“Nothing happens in Congo without Dan Gertler and Gertler can do nothing without playing the Israeli card,” said an advisor to an international mining conglomerate.
But the net is tightening around the Israeli billionaire mining magnate who dominates the economic life of the resource rich but economically impoverished Democratic Republic of Congo (DRC).
Building an empire in Congo
The Israeli mining magnate has been fundamental in the Kabila family’s control of the DRC over the past two decades. But the 42-year-old billionaire, who was the inspiration of for the movie Blood Diamond starring Leonardo DiCaprio, is now under international scrutiny over corruption.
Meanwhile, his main Congolese ally, President Joseph Kabila, is clinging on by his fingertips to power. The fragile situation in the Central African rentier state threatens to drag the Israeli security establishment into a renewed conflict to defend the billionaire’s interests.
There has always been a quid pro quo relationship between Gertler and Kinshasa that is heavily weighted to his corporate interests. His political influence in DRC is said to have begun shortly after his entry in 1997, when he shored up the government of Laurent Kabila by offering the late president $20 million to head off a rebellion in the east.
The rebels posed a major risk to the regime as it was attempting to establish itself. In exchange for this help, his IDI Diamonds firm was given exclusive rights on the purchase of artisanal diamonds.
The monopoly was ended by Joseph Kabila following his father’s assassination in 2001. But a deal was struck in which Gertler paid $15 million for the rights to 88 percent of the output of national diamond producer La Société Minière de Bakwanga (MIBA). Gertler’s uncle, Shmuel Schnitzer, is honorary president of the Israel Diamond Exchange.
One Israeli Defense source has also claimed that Gertler paid the Kabila government $40 million for a former Mossad chief and ex-soldiers to arm, train and direct Congolese special forces to put down the brutal Rwandan-backed M23 rebel group in an operation with the United Nations in 2013.
According to this source, the materiel was sourced from Israel and Russia.
It is claimed the operation was not officially backed by the Israeli government, but given the scale of Israeli security involvement would have probably given an informal nod of approval.
With a reputation for mass rape and slaughter, M23 had been operating out of the Virunga National Park in the unstable North Kivu province. The group’s violent operations were hindering efforts to develop the region’s potentially massive oil reserves. Ending the rebellion helped remove a problem for Kabila.
Following in Leopold’s footsteps
The sums Gertler has spent on consolidating the Kabila regime’s control over a vast territory are a fraction of the wealth he seems to have accrued allegedly as a fixer between international capital and Kinshasa. Not since Belgium’s notorious King Leopold II plundered Congo for ivory and rubber has a foreigner acquired such control and influence over the country.
Gertler has secured a reputation for buying up mining and oil prospecting rights from the government, via his high level political connections, and selling them at huge mark-ups. Over two decades, his position as gatekeeper has enabled him to dominate the copper and cobalt mining sectors in the resource-rich Katanga province, giving him personal control over nearly 10 percent of world cobalt production.
In recent years, he has turned his attention to oil exploration in the country’s potentially highly lucrative yet risky frontier prospects.
Gertler’s Oil of DRC start-up has found reserves estimated at 3 billion barrels of oil in Lake Albert. Put into context, his concessions potentially contain more oil than Syria or the UK. Oil production from the reserves would boost DRC’s economy by 25 percent, thereby consolidating Gertler’s power base in the country.
To get these commodities out of the country, Gertler has also secured an interest in infrastructural development, giving him control over the economy’s most strategically important sectors and amassing himself a huge net worth worthy of an entry into the Forbes Billionaires list.
Many of these assets are owned by the Gertler Family Trust or grouped under the Fleurette Group, which owns stakes in various Congolese mines through at least 60 holding companies in offshore tax havens such as the British Virgin Islands. Placed beyond public scrutiny, Fleurette’s investments are regarded by critics as asset stripping with his acquisitions made at a fraction of their true value.
Gertler and Congo’s web of corruption
Gertler believes the criticism of his political role in DRC is unjust. Instead, he told Bloomberg that he should be awarded the Nobel Peace Prize for his role.
However, the symbiotic relationship between Gertler and President Kabila is looking into the abyss as Congolese society becomes increasingly angry at his attempts to bend the constitution to lengthen his tenure.
At the same time, global corruption investigations are closing the net on the billionaire, leaving him vulnerable to prosecution and a post-Kabila political backlash in DRC.
The DRC is said to have suffered huge losses in revenue due to the alleged undervaluation of state assets in various privatisations, many involving Gertler.
In September, Och-Ziff Capital Management Group agreed the pay over $400 million in a settlement with US authorities over its alleged payment of Gertler to allegedly bribe Congolese officials to the tune of $100 million for mining rights. No charges were brought against Gertler by the Justice Department or the US Securities and Exchange Commission (SEC).
