RISKY BUSINESS
Stock-market regulator focuses on ties between mining firm and Israeli businessman
Canada’s OSC alleges Katanga Mining hid risks associated with Congo operations,
Canada’s main stock-market regulator said a Glencore PLC-controlled copper-mining company hid from investors the risks associated with its reliance on Israeli businessman Dan Gertler in the Democratic Republic of Congo.
The Ontario Securities Commission said Glencore’s Katanga Mining Ltd. relied upon, and paid associates of, Mr. