Glencore buys out Dan Gertler, Israeli businessman accused of bribing DRC’s President Joseph Kabila

It’s hard to imagine a more fitting embodiment of the sad story of economic vandalism in the DRC than the friendship between Israeli businessman Dan Gertler and President Joseph Kabila. Regular readers know that Gertler’s pillage of the DRC is a pet topic on this blog – see here, here, here and here, for example.

Now FT’s  has yet another story on how mining giant Glencore has been forced to buy out Gertler over accusations of bribery:

After years of doing business together in one of the world’s poorest countries, Glencore has dissociated itself from Dan Gertler, an Israeli mining tycoon implicated in the payment of bribes to the ruler of the Democratic Republic of Congo.

Glencore’s announcement last month that it would pay $534m to Mr Gertler to buy him out from their shared prize assets in the DRC — two giant copper mines — is designed to insulate the London-listed mining cum trading behemoth from the fallout of a widening corruption investigation involving the Israeli businessman, say people who have followed the saga. The decision by Ivan Glasenberg, Glencore’s chief executive, highlights the risks of doing business in the resource-rich, war-torn central African country, where Mr Gertler wields influence by virtue of his close friendship with Joseph Kabila, the DRC president.

Settlement documents released in September by US authorities in a scandal involving Och-Ziff, the New York hedge fund, alleged that an “Israeli businessman” — whose description clearly matches Mr Gertler — had paid bribes to Mr Kabila in order to obtain special access to mining rights in the DRC.

One banker who does dealmaking in the mining sector and owns Glencore shares says the company’s purchase of Mr Gertler’s stakes in the two DRC copper mines is defensive. “Buying out Gertler is primarily about detoxification for Glencore,” he adds. “The Och-Ziff investigation in the US has made it very risky to have clear ties to him.”

More on this here. Definitely worth a quick read.

President Joseph Kabila was paid $7m in bribes. Dan Gertler’s buyout is worth $534m in cash, paid by Glencore.

The dangers of simplistic single narratives

As Stearns argues in this excellent book, the causes of the conflicts in eastern DRC are multiple and complex. Yet simple narratives in the media and among aid workers and advocacy groups have tried hard to reduce these causes to a fight over minerals; and similarly the consequences as mass rape of women and young girls (remember the video cameras fiasco??). In reality the story is more complex than this.

Here is a quote from a good paper on the international community’s responses to the Congo (DRC) conflicts by Severine Autesserre in the latest edition of African Affairs:

“These narratives focus on a primary cause of violence, illegal exploitation of mineral resources; a main consequence, sexual abuse of women and girls; and a central solution, extending state authority. I elucidate why simple narratives are necessary for policy makers, journalists, advocacy groups, and practitioners on the ground, especially those involved in the Congo. I then consider each narrative in turn and explain how they achieved prominence: they provided straightforward explanations for the violence, suggested feasible solutions to it, and resonated with foreign audiences. I demonstrate that the focus on these narratives and on the solutions they recommended has led to results that clash with their intended purposes, notably an increase in human rights violations.

The international actors’ concentration on trafficking of mineral resources as a source of violence has led them to overlook the myriad other causes, such as land conflict, poverty, corruption, local political and social antagonisms, and hostile relationships between state officials, including security forces, and the general population. Interveners have singled out for support one category of victims, sexually injured women and girls, at the expense of others, notably those tortured in a non-sexual manner, child soldiers, and the families of those killed.”

The paper is a grim reminder that “fixing the Congo”  – whatever that means – will take a long time. More on this here.

Mining and Voting in the Congo

Elections in the DRC have come to be marked by a fire sale of state assets. A recent report by the UK parliament estimates that the government may have lost up to $5.5 b due to undervaluation of these state assets before sale.

No prizes for guessing where part of the difference in these sales go.

The whole situation is pretty stinky:

The IMF has asked the government to clarify several obscure contracts signed by Gécamines, which suggests that state assets have been sold for absurdly low prices…….. This would put the loss to the state at $870 mn.

The Chief Executive of Gécamines, Albert Yuma Mulimbi, has refused all requests, from the Mines Ministry to the IMF and others, to publish the controversial contracts, claiming that as a private company it is not obliged to, even though the state owns all its shares. The government has instructed Yuma, we understand, not to provide the information.

More on this here and here.

from the annals of history

One insurgent movement within the country lingers from the 1964-65 wave of rebellions. Localized in the Fizi-Baraka area by Lake Tanganyika, this group – known in recent years as the Parti de la Revolution (PRP) – achieved notoriety in 1975 by kidnapping four Stanford students from a zoological research station in Tanzania. Its composition is ethnically restricted to Bembe, though its leader, Laurent Kabila, is a Shaba Luba. The movement now has only a few hundred followers, and has no possibility of enlarging its base of operations.

That was Crawford Young writing in Foreign Affairs in 1978.

In 1997 Laurent Kabila, backed by Rwanda, Burundi, and Uganda, was in charge of a much stronger force and marched from the east of the DRC (then Zaire) into Kinshasa. After the overthrow of Mobutu Laurent Kabila was sworn in as president, only to be assassinated in 2002 and succeeded by his adopted son, Joseph Kabila. The younger Kabila continues to face a simmering insurgency in the east of the country.

Karl Marx once noted that history repeats itself, the first time as tragedy, the second time as farce. President Kabila’s continued ineptitude may be watering the seeds of his own ouster by rebels from the east in a farcical repeat of history.

kagame on the ropes

I respect all that Paul Kagame has done for Rwanda. Under his leadership the country appears to have survived the 1994 catastrophe, emerging as the least corrupt and one of the fastest growing economies in the region. But like most autocrats, Mr. Kagame has had his dark side. A damning UN report apparently documents atrocities committed by Rwandan troops in eastern Congo. The just concluded general election in the mountainous central African nation has also exposed the former rebel’s anti-democratic tendencies and intolerance of any form of opposition. It is slowly emerging that not even the much praised and disciplined Mr. Kagame is immune to the most common disease afflicting most autocrats: believing that they are God’s gift to their people and therefore have the right to do whatever they want with their power.

I have not read the entire UN report but for more on it check out Texas in Africa.

The DRC is 50 today

The Democratic Republic of Congo is 50 years old. The last 50 years (after they killed Lumumba) have been absolutely disastrous for this vast country in the middle of the Continent; Independence merely replaced the brutality, cruelty and pillage of King Leopold’s men (King Albert II attended the independence day “festivities”) with the brutality and kleptocracy of Mobutu. All I can say is that I hope the future holds a less punishing existence for the country’s 63 million plus.

Congratulations to Congolese people the world over for their enduring spirit. Kofi Olomide, the prolific Congolese soukous musician, sums it up in a quote from Samba: “This is hell’s system. The fire is raging but we don’t get burned.”

The other Continental disaster, Somalia, also turned 50 on Wednesday. No cause for celebration there either.