DRC, Mineral Exploitation, Dan Gertler and Ebola

DRC’s worsening instability heightens critical minerals concern

by Greg Klein | December 28, 2018

Yet another postponement to already overdue elections can only aggravate the Democratic Republic of Congo’s humanitarian plight. To Westerners remote from danger, the conflict also emphasizes the precarious nature of critical minerals necessary to modern society.

DRC’s worsening instability heightens critical minerals concern

(Map: U.S. Central Intelligence Agency)

Rich in copper, gold and diamonds, as well as critical metals including cobalt, tin, tantalum and niobium, the country typically chooses governments through coup, rebellion or sham elections. Current president Joseph Kabila has ruled unconstitutionally since December 2016, when his mandate ended. He belatedly scheduled an election for December 23, then pushed it back a week, citing the destruction of ballots in a warehouse fire. On December 26 the government announced voting in the northeastern region would be postponed until March.

The additional delay sparked violent protests in a month that’s already experienced over a hundred deaths in ethnic warfare, as well as battles between police and protesters.

The government blamed its latest postponement on the northeastern region’s Ebola epidemic, the second-worst outbreak in history, the DRC’s tenth since 1976 and the country’s second this year. The previous epidemic, which killed dozens in the west-central province of Equateur, officially ended in July. Confidence in the excuse given for the latest voting delay wasn’t helped by the fact that the health ministry officially recognized the current epidemic on August 1.

Responsible for hundreds of deaths so far, this outbreak takes place amid violence targeting aid workers as well as the local population. Like other parts of the country, the region has dozens of military groups fighting government forces for control, and each other over ethnic rivalries and natural resources. The natural resources can be mined, often with forced labour, to fund more bloodshed.

In 2017 the DRC supplied about 58% of the world’s cobalt, 34.5% of tin and 28.5% of tantalum, the U.S. Geological Survey reports. Both a critical and conflict metal, DRC tantalum presents an especially troubling example for the often unknown origins of its supply. Neighbouring Rwanda, another strife-torn source of conflict minerals, supplied 30% of 2017 global tantalum supply.

Katanga’s failure to disclose the risks related to the nature and extent of its reliance on the Gertler Associates is unacceptable. Investors cannot be given anything short of accurate and truthful disclosure.—Jeff Kehoe,
director of enforcement,
Ontario Securities Commission

Some of the major companies operating in the DRC have failed to rise above the country’s endemic problems. In mid-December Glencore subsidiary Katanga Mining TSX:KAT and its officers agreed to pay the Ontario Securities Commission a settlement, penalties and costs totalling $36.25 million for a number of infractions between 2012 and 2017.

The OSC said Katanga seriously overstated copper production and inventories, and also failed to disclose the material risk of DRC corruption including “the nature and extent of Katanga’s reliance on individuals and entities associated with Dan Gertler, Gertler’s close relationship with Joseph Kabila, the president of the DRC, and allegations of Gertler’s possible involvement in corrupt activities in the DRC.”

A member of a prominent Israeli family of diamond merchants, Gertler has been said to act as a middleman between Kabila and mining companies operating in the DRC. Kabila and his family hold interests in over 80 companies and businesses, according to a 2017 study by New York University’s Congo Research Group and the Pulitzer Center on Crisis Reporting.

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Diamond Joe Gutnick and His Sister – $1 is Not A Fair Market Value Exchange for $174M?

Court scraps Gutnick’s deal to sell $174 million mine to sister for $1

Former bankrupt mining tycoon Joseph Gutnick has suffered another setback in his turbulent career after a court tore up a deal to spirit away a mining project worth as much as $174 million from creditors to one of his companies by selling it to his sister for $1.

Liquidators to Legend International chalked up a major win for the mining exploration group against its once mining magnate director Mr Gutnick in the Supreme Court of Victoria late last week.

Joseph Gutnick declared himself bankrupt in July 2016.
Joseph Gutnick declared himself bankrupt in July 2016. CREDIT:JESSE MARLOW

The corporate regulator is also believed to be reviewing the matter, and it could lead to regulatory action against the former Melbourne Football Club president.

