Glencore PLC forwarded nearly US$1 billion in loans and advances to help fund U.S.-sanctioned businessman Dan Gertler's investments in the Democratic Republic of the Congo, where he is accused of corruption, The Wall Street Journal reported Jan. 14, citing the Paradise Papers.
According to the documents obtained by the news outlet, the loans were made over an approximately 10-year period. The amount, which was more than previously reported and later confirmed by the Swiss trader, showed the financial ties between Glencore and Gertler during their decade-long partnership in the DRC.
In December 2018, Katanga Mining Ltd. agreed to pay C$30 million to settle a Canadian probe into the company's dealings in the African country. The probe sought to find whether Katanga violated a securities regulation that calls for companies to disclose when they are doing business with their investors, which is described as a related-party transaction, in its US$100 million payment to a Gertler-related entity.
Documents cited by the WSJ showed, in 2011, an entity controlled by Gertler owed US$300 million to Limajo International Inc., a Bermuda affiliate of Glencore. The debt owed to Limajo rose to US$510 million by the end of 2014.
Ties between Glencore and Gertler began in the mid-2000s, when both parties invested in London-listed Nikanor PLC, which held copper projects in the DRC. The documents revealed that the Swiss trader lent approximately US$250 million to a Gertler-controlled company, which then used the funds to acquire a stake in Nikanor.
Gertler then used about US$61 million in Glencore funds to purchase shares in Katanga Mining after it merged with Nikanor. Glencore invested alongside Gertler in Katanga and eventually took control of the DRC copper miner.
The documents showed a total of nearly US$900 million in loans and advances to Gertler-linked entities were provided, with a portion of the amount possibly including accrued interest on some of the loans.
In December 2017, the U.S. Treasury Department slapped sanctions on Gertler, accusing the Israeli businessman of taking advantage of his relationship with DRC President Joseph Kabila to profit from "opaque and corrupt" deals on behalf of international companies seeking to do business in the country.
Subsequently, Glencore's Glencore Ltd. subsidiary, in July 2018, received a subpoena from the U.S. Department of Justice to produce documents over its business dealings in Nigeria, the DRC and Venezuela, starting in 2007 to the present.
Analysts cited by the WSJ said increasing concerns over Glencore's dealings in the DRC battered its share prices.