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Glencore, Gertler and the Congo

Company and/or individual involved: Glencore International AG (Switzerland) and one unknown natural person 

Charges: Bribery of foreign public officials (Article 322septies of the Swiss Criminal Code (SCC)) against the natural person, in combination with lack of organization (Article 102 SCC) against Glencore  

Swiss lawyers:  Peter Burckhardt & Nina Lumengo Paka, Schellenberg Wittmer, Zürich

Country affected: Democratic Republic of Congo

Proceedings: Switzerland (Office of the Attorney General of Switzerland (OAG)) and the Netherlands (Dutch Public Prosecution Service, DPPO) 

Procedure status: 

  • OAG: CHF 2 million fine and USD 150 million compensation claim
  • DPPO: closure following resolution of Swiss proceedings

Asset recovery: N/A  

The case 

This case is symbolic of the the resource curse. Metals, oil, forests, water resources: the Democratic Republic of Congo (DRC) has it all. But with three-quarters of its 100 million-strong population living on less than two dollars a day, the country is notorious for its public contracts, which are most often obtained through the payment of juicy commission fees to high-ranking officials. This was enough to tempt Glencore, which had its eye on the DRC’s copper and cobalt mines. 

In 2007, the group, then led by Ivan Glasenberg, didn’t think twice about the risks it would be taking by joining forces with Israeli businessman, Dan Gertler. Gertler, a diamond dealer, was well known for being able to open the country’s doors to foreign investors, exploiting his close ties with then-President Joseph Kabila. It was Dan Gertler who enabled Glencore to operate the Mutanda, Kansuki and Kamoto (controlled by Katanga Mining) mines, located in what was then the province of Katanga (south-east of the DRC), worth several billion dollars. 

Five years after the initial revelations disclosed by the NGO Global Witness, shedding light on dubious transactions surrounding the Mutanda mining complex, the Paradise Papers rekindled the affair. The data leaked in 2017 from a law firm specialising in setting up offshore companies revealed new details about Glencore’s contracts, suggesting embezzlement of funds during the acquisition of the mines. In particular, in early 2009, the multinational granted one of Gertler’s companies a USD 45 million loan, conditional upon the successful outcome of negotiations with the Congolese authorities to keep operating Katanga Mining. Thanks to this intervention, Glencore was granted an astounding reduction in the signing bonus, which is calculated on the basis of available metal reserves(a “door opener”), which dropped from USD 585 million to USD 140 million. From the DRC’s perspective, nothing seemed to justify this rebate – a “total loss”, equivalent to the country’s education budget at the time.

On 19 December 2017, Public Eye filed a criminal complaint with the Office of the Attorney General of Switzerland as a means of verifying whether Glencore had failed as a company to prevent illegal practices in line with its duty of due diligence. Then the Israeli billionaire Gertler was placed under sanctions on 21 December 2017 by the U.S. Department of the Treasury. In Switzerland, criminal proceedings for suspicion of bribery of foreign public officials were first instituted against an unknown person, then against Glencore by name in June 2020. 

On August 5, 2024, the Swiss courts finally sentenced Glencore to a fine of CHF 2 million and a compensatory payment of CHF 150 million for “lack of organization” in connection with bribes paid by a “business partner”. The investigation revealed that some $26 million had been paid to Dan Gertler via Swiss bank accounts. Of this sum, 10 million dollars were paid in cash to a Congolese official, close to the president of the DRC at the time.

In a press release, the multinational stated that it rejected the conclusions of the MPC's investigation, but waived its right to appeal “in the interests of resolving this case”. It has to be said that the Swiss courts were unable to prove that Glencore or its employees had any knowledge of the bribes paid to the Kabila clan. Thus, the verdict relates only to the acquisition, in 2011 and via bribes paid by Dan Gertler, of minority shares in the Mutanda and Kansuki mining operations (merged in 2013) “for an amount below their value”. And not to the renegotiation of the Katanga Mining agreement, which had also represented a gigantic loss of earnings for the Congolese state. 

A Dutch criminal case involving the same facts was dismissed following the resolution of the Swiss case. With the Swiss verdict, all criminal proceedings against Glencore are closed. Further good news for the multinational: in the United States, the Government is considering lifting the sanctions against Dan Gertler. 

Documents related to this affair

Timeline 

Date 

Event 

Source

2007 Glencore joins forces with Dan Gertler to obtain shares in two cobalt and copper mines located in the province then called Katanga. Public Eye
9th May 2012 At Glencore’s first general meeting, Global Witness publishes a report condemning the risks of corruption surrounding its campaign in the Democratic Republic of Congo (DRC). Global Witness
5th November 2017The Paradise Papers bring to light new aspects of this affair. International Consortium of Investigative Journalists
19th December 2017 Public Eye files a criminal complaint with the Office of the Attorney General of Switzerland (OAG). Two days later, Dan Gertler is placed on the U.S. Treasury’s sanctions list. Public Eye
26th January 2018 Press reports reveal, based on a decision of the Federal Criminal Court, that the United States had requested legal assistance from Switzerland in relation to Dan Gertler as early as 2016, probably even earlier. Tribune de Genève
May 2019 The OAG opens an investigation “against an unknown person” on suspicion of bribery of foreign public officials relating to commodities. Le Courrier
22nd May 2019 Public Eye passes an additional document to the OAG. This is a service agreement concluded in 2013 between a subsidiary of Glencore International AG and a company run by a confidant of Dan Gertler. The document confirms that the subsidiary paid USD 6 million a year to maintain good relations with the upper echelons of Congolese power, up to and including the presidential circles. Public Eye
19th June 2020 Glencore confirms that criminal proceedings have been opened against the group by the OAG for “lack of organization” in connection with an alleged corruption case in the DRC. RTS
24th May 2022 The U.S. Department of Justice announces that Glencore will pay more than USD 1.1 billion for channeling the equivalent of USD 100 million over a decade to intermediaries so that they could offer bribes to officials in Nigeria, Cameroon, Côte d'Ivoire, Equatorial Guinea, Brazil, Venezuela and the DRC. 

Glencore also admits to “commodity price manipulation,” undermining participants’ “faith in the commodities markets’ fair and efficient function”, according to the U.S. Department of Justice. The facts relate to August 2019. 		Glencore
3rd November 2022 The British Serious Fraud Office (SFO) imposes a fine on Glencore of GBP 276 million and its Brazilian counterpart imposed a fine of nearly USD 40 million.Serious Fraud Office
15th May 2023Glencore reaches an agreement with Swiss justice authorities in relation to oil price manipulation through the payment of USD 29 million to the Confederation in order to benefit from a reduction in its fine in the United States. Public Eye
5th August 2024The Swiss Federal Prosecutor's Office sentences Glencore to a fine of CHF 2 million and a compensation claim of USD 150 million. Following this resolution, the Dutch proceedings are closed. The Swiss proceedings were opened in May 2019 following a criminal complaint filed by Public Eye.Office of the Attorney General of Switzerland

Legislative loopholes

  • Concealing responsibility by using intermediaries to pay bribes
  • Systematic corruption seen as a lack of organization
  • Lack of cooperation with the local justice authority. Difficult for the case to advance in the Swiss justice system;
  • Fines that are too low (CHF 5 million maximum) and therefore fail as a deterrent for groups making billions in profits;
  • Compensation claim paid to the Swiss justice system and not to the victims of corruption
  • No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders