SA doctors stall Glencore’s mega settlement over alleged DRC ‘bribe’ by Gertler associate

23 Nov 2022

Two South African doctors are fighting to piggyback on the commodity trading behemoth’s $1.1bn corruption settlement with American authorities, claiming R860m related to a bizarre saga in which Glencore admits paying to bribe a judge in the Democratic Republic of Congo. They allege the payment was orchestrated by the right-hand man of sanctioned billionaire Dan Gertler.

In 2010, a powerful fixer in the Democratic Republic of Congo (DRC) allegedly organised a $500,000 bribe for a local judge to make a $16-million lawsuit against Glencore subsidiary Katanga Copper Company (KCC) go away.

We know about this because as part of its $1.1-billion corruption and price manipulation settlement with American authorities, Glencore admitted involvement in the alleged bribery scheme.

Although the identity of the fixer is obscured in US court papers – he is dubbed “DRC Agent” – recent court filings by two South African doctors identify him as an “in-country manager” who allegedly operated on behalf of a person dubbed the “DRC Partner” and “facilitated the payment of bribes to further the DRC Partner’s interests”.

Other filings suggest that “DRC Partner” matches the description of Dan Gertler and “DRC Agent” (the alleged fixer) matches the description of Pieter Deboutte, the long-serving head of Gertler’s operations in Congo.

amaBhungane could not independently confirm this – and Glencore’s admissions also do not directly implicate Gertler.

Gertler’s Israeli lawyer, Boaz Ben Zur, said his client “did not know and was not involved in the actions alleged” and neither was anyone else on his behalf.

“Mr Gertler had no interest, whatsoever, in such actions and in any case did not send nor bring Mr Pieter De Boot [sic], mentioned in your letter, into play.”

He emphasised that neither Gertler nor anyone on his behalf was a party to the proceedings filed by the South African doctors against Glencore, and was not familiar with any of the South African protagonists mentioned.

Attempts to reach Deboutte were unsuccessful.

Both Gertler and Deboutte – and 19 companies associated with them – were sanctioned by the US in December 2017 for what the US Treasury’s Office of Foreign Assets Control (Ofac) termed “hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals” in DRC.

The move in effect locked them out of trades involving any US dollar accounts, and US individuals and companies were also prohibited from doing business with them.

Gertler was, until 2017, a co-owner of Glencore’s DRC mines and was known for his close relationship with former DRC president Joseph Kabila.

According to Ofac, Gertler used his friendship with Kabila “to act as a middleman for mining asset sales in the DRC, requiring some multinational companies to go through Gertler to do business with the Congolese state”.

Glencore admits in court that it played such a dirty game, though Gertler and his associate have made no such admission and indeed Gertler denies any involvement.

Now two South African doctors who have put up evidence in the US courts alleging they got caught in the Glencore-Gertler web want Glencore to pay.

Quashed case

The 2010 DRC court case, which Glencore’s fixer allegedly got quashed, had been brought by a company called Crusader Health, owned by South Africa doctor-couple Ian and Laurethé Hagen.

In 2010, the Hagens were seeking damages in a DRC court after Glencore abruptly cancelled their company’s contract to build and operate hospitals at copper mines in the DRC. The cancellation of the Crusader Health contract allegedly followed the Hagens’ raising alarms about a new medical manager imposed by Glencore.

They raised questions about whether the new manager, fellow South African André Hattingh, was properly medically qualified and claimed his influence stemmed from his being “closely connected to and sponsored by” Glencore and its DRC agent.

The Hagens’ contract pre-dated Glencore and Gertler taking control of the mines in question, while Hattingh had already set up a hospital for Glencore at another mine. The Hagens’ objections to their new medical manager were allegedly met with a mystifyingly aggressive pushback, culminating in their company getting the boot – and then the launch of their ill-fated claim for damages.

Gertler’s lawyer told amaBhungane: “Mr Gertler or anyone on his behalf was not party to the proceedings filed by the Hagen family against Glencore. As stated, neither Mr Gertler nor anyone on his behalf was involved in the matter of the construction of the hospital mentioned in your letter, and neither Mr Gertler nor anyone on his behalf is familiar with the Hagen family or Mr Hattingh.”

When amaBhungane spoke to Hattingh, he partly contradicted this, confirming he knew Gertler, but was not aware of what he called “the politics” of the termination of the Hagens’ contract and the subsequent fallout.

The Gertler Family Foundation on its website mentions that it “hired renowned South African medical doctor, Dr Andre Hattingh, to manage all aspects of the [Kisingani] hospital”, which it describes as a “signature” project.

Glencore’s version

In Glencore’s court filing setting out the corrupt activities it is settling for, the company explained how the DRC judge was paid off via the “DRC Agent”.

The agent emailed a Glencore executive on 3 November 2010 saying that he had talked to an unnamed “DRC official”, and he and this official would be meeting the judge in the Crusader matter to iron things out.

The agent allegedly wrote that “without [the DRC official’s] help, we will be screwed big time, I believe. We need political pressure.”

They then “suggested that Glencore could ensure that [it] would prevail in the contract dispute if [he] had a reasonable amount of ammunition to make it happen”.

The “ammunition” needed was $500,000 and the agent sent Glencore a fake invoice for this amount, supposedly from their attorney for work done on the Crusader dispute.

In reality, the money “was used as a bribe payment to have the lawsuit dismissed”, says Glencore. To add insult to injury, the agent allegedly also told the Glencore executive that Crusader’s own lawyer was in on it and “ready to play along for the good cause”.

