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Paradise Papers documents raise questions over African mining deal

From BBC - November 6, 2017

One of the world's largest firms loaned a businessman previously accused of corruption $45m and asked him to negotiate mining rights in a poor central African nation, the Paradise Papers reveal.

Anglo-Swiss company Glencore made the loan available to Israeli billionaire Dan Gertler, a notorious middle man with a close relationship with senior figures in the DR Congo government, in 2009.

Mr Gertler was asked to negotiate a new deal for a mining company in which Glencore had a significant stake, which campaigners say cost DR Congo hundreds of millions of dollars.

He and Glencore deny any wrongdoing.

Glencore agreed to pay Dan Gertler $534m (407m) to buy him out of their shared mining interests in DR Congo in February this year.

The new details came to light in the Paradise Papers, a leak of more than 13.4 million documents, many from within Appleby, one of the world's leading offshore law firms.

The central African country of DR Congo has been mired in violence and corruption for decades, leaving more than half of its population living below the poverty line.

But the country's vast mineral resources are worth hundreds of millions of dollars a year for those that can access them.

This includes Glencore, a huge Anglo-Swiss mining and commodity trading company.

By some measures it is the 16th largest company on the planet.

For many years Glencore has been involved in mining in DR Congo, in particular the production of copper.

The company says it has invested $50bn there. Ten years ago it had an 8.52% stake in a company called Katanga which had the rights to mine copper in the south of the country.

In June 2008 Katanga's board, which contained a senior Glencore figure, received some bad news.

The DRC government under President Joseph Kabila wanted to renegotiate the terms of its mining licences. Glencore had already invested $150m in Katanga but this could have been wasted if it was unable to mine.

The state-owned mining company Gcamines wanted $585m (409m) in an "access premium" to allow the exploitation of copper and cobalt at the mine.

The previous agreement had been for $135m (94.5m).

Documents contained within the Paradise Papers show Katanga's board felt the demands of the DRC authorities were "quite unacceptable". For the first time, it is possible to see that the directors decided to call for the help of an Israeli businessman called Dan Gertler.

Source document: Katanga board minutes - June 2008

"Dan Gertler, who had a substantial indirect interest in the company, should be given a mandate from the board to negotiate with the DRC authorities," Katanga's board minutes from June 2008 show.

"The board... should approach Mr Gertler to see whether he was prepared to act in this way."

Mr Gertler was asked to negotiate an agreement on Katanga's behalf.

At around the same time, Glencore agreed to lend a company in the British Virgin Islands called Lora Enterprise $45m (31.5m).

Lora Enterprises was controlled by Mr Gertler's family.

Source document

Source document

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