No other businessman wields the influence Dan Gertler has had in the DR Congo over the past two decades.
The football-loving son of a successful diamond-trading family in Tel Aviv, Mr Gertler arrived in DR Congo in 1997, shortly after Mr Kabila’s father, Laurent-Desirée Kabila, came to power.
At the age of 23, Gertler landed in Congo, stepping into the ruins of Mobutu Sese Seko’s 32-year reign. A rabbi in Kinshasa introduced him to Joseph Kabila, then 26, who became head of the army after his rebel leader father toppled Mobutu. The younger Kabila assumed the presidency four years later.
In 2000, when civil war risked ending Kabila’s reign as suddenly as it had begun, Mr Gertler promised millions of dollars and, according to a United Nations report, access to arms – the two things that could best help the new leader stay in power. In return, he received a monopoly on DR Congo’s substantial diamond exports.
Mr Gertler gained the trust of the younger Kabila, who took over as president when his father was assassinated in 2001.
Over more than 20 years of friendship, Gertler lobbied the White House on Kabila’s behalf, conducted secret peace talks and became DRC’s honorary consul in Israel. At first, Gertler dealt in gems, at one point holding a monopoly on Congo’s diamond exports.
But the country’s real riches are its copper and cobalt deposits. Gertler started facilitating access for mining companies such as Glencore Plc and Eurasian Natural Resources Corp. On top of that the Congolese government sold him cut-price mining stakes, often in the lead-up to elections. Instead of trading in packages of precious stones, Gertler was now dealing in enormous mines.
Gertler had used his close friendship with then-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.
As a result, between 2010 and 2012 alone, the DRC reportedly lost over $1.36 billion in revenues from the underpricing of mining assets that were sold to offshore companies linked to Gertler. In one incident Gertler paid the DRC government $500,000 for oil rights – which he later sold for $150m.
In February 2017, he sold his stake in two mines in the Congo to commodities giant Glencore for $960 million; Gertler made an estimated $400 million.
But his entanglements with Congolese politicians came back to haunt him. The U.S. Justice Department opened investigations into Glencore and New York-based hedge fund Och-Ziff Capital Management LLC.
The U.K. Serious Fraud Office launched separate probes into Glencore and ENRC. Among other things, investigators looked at deals involving Gertler.
In a 2016 settlement with the Justice Department and Securities and Exchange Commission, Och-Ziff, since renamed Sculptor Capital Management Inc., admitted to its role in a bribery conspiracy in Africa.
An unidentified Israeli businessman, who was said to be Gertler in a related civil case, paid more than $100 million to Congolese officials over a decade to gain access to mineral rights. Gertler wasn’t charged with a crime in that case or any other, and he has denied wrongdoing. Glencore has said it is cooperating with the investigations, and ENRC has said it did nothing wrong.
Meanwhile, Kabila’s grip on power was loosening. He had won elections in 2006 and 2011, but the constitution barred him from running for a third term.
He delayed the vote, and when his security forces tortured and killed protesters, the U.S. imposed sanctions on some of his generals to pressure him to hold elections and curb human rights abuses.
When that didn’t work, it went after Gertler, who “acted for or on behalf of Kabila” to set up offshore leasing companies, the Treasury Department said when it announced the action in December 2017.
The sanctions prohibited Gertler, any companies in which he owned a majority stake and 19 designated entities linked to him from doing business with U.S. banks or effectively making transactions in dollars. Any assets under U.S. jurisdiction could also be frozen. In June 2018, Treasury added another 14 entities to the list because of their alleged links to Gertler.
Not long before the December 2017 announcement, Gertler reincorporated and relocated several of his companies to Congo from offshore jurisdictions.
Fleurette Mumi Holdings Ltd., a British Virgin Islands-registered company that collects royalty payments from Glencore’s two copper and cobalt mines, was moved to Congo and renamed Ventora Development Sasu, according to company records. The entity that had exploration rights for an oil block on Congo’s eastern border also was moved and renamed. And Gertler established a new holding company in Congo called Gerco SAS, whose owners are his wife and nine family members, filings show.
Some banks in Congo, including Citigroup, had long refused to take on Gertler as a client, according to people familiar with the industry.
But Afriland First Bank opened accounts for his new companies, as well as for Gertler, bank documents show. It did the same for Pieter Deboutte, the long-serving head of Gertler’s operations in Congo, who’s also sanctioned. Deboutte said the funds in his account were for private use.
By the end of 2018, deposits by companies and individuals connected in some way to Gertler made up more than one-third of the Kinshasa Afriland’s total, which had jumped almost fivefold to $279 million from a year earlier, according to a PwC audit reviewed by Bloomberg.
Whether Afriland knew it was handling dollars linked to Gertler or its compliance procedures weren’t thorough enough, the bank and its employees were exposing themselves to possible sanctions and fines if U.S. law was being violated.
