Africa

ISS TODAY ANALYSIS

DRC President’s dodgy mining deal with mining magnate likely to be a costly miscalculation

Israeli billionaire Dan Gertler. (Photo: Simon Dawson / Bloomberg via Getty Images)

Questions mount over president Félix Tshisekedi withholding details of the deal to recover assets from the controversial mining magnate.

Many clues about what the enigmatic president Félix Tshisekedi is really about seem hidden in the secret deal his government signed on 24 February with notorious Israeli mining magnate Dan Gertler.

Gertler was former Democratic Republic of the Congo (DRC) president Joseph Kabila’s closest business crony. The memorandum of understanding between Tshisekedi and Gertler would allow the DRC to “recover the disputed mining and oil assets” of Gertler’s company Ventura, worth more than $2-billion, the DRC said. 

“This is a historic first for the country, which is thus reclaiming assets whose sale had been called into question. The Congolese State will therefore revalue these assets for the exclusive benefit of the population,” the DRC Presidency said in Twitter posts

But the failure to publish the details of the deal so far has raised many questions about its merits. The DRC anti-corruption watchdog Le Congo n’est pas à vendre (CNPAV) (Congo is not for sale) is one of many civil society voices demanding that the full agreement be made public. This would allay fears that Tshisekedi hasn’t simply launched “a new cycle of  corruption.”

CNPAV said Gertler still owned several strategic assets including oil blocks 1 and 2 on Lake Albert and gold permits near Kibali. It said the public needed to be reassured these assets would be recovered fully, and others have suggested their purported value needed to be corroborated.

CNPAV also noted that Gertler was still earning “colossal” royalties of over $200,000 a day from the three copper-cobalt mining interests KCC, Mutanda and Metalkol. Government statements showed that only part of KCC’s royalties would be recovered, meaning Gertler still gets huge commissions from Mutanda and Metalkol. They also suggest that Gertler is surrendering some assets in exchange for the state dropping litigation against him. 

The deal seems to favour Gertler over the DRC. As former United States (US) special envoy to the Great Lakes, J Peter Pham tweeted: “Congo should get its resources back, but it shouldn’t … give a penny to Gertler … the victim of a crime shouldn’t be required to pay … to get back what was his from the start.”

Pham remains actively engaged in the DRC and during his regular visits to Kinshasa, meets with senior officials, including Tshisekedi. “It should be recalled that Mr. #Gertler remains sanctioned by the #USA and any financial or commercial settlement with this targeted person which violates the #OFAC restrictions imposed by the @USTreasury will not advance our privileged partnership with the #DRC,” he said.

This was a helpful reminder that in December 2017 and June 2018, the US Treasury slapped financial sanctions on Gertler under its Global Magnitsky Act. It said he had “amassed his fortune through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals in the Democratic Republic of the Congo.”

The US Treasury noted that Gertler had used his friendship with Kabila to act as a middleman for mining asset sales in the DRC. The country had reportedly lost over $1.36-billion in revenues from the under-pricing of assets that were sold to offshore companies linked to Gertler. 

Diplomatic sources believe Gertler was motivated to sign the 24 February agreement by an impending plea deal that commodity giant Glencore is about to strike with the US over corruption charges related to its business in the DRC. Glencore has reportedly set aside some $1.5-billion to settle. 

Glencore operates KCC and Mutanda and is paying a large part of the royalties Gertler still earns. And the diplomatic sources told ISS Today that the Mutanda deal between Gertler and Glencore was part of the US corruption investigation of Glencore.

The sources suggest Gertler may have sought the agreement with the DRC to pre-empt or mitigate US legal action. They noted that the claims against him so far under the Magnitsky Act were only civil. Any charges in the Glencore matter could be criminal.

But if Gertler’s motives are easy to understand, it’s by no means clear what motivated Tshisekedi. Was it just about getting his hands on some of Gertler’s loot — perhaps to help finance a difficult re-election campaign next year — as some political commentators have suggested? Yet the substantial domestic fallout has damaged his reputation and could impair his re-election chances. 

Furthermore, the agreement has infuriated Washington. The US Treasury’s Under-Secretary for Terrorism and Financial Intelligence, Brian Nelson, travelled to Kinshasa last month to express the US government’s displeasure at a deal that undermines its Magnitsky Act sanctions against Gertler. The Biden administration also reimposed the sanctions on Gertler, after a reprieve from the Trump administration in its dying days. 

The more charitable interpretation from Washington is that Tshisekedi didn’t pay enough attention to the deal or foresee its implications for his ties with the US. This ought to be an important relationship since Washington has helped him in his power struggle with Kabila. In this view, Tshisekedi’s lieutenants concocted the agreement in their own interests and the president approved it without scrutiny. As a result, these sources suggest the deal won’t go through. 

The less charitable view is that Tshisekedi is quietly perpetuating the DRC’s cycle of corruption as CNPAV suspects. He promised to stamp out graft but has done nothing legal and visible, for instance, about the many revelations around Kabila and his cronies, revealed in the Congo Hold-up leak last November. That would suggest some secret quid pro quo with his predecessor — perhaps the same variety as the deal with Gertler. 

Time will hopefully tell, though it would be helpful to the Congolese if Tshisekedi published the memorandum of understanding with Gertler to give some sense of his stand on corruption. DM

Peter Fabricius, Consultant, Institute for Security Studies (ISS) Pretoria.

First published by ISS Today.

 

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