Biden administration officials have reversed course three years after tightening sanctions on a billionaire Israeli mining executive over corrupt business practices in the Democratic Republic of Congo and offering the executive a deal they hope will bolster supplies of the metal vital to electric vehicles. I’m doing it.
The plan would allow Chairman Dan Gertler to sell his remaining stakes in three giant copper and cobalt mining operations in Congo.
If Mr. Gertler sells his position, the Biden administration hopes Western companies will be more willing to invest in Congo, which could provide more cobalt supplies to the United States as automakers race to increase domestic battery production. .
But some State and Treasury officials strongly opposed the effort, saying Mr. Gertler should not be allowed to profit from his dealings. The Biden administration previously claimed the deal cheated Congolese citizens out of more than $1 billion in mining profits. .
Mr. Gertler, the son of one of Israel’s largest diamond dealers, began investing in Congo nearly 30 years ago. He eventually became one of the Central African country’s largest mining license holders and the target of accusations that he enriched himself at the expense of the world’s poorest people.
Mr. Gertler did not respond to a request for comment through his attorney. But he has long disputed corruption charges, with Mr Gertler claiming his Congo investments have provided the country with billions of dollars in taxes and created thousands of jobs.
Biden administration officials pushing the agreement see it as a solution to America’s competitive disadvantage, a problem that could only grow as automakers continue to expand production of electric vehicles. And this is consistent with the government’s policy stance of embracing alternative energy solutions to fossil fuels.
But it also illustrates the compromises world leaders often tolerate when efforts to hold individuals accountable for their actions conflict with the political and economic interests of their countries.
As it stands, China-based mining companies own or hold major stakes in most cobalt production sites in Congo. Congo produced 76% of the world’s metal supply last year. The last major U.S.-owned mining company pulled out of Congo in 2020, just as the electric vehicle revolution was taking off.
Two senior Biden administration officials who were not authorized to go on the record said they believed Western companies would continue to avoid investing in Congo’s mining sector as long as Mr. Gertler remained involved, given ongoing concerns about corruption in the industry. there. They said the proposed deal would give Congo a “clean slate.”
But human rights activists are openly challenging the plan.
“Easing sanctions now seems absurd, giving Gertler a free pass to profit from his ill-gotten gains,” said Anneke Van Woudenberg, executive director of RAID, a nonprofit that monitors mining trade in Congo and other countries. “It is,” he said. She said, “This deal has made Gertler an enriched, hurtful, and unaccountable man with no regard for the people who matter most: the people of the Democratic Republic of the Congo.”
The proposed deal comes as the Biden administration plans tariffs on a variety of Chinese imports, including electric vehicles and advanced batteries, as part of recent protectionist stances from both Republicans and Democrats.
The State Department did not respond to a request for comment, but officials involved in the negotiations and on Capitol Hill confirmed to The New York Times that objections had been raised within the State Department.
According to a senior Biden administration official, Mr. Gertler’s lawyers last week developed a “framework” that would allow him to liquidate his stake in the mainly Swiss-owned Kamoto Copper Company and Mutanda Mining. presented to the lawyers. It is based on Metalkol RTR, which is partly owned by Glencore and the Kazakh government.
Mr Gertler no longer has formal ownership of the Glencore mine. The company acquired him in 2017, but he still receives royalties on copper and cobalt production from the facility. Mr. Gertler’s business currently earns about $110 million a year in royalty payments from Congo, despite being subject to U.S. sanctions that prevent global banks from doing business with him and limits their ability to buy or sell, the Biden administration said. Officials estimated. Business venture.
These three mining operations alone produce nearly 30% of the world’s cobalt supply, which is important for long-range electric vehicles because it helps give batteries the ability to hold more charge. It is also a major global source of copper, a metal that is increasingly in demand as the revolution in artificial intelligence spurs the construction of new data centers filled with copper wiring.
As a condition of allowing the asset sale, Mr Gertler must disclose a detailed statement of his remaining holdings in Congo, which will then be examined by independent auditors. Half of the proceeds from the sale of the asset will be held in escrow pending this review. Any remaining assets Mr. Gertler is trying to hide could be confiscated by the government there.
Mr. Gertler will also have to withdraw. Lawsuits against human rights leaders In Congo, there are those who have been critical of its role in mining there, such as Jean Claude Mputu, spokesman for Congo Is Not for Sale, which opposes the deal.