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Intervention

Now, 12 years later, Glencore has pleaded guilty to a staggering campaign of bribery across the African continent as well as Brazil and Venezuela – including the bribe to quash the Hagens’ case.

The Hagens have seized on these admissions to intervene in the settlement process, demanding that Glencore settle with them before the larger agreement is finalised. Like Glencore, the Hagens anonymised “the DRC Agent” in their papers. Unlike Glencore, they went to some lengths to identify this agent.

“At the request of [the Hagens], the [US] government has confirmed the identity of the DRC Agent. He is an individual who operated on the DRC Partner’s behalf in the DRC and facilitated the payment of bribes to further the DRC Partner’s interests,” they noted, referencing an Ontario Securities Commission settlement agreement that made it clear they were fingering Deboutte and Gertler.

The episode raises questions about Glencore’s motives for allegedly upending a seemingly harmless hospital contract so aggressively. A more immediate concern for Glencore is, however, the threat posed by the revival of the Hagens’ case to its historic settlement for its abundant past sins.

The company has agreed to two separate settlements in the US – a $700-million one for bribery and corruption as well as a $385-million one for manipulating fuel prices. These are separate from settlements in the UK and elsewhere.

The corruption settlement with the US was substantially finalised in May this year, but the date for final sentencing has been repeatedly postponed.

The US has been haggling with Swiss authorities to create a compliance monitoring scheme to keep Glencore honest in future. The mining giant is based in Geneva. The current estimate is that the Swiss will make a determination in late January 2023.

The Hagens have now thrown a further spanner in the works with their $50m claim, a significant addition to the $700-million corruption settlement and potentially an example for others to follow.

The Hagens base their claim on Glencore’s own $16-million estimate of what paying the bribe saved the multinational by swinging the 2010 case, plus claims for the loss of their business and legal expenses.

Glencore, in its own responding court papers, readily admits that it owes the Hagens restitution – but argues that the appropriate amount is more in the region of $10-million.

Doctors vs doctors

Crusader Health had been appointed by the previous owners of two copper mines in which Glencore and Gertler, through KCC, acquired controlling interests in 2009.

Shortly afterwards, Glencore brought in Hattingh who already ran hospital operations at another Glencore mine in the DRC, called Mutanda.

Ian Hagen, who was based in Australia with his wife at the time, alleged in his court papers:

“Crusader DRC medical staff, who were working with the Medical Manager [Hattingh], reported to me that his medical knowledge and competence were suspect and ‘at best on the level of a paramedic’. I and my staff began conducting diligence to verify the Medical Manager’s medical credentials.”

Hattingh now heads an NGO called Paediatric Care Africa. On its website, he claims a medical degree and PhD in neuroscience after studies carried out in the US and Taiwan, specialising in foetal alcohol syndrome and related disorders.

He told amaBhungane: “My understanding is that the Crusaders’ services were discontinued as both a financial decision and a requirement by the DRC government to supply the mine staff at KCC with a hospital, as that is what I was told at the time by Glencore. The rest of the politics I never got involved in.”

Hattingh was employed by Glencore between 2008 and 2013 to build four hospitals, including those the Hagens were originally meant to build.

He then opened another hospital for the Gertler Family Foundation, Dan Gertler’s philanthropic outfit.

He told us, “The Gertler family foundation in Kinshasa paid my salary and paid the initial start-up cost to open the Kisangani Hospital … I have met Dan Gertler on a number of occasions at the Gertler foundation offices in Kinshasa. He was my employer, so yes, I do know him.”

The Hagens assert that questioning Hattingh’s appointment sparked a campaign of harassment, during which “a senior KCC executive told the Hagens that if they did not turn a blind eye to this issue [Hattingh’s expertise], they would never work in the DRC again”.

They state: “Glencore concedes that it acted in bad faith and terminated Crusader DRC’s contracts, not for any legitimate business reason, but because the Hagens were stirring up trouble by investigating the Medical Manager … thereby jeopardising Glencore’s relationship with the DRC Partner.”

‘A veritable journey through the criminal code’

It is not entirely clear from the Hagens’ court papers why Hattingh allegedly found such favour.

What followed is, however, more readily understandable.

When Crusader got canned and then came back with a court challenge, it was taken seriously enough to warrant bribing the judge to secure a favourable outcome based on a technicality rather than the merits of the claim.

Still, the Crusader claim, then worth around $10-million, seems small change for Glencore.

Hagen theorises that the claim had to be quashed and kept quiet because it coincided with a delicate deal involving a $110-million loan being negotiated with global asset management firm Och-Ziff.

Och-Ziff (now renamed Sculptor Capital Management) previously signed a settlement (similar to the Glencore one) related to bribes paid in African countries.

Whatever the reason for Glencore’s decision to freeze out the Hagens, they are adamant the company must make full restitution.

“For more than a decade, Glencore has engaged in criminal and corrupt activities directed at Crusader DRC and the Hagens. Glencore’s conduct has been a veritable journey through the criminal code – bribes, corruption, intimidation, and threats of physical violence which caused Crusader DRC to leave the country – all of which crippled the Hagens’ business and denied them their rightful recovery.”

It is certain that Glencore will pay – the question is, just how much.

The bigger question raised by the larger Glencore settlement is whether the net of accountability will extend to its former executives – and to the “DRC Partner”. DM

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Africa

Quashed case

Glencore’s version

Intervention

Doctors vs doctors

‘A veritable journey through the criminal code’