Late last week, Associate Justice Rodney Randall found the sale of Legend International’s ownership in a potentially lucrative mining project in North Queensland to a company operated by Mr Gutnick’s Sydney-based sister Pnina Feldman and nephew Shalom Feldman “uncommercial”, “insolvent” and “voidable”.

Mrs Feldman, the wife of Bondi’s Yeshiva Centre leader Rabbi Pinchus Feldman, famously took her brother to court in 2003 over a separate loan disagreement.

Pnina Feldman leaving a separate court case with her husband Rabbi Pinchus Feldman that also featured her brother Joseph Gutnick as a defendant.
Pnina Feldman leaving a separate court case with her husband Rabbi Pinchus Feldman that also featured her brother Joseph Gutnick as a defendant. CREDIT:SYDNEY MORNING HERALD

The recent court case brought by liquidators to Legend was part of a wider complex dispute between Mr Gutnick, Legend and the multi-billion dollar company that signed a deal with Legend, the Indian Farmers Fertiliser Cooperative (IFFCO).

The legal battle sparked Mr Gutnick’s shock bankruptcy in June 2016 and led to Mark Korda and Craig Shepherd from KordaMentha acting as liquidators to Legend International that month.

Mr Gutnick was discharged from his bankruptcy in June this year after striking a sweetheart deal with his trustees in bankruptcy to clear his $175 million in debt for less than one cent in the dollar.

Mr Gutnick and Legend’s dispute with IFFCO links back 2008 when Legend inked a $103 million contract with IFFCO to supply phosphate to IFFCO.

Under the deal, IFFCO was to invest the $103 million over two years through shares and options in Legend International Holdings.

An aerial view of Mount Isa. Legend International owned 100 per cent of shares in Paradise Phosphate which owns a major deposit outside of Mount Isa.
An aerial view of Mount Isa. Legend International owned 100 per cent of shares in Paradise Phosphate which owns a major deposit outside of Mount Isa.

However, the deal fell apart when Legend failed to deliver any phosphate, a key ingredient in fertiliser.

In 2015, IFFCO later sought to recoup its investments by suing Legend and Mr Gutnick in Singapore and later in Australia.

The legal stoush culminated in the Supreme Court of Victoria finding on December 21, 2015 that IFFCO was owed more than $80 million by Legend and Mr Gutnick.

But four weeks before Supreme Court of Victoria handed down its decision in IFFCO’s case, Legend executed a new deal that transferred Legend’s main assets – its 100 per cent ownership of one-time ASX hopeful Paradise Phosphate – to entities linked to the Gutnick family. This included a company Queensland Phosphate, that was set up a week earlier.

Queensland Phosphate appointed a receiver over Paradise a few months later when Mr Gutnick lost his appeal. That receiver, Christopher Palmer of O’Brien Palmer, then sold Paradise’s assets to Queensland Phosphate for $1.

Associate Justice Randall is expected to hand down orders that the asset be transferred to liquidators acting on behalf of creditors to Legend in early January.

As a result of the Gutnicks losing the case, Australia’s largest phosphate deposit is expected to come up for sale early next year. Maverick MP Bob Katter testified during the trial that he planned to assist the funding of the development of the mine in Mount Isa.

More Dan Gertler and Glencore – WSJ

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LostMessiah – The Gertler, Fleurette, Katumba, Glencore…. Reported Long Ago

To our faithful readers and to the journalists and law enforcement who read our pages: 

We uncovered the abuses portrayed long ago. For a look into our investigations into Dan Gertler, Fleurette,  the death of Katumba, Glencore, the various violations and other unsavory practices, please go into our search bar and search the names. We reported about these issues nearly 2 years ago.

