Dan Gertler Using Trump-adjacent Lobbyists to Subvert U.S. Foreign Policy?
When the United States places sanctions on a rogue
businessman or corrupt corporation, the expectation is that significant
financial consequences will result. Some targets of those sanctions, however,
are devising tactics to skirt the measures and continue with their dirty business
as usual.
Today, these evasion schemes are both putting global banks
at risk for money laundering and sanctions busting, and endangering the United
States’ most important foreign policy tool: targeted sanctions.
A textbook example is Israeli tycoon Dan Gertler, sanctioned
by the United States for his involvement in grand corruption. An aggressive yet
charming businessman who is said to be the inspiration for the movie
"Blood Diamond," Gertler has claimed that he should get the Nobel
Prize for his supposed investment in
Congo. His record says otherwise.
At age 23, Gertler went to the Democratic Republic of Congo
and reportedly gave then-President Laurent Kabila $20 million in cash – money
that was then used to buy weapons – in exchange for a monopoly on Congo’s
diamond exports. He then, according to U.S. Treasury Department reports,
leveraged a tight-knit relationship with Kabila’s son and Congo’s subsequent
president, Joseph Kabila, to make “hundreds of millions of dollars’ worth of
opaque and corrupt mining and oil deals in the Democratic Republic of the
Congo.”
Many of these deals involved asset flipping, with Gertler
opaquely obtaining natural resource concessions for undervalued prices and then
selling them for enormous profits with minimal or no investment. In one
instance, he reportedly bought a mine for $60 million and then flipped it for
$680 million; in another, he was said to have made a 29,900 percent profit on
an insider oil deal.
In 2013, after 15 years of diamond, cobalt, and oil deals in
Congo, Gertler made Forbes’ list of the world’s top 25 youngest billionaires.
He has boasted that, "At the end of the day, yes, I’m looking to create a
lot of wealth." Meanwhile, the source of that wealth, a nation with vast
natural resources, has been shattered by systematic looting. Seventy-seven
percent of Congo’s population still lives under the poverty line, and nearly half
its children under age 5 are malnourished.
When the U.S. Treasury Department first issued the executive
order implementing the Global Magnitsky sanctions program two years ago,
Gertler was one of the first people targeted, along with 19 of his companies
and one of his trusted associates. This powerful law allows the United States
to sanction individuals and companies anywhere in the world that are involved
in corruption or human rights violations.
With Global Magnitsky and modernized sanctions targeting
entire corrupt business networks, the United States is deploying proven
techniques once reserved for countering terrorism and nuclear proliferation to
support human rights and good governance, an historic step forward for
international justice.
Gertler, however, is now actively attempting to dodge those
sanctions in a series of power plays that allow him to continue to loot Congo
of its natural treasures. He has set up new companies after being sanctioned,
according to Congolese corporate records reviewed by The Sentry. These allow
him to continue to be paid tens of millions of dollars in royalties by mining
giant Glencore, this time in euros as a tactic to evade the legal jurisdiction
of U.S. dollar transactions.
Gertler has also cut post-sanctions deals to have his
companies’ oil permits extended by the Congolese government despite allegedly
not following DRC investment rules. If the government sells the oil blocks,
this would net Gertler another post-sanctions $150 million, according to two
people familiar with the negotiations.
In 2018, the U.S. followed its original action with
sanctions against 14 additional Gertler-affiliated companies and a Justice Department
subpoena to Glencore that, according to sources familiar with the matter,
requested information about Gertler’s activities.
Gertler recently upped the ante by hiring former FBI
Director Louis Freeh and President Trump's legal advisor, attorney Alan
Dershowitz to lobby on his behalf. Their high profiles suggest that the
sanctions are having some effect even as Gertler attempts to poke holes in the
net of accountability. But unless the U.S. closes those gaps by sanctioning
Gertler’s new companies and enforcing the existing penalties, he and his
cronies will seriously undermine U.S. anti-corruption efforts.
When Iran attempted to develop methods for evading sanctions
in the late 2000s and early 2010s, the U.S. responded with a mix of strong
diplomacy and secondary sanctions that essentially presented foreign
governments and banks with a clear choice: Either do business with the
sanctions target, or with the United States. The U.S. government should do the
same with Gertler and others sanctioned for major corruption and human rights
abuses.
How Gertler’s efforts play out will have significant
implications for U.S. foreign policy and, more broadly, for international
justice. At risk is the efficacy of targeted network sanctions and global
anti-money laundering approaches, two of the most important policy tools the
United States has in creating leverage for change.
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