Glencore’s secret loan for Israeli billionaire to secure Congo mining rights revealed

A trove of more than 13 million documents from the world’s leading offshore law firms, including Appleby, was released through the International Consortium for Investigative Journalists (ICIJ) on Sunday. The documents lay bare the secretive multi-jurisdictional dealings of Glencore, a scandal-plagued, Anglo-Swiss multinational with mining interests across the globe.

As a friend of the Congolese President Joseph Kabila, Israeli billionaire Dan Gertler’s role has been questioned by anti-corruption campaigners since Glencore floated in London in 2011. His notoriety in the resource-rich but conflict-riven and corrupt DRC spans nearly two decades.

Gertler was cited by a 2001 UN investigation, which said that he had given Kabila $20 million to buy weapons to equip his army against rebel groups in exchange for a monopoly on the country’s diamonds. A 2013 Africa Progress Panel report said a string of mining deals struck by companies linked to him had deprived the country of more than $1.3 billion in potential revenue. Last year, he was implicated in a scheme to bribe Congolese officials on behalf of US hedge fund manager Och-Ziff Capital Management, according to Bloomberg.

According to the Guardian, the Paradise Papers confirm that several times during 2008 and 2009, Gertler was called in to negotiate with DRC authorities over the struggling Katanga copper mine in the southeast of the country, which was hampered by stalled talks to secure a joint-venture agreement with DRC’s state-run miner Gecamines.

In 2009, Glencore, through a loan offer, took effective control of Katanga, but also kept Gertler’s interest in the firm by secretly loaning his company Lora Enterprises $45 million in pledged shares for him to take part in the loan. The loan was granted with the caveat that it would be repayable in the event that an agreement was not made with DRC authorities to secure a contract for a company linked to the firm.

While the details of the loan have been previously reported, the new documents show that Gertler was required to secure certain approvals from the government in return, according to the Guardian.

Daniel Balint-Kurti of the Global Witness campaign group told The Times: “Glencore must explain to the world why it used a secret offshore company to pump millions of dollars to a controversial friend of the Congolese president linked to bribery scandals.”

In a written statement, lawyers for Gertler told the Guardian that neither he nor any company or person related to him received any loan funds directly, and any allegation that the $45 million loan was improper “demonstrates misapprehension of international finance transactions.”

“Mr Dan Gertler is a respectable businessman who contributes the vast majority of his wealth and time to the needy and to different communities, amounting to huge sums of money. He transacts business fairly and honestly, and strictly according to the law,” the statement said.

Gertler’s lawyers said there was no basis for the allegation that Katanga received “preferential terms” in its agreement with the DRC as a result of his involvement.

Glencore has dismissed any allegations of impropriety concerning the loan. The loan was made on commercial terms and “negotiated at arm’s length,” it told Bloomberg.