Banks conducting transactions involving the U.S. financial system, whether based in the U.S. or abroad, are generally barred from processing payments involving sanctioned entities and individuals.
Details of investigations show that records for 20 bank accounts in Afriland that can be traced to Gertler or people connected to him through common directors, lawyers, addresses or shareholdings.
People familiar with the bank say that until Gertler was sanctioned they couldn’t recall a transfer of more than $500,000 or the subsidiary holding more than $2 million in cash on site. But in 2018, Afriland’s total assets more than tripled from a year earlier to $351 million, according to the PwC audit. Income from banking operations more than doubled to $16 million that year, with transfer and foreign-exchange fees making up 80% of the total.
Gertler, who lives in Israel, has tried to get the sanctions lifted. He hired former FBI Director Louis Freeh and former Harvard law professor Alan Dershowitz, who represented Donald Trump at his impeachment trial, to help make the case.
For a while, despite the sanctions, Gertler’s status in Congo didn’t change much. And Kabila, who allowed elections to take place in December 2018, retains immense influence even though his handpicked successor didn’t win.
But desperate for financial support from the International Monetary Fund and other donors, Tshisekedi has been making moves to clean up corruption.
In December, a prosecutor opened an investigation into how Gecamines used a 128 million-euro loan Gertler gave the mining company before sanctions were imposed. That kind of scrutiny from the Congolese authorities is unprecedented.
While Gertler isn’t under investigation, government mining officials face questions about where the money went, according to two people familiar with the case. In June last year, Tshisekedi’s chief of staff was convicted of corruption charges and sentenced to 20 years in prison, a verdict he’s appealing.
Sanctions
After an outcry at the sanctions licence from anti-corruption campaigners, members of the US Congress and former State Department officials, Gertler became an early example of President Joe Biden’s stated commitment to a principled foreign policy, including cracking down on international corruption.
In March this year, Gertler’s fortunes reversed with dramatic speed. The administration withdrew the licence.
Washington’s decision follows a month after the emergence of leaked bank documents purporting to show how Gertler’s companies in the DRC had worked around what are meant to be the US’s most punitive sanctions.
The US treasury department first sanctioned Gertler in 2017, accusing him of amassing his fortune “through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals” in the DRC. The country had lost more than $1.3bn from these deals, according to the US treasury.
In mid-January, shortly before Mr. Trump left office, Mr. Gertler secretly secured a one-year Treasury Department license that unfroze money he had deposited in financial institutions in the United States. The license also effectively ended a prohibition on Mr. Gertler doing business through the international banking system. The Trump administration had imposed those sanctions in 2017.
After the issuance of the license became public, associates of Mr. Gertler said that part of the reason he had been granted special treatment was that he had played some undisclosed role in helping U.S. national security interests.
The Trump administration’s controversial move to ease sanctions on Gertler came after repeated requests from Israeli officials who said he was a vital national security asset.
Both Yossi Cohen, director of Mossad, Israel’s foreign intelligence agency, and Ron Dermer, then ambassador to Washington, spoke with top US officials over many months to make the case for the value of Gertler’s connections in Africa and his philanthropy in Israel. Cohen also made two previously unreported trips to Congo in 2019 to meet with Gertler and former president Joseph Kabila, according to people with knowledge of the meetings.
Gertler “has lots of relationships in the region that are important to Israel’s interests, and he is a major philanthropist, so we did make an official request,” said Dermer, a confidant of Prime Minister Benjamin Netanyahu.
Cohen’s visits to Congo were unusual. His predecessor, Tamir Pardo, spent five years as head of Mossad and visited Africa once, never setting foot in the country, where Israel has no embassy.
Cohen didn’t tell Congo President Felix Tshisekedi of his meetings with Kabila beforehand, according to two of the president’s aides.
When Tshisekedi found out that he saw Kabila, who had stepped down in early 2019 but remained a power broker and political rival, he complained to Cohen and told him he wasn’t welcome to continue having such meetings in Congo.
Gertler’s value to Israeli and US national security in Africa is unclear. In making the case for easing sanctions, his advocates said he has his ear to the ground across Central Africa and can help Israel and the US gather intelligence on terrorists and the growing Chinese influence in the region.
Israel has stepped up its business and diplomatic activities on the continent over the past five years. Netanyahu has made three trips since 2016, restoring relations with Chad and Sudan. Some people familiar with the Gertler case say he played a role in both breakthroughs.
Marshall Billingslea, assistant secretary for terrorist financing under President Trump who played a key role in setting up the sanctions, assailed the easing of restrictions.
“It was directly because of our sanction actions against Gertler that we deterred his partner in crime, Joseph Kabila, from trying to change the constitution in the Congo and that led to elections and Kabila’s ouster and the return to some semblance of democracy in the country,” Billingslea said on a Feb. 25
This is a tale of how one former president, one businessman and a tiny bank plunged a vast African country into ruin.