LM

Glencore-Controlled Miner to Be Fined by Canadian Authorities Over Congo Ops

Regulator expected to allege Katanga Mining hid risks of doing business with Israeli diamond merchant closely linked to Congolese President Joseph Kabila

Glencore GLNCY -3.44% PLC-controlled mining company and some of its current and former directors and executives have agreed to pay more than $22 million to settle Canadian allegations that they hid the risks of doing business with a controversial Israeli businessman closely linked to Congolese President Joseph Kabila, according to a person familiar with the matter.

The expected settlement between the Ontario Securities Commission, Canada’s biggest stock-market regulator, and Toronto-listed Katanga Mining Ltd. KAT -1.56% is related to the company’s business activities in Congo between 2014 and 2016, the person said.

The regulator is expected to name several of Katanga’s current and former executives and directors in the settlement and will focus, at least in part, on Katanga’s longstanding ties with Dan Gertler, the Israeli businessman who first invested in Katanga alongside Glencore in 2008, the person said.

The OSC is also expected to allege that Katanga lacked proper internal financial controls, leading it to overstate copper production and understate mining costs, potentially inflating the miner’s performance, according to the person familiar with the matter.

Glencore owns about 86% of Katanga. In 2017, Glencore purchased Mr. Gertler’s stakes in Katanga and another giant copper mine in Congo.

The settlement is expected to name Glencore’s former representatives on Katanga’s board, according to this person. Those individuals include Aristotelis Mistakidis, one of Glencore’s most senior executives and two other Glencore executives, Liam Gallagher and Tim Henderson. All three stepped down from the board in November 2017 after Glencore and Katanga confirmed the Canadian investigation. The probe was first reported by The Wall Street Journal.

Katanga said at the time it was shuffling the board to address weaknesses in its controls over financial reporting. Earlier this month, Glencore said Mr. Mistakidis would retire at year-end.

Katanga and the named individuals have agreed to jointly pay a fine of more than 30 million Canadian dollars ($22 million) to settle the allegations, according to the person.

The people named in the OSC settlement will be banned for certain periods of time from acting as a director or officer of a publicly traded company listed in Ontario, the person said.

The settlement is expected to be announced as early as this week. A panel of the OSC must approve any settlement agreement at a public hearing for it to take effect.

It’s unclear whether Katanga and the individuals admit to wrongdoing in the settlement.

Katanga Chief Executive Johnny Blizzard has also agreed to resign as part of the settlement, the person said.

Katanga’s settlement represents another reputational hit for Glencore and its operations in Africa. In July, the London-listed mining giant said it had received a subpoena from the U.S. Justice Department demanding records related to its compliance with American antibribery and money-laundering laws in Congo, Nigeria and Venezuela.

The Wall Street Journal reported that a focus of the probe is Glencore’s ties to Mr. Gertler.

Mr. Gertler in recent years has become a lightning rod for controversy. In 2016, he was a central figure in a $412 million settlement between the U.S. Justice Department and the Securities and Exchange Commission with New York hedge fund Och-Ziff Capital Management Group LLC. A businessman people familiar with the matter said is Mr. Gertler paid more than $100 million in bribes to Congolese government officials, including Mr. Kabila, to get beneficial terms for deals in the Central African country, the DOJ and SEC alleged.

A spokesman for Fleurette Group, Mr. Gertler’s main company in Congo, said it “has always acted appropriately and with integrity in the DRC. Nothing has ever been proven against the company or its executives in a court of law.”

A year ago the U.S. Treasury Department sanctioned Mr. Gertler, alleging he traded on a friendship with Mr. Kabila to amass a fortune through “opaque and corrupt” deals on behalf of multinational companies seeking to do business in Congo. Mr. Gertler has denied wrongdoing and has declined to comment on the Treasury allegations and Justice Department investigation.

The OSC is expected to allege that Katanga breached Canadian securities law by not disclosing the risks it faced by relying on Mr. Gertler to maintain relationships with Mr. Kabila, Congo’s president, according to the person familiar with the matter.