Two months later, Gertler’s nemesis Global Witness, an NGO that fights corruption in the global natural resources industry, reported that the state mining company Gecamines signed over royalty rights to the Israeli plutocrat.
Royalties amounting to up to $880 million that were due to Gecamines from Glencore’s KCC copper project in southeast Congo were assigned to an anonymous Cayman Islands company called Africa Horizons, which is part of Fleurette Group.
It is unclear what, if anything, was paid to Gecamines, whose earnings could make a significant fiscal contribution to alleviating poverty in one of the world’s poorest countries. The NGO has accused Glencore of knowingly entering loss-making deals to appease the billionaire as the DRC’s central power broker.
According to Bloomberg, in December the UK’s Serious Fraud Office (SFO) began investigating Gertler and four former Eurasian Natural Resources Corp. (ENRC) executives as part of a three-year probe into the Kazakh company’s acquisition of DRC copper and cobalt mining projects.
The deals may have violated UK fraud and bribery laws, for which individual offenses carry penalties of as long as 10 years in prison or an unlimited fine. The IMF had, in 2012, cancelled a $532 million loan to DRC for Gecamines’ failure to disclose the transfer of its stake in another ENRC project to a BVI-registered company controlled by Gertler.
While Gertler’s business empire sinks into international controversy, DRC has been teetering on the brink of a third civil war after Kabila failed to step down at the end of his two-term limit in December. Protests erupted across the country, prompting the Catholic Church to step in to broker an agreement between the government and the opposition.
This would see the president standing down at the end of 2017 after presidential elections, a scenario that most Congolese do not think he will do voluntarily. Besides, Kabila’s hugely popular challenger the wealthy businessman and former Katanga governor Moïse Katumbi – is in exile in Belgium, having been convicted in absentia for corruption and sentenced to 36 months’ imprisonment.
If Kabila, his family and allies leave power, any successor is likely to confront endemic corruption to diminish his influence.
Documents from the Pulitzer Center on Crisis Reporting suggest that Kabila and his family control 120 mining permits and have direct and indirect links to a wide variety of businesses including banks, farms, fuel distributors, pharmaceutical suppliers and airlines.
Stripping away Kabila’s business empire could involve an anti-corruption drive that could sweep up Gertler and other friends of the President.
Israel’s response to Kabila’s fall
The mining baron may be tempted to secure backing from his Israeli connections to shore up the Kabila regime in one form or another, including the possibility that he could rule through his twin sister Jaynet Kabila or another puppet.
A step towards a Mobutu-style tyranny would precipitate another deadly conflict in a country that has lost a million lives due to past civil wars and foreign interventions.
The forces that were deployed to put down foreign-inspired rebellions in eastern DRC could be deployed against the Congolese opposition, bankrolled by Gertler and allegedly with the tacit approval of the Israeli security establishment. Such a scenario would drag Israel into a renewed conflict in the Great Lakes region.
Why would Israel get involved in Congo with such high stakes? In an article for the Jerusalem Post last April, Yossi Melman stated that a pro-Africa parliamentary lobby had been established in the Knesset to promote Israeli interests in the continent.
Interests fall into three main areas: the political-diplomatic interest in preventing anti-Israel UN resolutions, the promotion of economic ties and the strategic and military interest in advancing arms sales and combating terrorism.
Israel has traditionally trained and equipped the military guards around African dictators in the pursuit of these objectives.
Since the early 1970s, Israeli military industries and former military and intelligence officials have, with the backing of the Israeli security establishment, provided security assistance and arms to African dictators, including DRC’s former dictator Mobutu Sese Seko.
Dan Gertler is intimately associated with Israel’s military, economic and political elite. He is close to several Israeli politicians, especially Defense Minister Avigdor Lieberman, founding leader of the right-wing Yisrael Beiteinu party. He could seek to utilise these links to maintain DRC’s status quo.
However, there are signs that Israel is losing patience with its roving billionaires. In December, Gertler associate Benny Steinmetz who also earned his billions from diamond mining in Africa was put under house arrest under suspicion of bribery and money laundering in a long-running dispute over the $20 billion Simandou project in Guinea. He has yet to face charges and denies wrongdoing. Gertler may face a similar fate if his corporate activities come under the spotlight of investigation.
Meanwhile, the Foreign Ministry has taken a greater role in international relations, eating into the power of the Defense Ministry, which has operated as a state-within-a-state. The involvement of diplomats in relations with Africa has moderated the more militaristic inclinations of the past.
In this context, diplomats will be cautioning the Israel not to involve themselves in the quagmire of Central African politics on Gertler’s behalf, mindful of the long-term damage this could do to its diplomatic leverage in Africa. In this case, Israel may warn the security establishment and associated freelancing mercenaries to abandon Gertler to secure influence in a post-Kabila scenario.