/library/secret-sales
(22) http://www.globalwitness.org/sites/d...ay%202014.pdf; http://www.theguardian.com/business/...s-dan-gertler; http://www.metalbulletin.com/Article...#axzz3OYdqor2D
(23) http://www.wsj.com/articles/SB100014...3772144953130; http://www.lecongolais.cd/glencore-p...-a-congo-mine/
(24) On this see: http://semiticcontroversies.blogspot...h-backers.html
(25) http://mg.co.za/article/2012-08-17-0...-drcs-mr-grab; http://www.mining.com/meet-the-israe...rc-mine-76979/
(26) http://www.csmonitor.com/World/Afric...blood-diamonds
(27) http://www.mining.com/meet-the-israe...rc-mine-76979/
(28) Ibid.
(29) Ibid.
(30) http://mg.co.za/article/2012-08-17-0...e-drcs-mr-grab
(31) Ibid; http://www.miningnewsmagazine.org/?p=345; http://www.theguardian.com/business/...ng-billionaire
(32) http://www.ft.com/cms/s/0/dce3c89a-b...#axzz3SUe6LZ00
(33) Ibid.
(34) http://www.bloomberg.com/news/articl...for-congo-mine
(35) http://www.ft.com/cms/s/0/dce3c89a-b...#axzz3SUe6LZ00
(36) http://www.bbc.co.uk/news/technology-31438699
(37) http://www.bloomberg.com/news/articl...for-congo-mine
(38) http://www.bloomberg.com/news/articl...-congo-poorest
(39) http://www.thesundaytimes.co.uk/sto/...cle1367419.ece

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This was originally published at the following address: http://semiticcontroversies.blogspot...ooting-of.html