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Canadian regulator to fine Glencore-controlled miner over Congo: WSJ — peoples trust toronto

https://ift.tt/2GhMlTr December 16, 2018 (Reuters) – A Glencore PLC-controlled mining company and some of its current and former executives have agreed to pay more than $22 million to settle Canadian allegations they hid the risks of doing business with an Israeli man close to Congolese President Joseph Kabila, the Wall Street Journal reported on Sunday. […]

via Canadian regulator to fine Glencore-controlled miner over Congo: WSJ — peoples trust toronto

 

See Dan Gertler on LostMessiah

Lev Leviev – Spotlights and Shadows and Diamonds

Diamond Smuggling Scandal Spotlights Shadowy Israeli Tycoon

By: AP

This Dec. 2, 2009 photo showsLev Leviev at a district court in Tel Aviv, Israel. Israeli police are demanding his return from Russia to be questioned of charges including smuggling, money laundering and tax offenses. (AP Photo/Ofer Vaknin)

 

Tel Aviv – A shadowy Israeli billionaire who made his fortune in the insular world of diamonds has suddenly found his empire in jeopardy after close associates were busted in a massive smuggling ring and an employee mysteriously plummeted to her death from his high-rise Tel Aviv office building.

 

Lev Leviev, known in Israel as the “king of diamonds,” has enjoyed close ties to Russian President Vladimir Putin and has a reputation for generous philanthropy to Jewish causes. But now, Israeli police are demanding that he return from Moscow for questioning on allegations of smuggling, money laundering and tax offenses.

It’s a stunning downturn for one of Israel’s most well-known tycoons. Born in the former Soviet republic of Uzbekistan, the 62-year-old Leviev immigrated to Israel as a youth in 1971 and began working as an apprentice in a polishing plant in Israel’s then-booming diamond industry. His meteoric rise saw him later establishing a plant of his own, and striking deals in Angola and Russia that briefly undercut the DeBeers diamond giant. He later branched out to real estate, construction and chemicals, with his Africa-Israel holding and investment company becoming a powerful player in the Israeli market and establishing Leviev as a precursor to a wave of Jewish oligarchs from the former Soviet Union who have become power brokers in Israel.

Though his net worth is estimated at more than $1 billion, Leviev suffered heavy losses in recent years because of his massive investment in Russia, where he is known to enjoy strong government support. Leviev, who moved to London a decade ago and recently relocated to Moscow, denies any allegations of impropriety and is currently negotiating terms of his return with Israeli police. But insiders say that even if he hasn’t been formally charged with a crime, his mere association with the suspects accused of smuggling some $80 million worth of diamonds hidden in briefcases over several years could be devastating to his brand.

“I can’t believe he would put himself in such a situation. He is still a strong oligarch, and this is not his style. A smuggling of this scale could topple businesses far larger than his,” said Alex Kogan, a journalist who has covered the oligarchs in Israel for the local Russian-language press. “Even if he is not involved, this whole affair will harm him greatly.”

Leviev’s son and brother were arrested in early November, along with four others, and are currently out on bail in what has been dubbed the “Black Diamond” affair.

The saga took a more tragic turn on Nov. 11, when Mazal Hadadi, a bookkeeper for Leviev’s diamond firm LLD, fell to her death from a small, elevated bathroom window on the 10th floor of his office building next to Israel’s Diamond Exchange.

The death was initially reported as a suicide, the supposed result of a breakdown following tough police questioning about the smuggling affair. The family acknowledges Hadadi was rattled by the investigation but insists the mother of three would never take her own life and was on her way to meet her husband after work when a mysterious call to her cell phone made her abruptly return to the office.

Israel’s reeling diamond industry has been trying to distance itself from the affair. With tens of thousands of employees in the 1970s, Israel was once the world’s largest diamond trading center but fell on hard times in recent years because of the proliferation of synthetic diamonds and outsourcing of polishing plants to countries like India, where wages are far lower. Dubai has also cut away at Israel’s status as the regional gateway for trading because of tax benefits for companies.

But Israel is still a leader in the polishing of large diamonds and a hub for e-commerce and technological developments. Though officially still a member of the Israel Diamond Exchange, Leviev hasn’t been seen in Israeli diamond circles in years as his business interests focused elsewhere and his brother took over the leadership at LLD.