Ultimately, the plan allowed Mr. Gertler to obtain a “general license” from the United States to broadly reopen international financial markets globally. If he is charged with corruption offenses again, his full sanctions could be reimposed, officials said.
Biden officials acknowledged that the deal was motivated by a desire to strengthen economic ties with Congo and find ways to support the country, which has suffered from a history of corrupt mining deals and child labor abuses in makeshift mines.
The Biden administration has already pledged to fund expansion of the rail network linking Congo and neighboring Zambia with Angola in the South Atlantic. The connection will allow large mines in Congo and Zambia to supply battery manufacturing plants in the United States or its allies more directly.
But so far no major U.S. mining company has publicly announced any plans to reinvest in Congo.
The deal with Mr. Gertler was promoted most aggressively by Amos Hochstein, an adviser to President Biden on energy security issues. Mr. Hochstein has also worked closely with other countries to expand access for Western-oriented companies to Africa’s cobalt and copper mines.
“When we said we were going to go to the moon, no one knew, ‘How are we going to get to the moon?’” Mr. Hochstein said at a mining industry event in January that included discussions with representatives of the Congolese mining industry in Saudi Arabia. He said. “We just said we would do it. And we made it happen. “This is how we should approach the energy transition.”
Two U.S. government officials involved in the negotiations objected to Mr. Hochstein’s role, suggesting he was trying to force others in the government’s foreign policy and human rights departments to do his bidding. However, senior Biden administration officials pointed out that the White House has always played a coordinating role in major sanctions cases.
Questions also came from the Capitol. “The Biden administration has refused to be transparent about the framework for negotiations on this issue or who is leading the policy,” Idaho Republican Sen. Jim Risch said in a statement to the Times. “The important question is what prevents Gertler from returning to the Congo now or under the next administration.”
Mr. Gertler’s dealings with Congo have been a source of tension with Washington for decades, after he forged close ties with former President Laurent Kabila and his son, Joseph Kabila, who became president after his father was murdered.
Mr. Gertler became subject to sanctions in December 2017, the first year of the Trump administration. The Treasury claimed Congo had been defrauded as a result of “opaque and corrupt mining and oil deals” involving the billionaire. The price was discounted due to his ties to the Kabila family.
Mr. Gertler launched a counterattack almost immediately. He hired a legal and lobbying team that included onetime Harvard Law School professor Alan Dershowitz and former FBI Director Louis J. Freeh, and the appeal was led by Trump’s Treasury Secretary Steven T. Mnuchin. was delivered directly to management.
Shortly before President Trump left office, the Treasury Department decided to ease sanctions without public notice after Gertler argued through his lawyers and associates in Israel that allowing sanctions on U.S. officials provided some kind of “national security interest.” I did. He told him to do global deals again.
By March 2021, the Biden administration had reimposed sweeping sanctions, arguing that providing relief to Mr. Gertler was “inconsistent with America’s compelling foreign policy interests in fighting corruption around the world.”
Mr. Gertler continued to fight. This time he brought in Congo’s President Felix Tshisekedi, who wrote a letter to Biden in 2022 urging the United States to lift sanctions.
“If foreign investors perceive sanctions as a dead end for corporate liquidation and cessation of activities, this anxiety will certainly lead to the demise of foreign direct investment in Congo,” Mr. Tshisekedi wrote.
Last year, Mr. Gertler wrote a series of letters to human rights leaders in Congo, Europe and the United States telling them the sanctions were “serious” and that he was prepared to sell off remaining Congolese assets to lift the punishment.
“The essence of sanctions is not simply to punish,” he wrote in one letter. “It is equally expected that for a sanctions regime to work, it must promote positive change.”
Human rights groups said they were not opposed to allowing Mr. Gertler to divest his remaining financial interests in mines and other assets in Congo. But they say they should simply be forced to forfeit them.
“There is extensive documentary evidence of Mr. Gertler’s corrupt activities in Congo,” said a statement released by Congo Is Not for Sale, which was offered to the Biden administration to oppose the proposed deal. The group demanded that Mr. Gertler “no longer benefit financially from illegally acquired assets.”
But Biden administration officials said these expectations are unrealistic. Mr. Gertler is already receiving royalties and may simply not be willing to stop investing.
