Press release | June 15, 2018

Glencore must not pay millions to sanctioned individual

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Corruption & money laundering Oil, Gas & Mining
D.R. Congo

Glencore to resume paying royalties to “corrupt” businessman Dan Gertler despite US sanctions

Glencore today announced it will resume paying royalties to notorious Israeli businessman Dan Gertler, despite the US Treasury designating him a sanctioned individual at the end of 2017. Unless the US responds by enforcing its sanctions, Glencore’s decision will show that big business can ignore even a US executive order and suffer no consequences.

“Global Witness has consistently warned about the risks of partnering with Dan Gertler, but for years Glencore defended that partnership. Getting around sanctions and paying Gertler millions for years on end is not an acceptable solution to this dispute. US authorities must hold Glencore accountable when those payments to Gertler resume,” said Campaign Leader Peter Jones.

The sanctions, imposed in response to Gertler’s “corrupt mining and oil deals”, prohibit US companies or individuals from doing business with him or companies majority owned by him. Companies outside the US that do business with Gertler also risk being fined or even sanctioned.

Gertler, a close friend of Democratic Republic of Congo’s President Joseph Kabila, owns the rights to contractual payments from two Glencore-owned mines in Congo. Those rights are worth tens of millions of dollars per year, but payments were temporarily halted following the sanctions. Glencore now plans to pay Gertler in euros, rather than US dollars.

“The payment of tens of millions of euros to Gertler’s company is a brash test of the resolve of US authorities to uphold their sanctions. Glencore is trying to carry on business as usual by getting around the anti-corruption measures of the world’s biggest economy. If Glencore gets away with these payments it sends a dangerous message that huge companies can act with impunity to protect their business interests,” notes Jones.

“It is time for the relevant authorities to investigate Glencore’s deals with Gertler in Congo. Glencore’s resumption of royalty payments, despite US sanctions, shows the impunity with which some major companies are able to operate. This could send a dangerous message that big business is potentially above the obligation to respect sanction regimes,” he adds.

The news comes at a time of significant political instability in Congo. Elections due to be held in November 2016 have been repeatedly delayed, sparking widespread protest at the prospect of President Kabila ignoring the constitution and standing for a third term. Congo’s political crisis is likely to worsen as it approaches the new December 2018 deadline for elections. Glencore’s decision to resume royalty payments means that it is now enriching an individual close to the president; a fact highlighted by the US Treasury, which said that Gertler had “acted for or on behalf of Kabila”.

Both Gertler and Glencore have consistently denied any wrongdoing in their business deals in Congo.

/ ENDS

Contacts

Notes to editor:

  • Glencore and Dan Gertler were partners in mining ventures in Democratic Republic of Congo for a decade, until Glencore bought out Gertler in a billion-dollar deal in February 2017.
  • Gertler owns rights to royalty payments from the Mutanda mining project. In November 2015, Global Witness revealed that he had secretly acquired the rights to royalty payments from Glencore’s other mining outfit, KCC.
  • Gertler was sanctioned in December 2017 under the global Magnitsky Act for making a fortune out of “opaque and corrupt mining deals in the Democratic Republic of Congo”. The US treasury also said he used his close friendship with Joseph Kabila to “act as a middleman for mining asset sales in the DRC, requiring some multinational companies to go through [him] to do business with the Congolese state”.
  • As a result of the sanctions, Gertler is now unable to visit the U.S., to access his assets held within U.S. jurisdiction, or to engage in transactions (exchange of money, goods or services) with any U.S. entity. Any company owned 50 percent or more by him or his companies is automatically sanctioned — whether or not it is on the list. U.S. authorities can also choose to sanction a company owned less than 50 percent by Gertler, if they determine that he exerts control. Any individual or company, even outside the U.S., that does business with Gertler risks being fined or even sanctioned by the U.S. Office of Foreign Assets Control (OFAC). In extreme cases they may become the subject of a criminal investigation by the U.S. Department of Justice, not to mention the reputational risk of doing business with a sanctioned individual.
  • Global Witness has reported on Glencore’s deals with Gertler since 2011, calling into question how the commodities trader has enriched Gertler and protected his interests in mining deals.
  • In September 2016 the US hedge fund Och-Ziff admitted to its role in a bribery conspiracy in Africa and entered into a deferred prosecution agreement with the Department of Justice. Och-Ziff’s partner in Congo was described by US authorities as an “infamous Israeli businessman” and has been widely understood to be Gertler. US authorities’ evidence showed that Och-Ziff’s partner paid substantial bribes to Congolese officials as he sought access to mining rights. Gertler has not been charged in the case and the Wall Street Journal reported that Gertler’s spokesman has denied the allegations.

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