An official in the industry, who spoke on condition of anonymity because of the ongoing investigation, said the affair has put a strain on other Israeli diamond dealers. The Israeli market is now considered to be a highly regulated industry that has cleaned up its act after decades of shady dealings and association with “blood diamonds” mined in conflict zones that financed human rights violations. In 2003, Israel joined the Kimberley Process by which members meet annually to discuss strengthening controls over conflict diamonds.

Leviev’s alleged motivations are also a mystery, since diamonds entering Israel only need to be declared and inspected rather immediately taxed.

For now, there are far more questions than answers. The Israeli media has been filled with trickles of information along with interviews with the bereaved bookkeeper’s family, criticism of police conduct and speculation over whether Leviev will return and be arrested.

In a statement, Leviev’s Israel office denied all allegations against its employees.

“Mr. Leviev and all of the companies under his control operate in accordance with accepted norms, adhering to the law,” it said. “We hope that this matter will be clarified quickly and the suspicions will be proven baseless.”

It’s the kind of attention Leviev has long tried to avoid, preferring to limit his media coverage to his philanthropy for the Chabad movement, a Hasidic sect that performs outreach to Jews around the world, rather than his diamond dealing.

“It’s a closed world where people like to keep their secrets,” said Kogan, the journalist. “He doesn’t like publicity and doesn’t like to stick out.”

Gemcanton, Eli Nefussy, Emeralds and Leviev

Bloomberg-Zambia’s High Court rejected an appeal by an employee of diamond billionaire Lev Leviev against his deportation, according to official documents seen by Bloomberg.

In a ruling dated June 19, Judge Dancewell Bowa said he didn’t “find any illegality, unreasonableness or procedural impropriety” by the Department of Home Affairs when it expelled Eli Nefussy, the co-chief executive officer of emerald mine Gemcanton Investments Holdings, on November 28.

Eli was challenging his deportation on grounds that he wasn’t afforded the opportunity to make representations before his expulsion. Gemcanton is jointly owned by Leviev and Wolle Mining Ltd. Previously known as the Grizzly emerald mine.

Gemcanton was built by Abdoulaye Ndiaye, a naturalized Zambian originally from Senegal.

Nefussy’s lawyer, Dickson Jere, said they would appeal the ruling. “Courts have powers to review reasons given by the state for deportation, but the judge misdirected himself when he refused,” Jere said in a text message.

 

Mr. Hadadi, We are Convinced Your Wife Did not Kill Herself Too, the “Black Diamond”

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‘I am convinced my wife did not kill herself’

Husband of woman who fell to her death at Ramat Gan stock exchange says police have more information than has been revealed to the public.

 

The circumstances surrounding the death of Lev Leviev employee Mazal Hadadi, still preoccupy the police and the family.

The husband of the deceased said Thursday that despite reports that there is no criminal aspect to the affair, he is convinced that Mazal did not commit suicide.

“The interrogators told me, ‘Do not listen to what they say outside, we’re still investigating,'” the husband told News 2.

“I received a telephone call from the Dan Region police in the morning and I was accompanied by my attorney Shishi Gas,” added Hadadi.”They asked me for her Facebook password and asked me a few questions, among other things, they wanted to know about certain phone numbers. When it was people I knew I told them who they were talking about.”

“With people I didn’t recognize I said I didn’t know. Some were her friends, some I did not recognize. They showed me boxes containing the investigation materials. And they told me to be patient,” he said.

The police have repeatedly stated that all the findings of the investigation, including security cameras and media analysis, indicate that Hadadi went up alone to the tenth floor – when no one was on the same floor. Hadadi fell to her death from the office building on the stock exchange in Ramat Gan last week, at the height of the investigation of the company in which she was employed.

“We reject the conclusion that Mazal committed suicide. We received other impressions from the police. They told us that after the shiva they will come with all the findings of the investigation, and we want to be patient until the truth comes out,” the Hadadi family said in response.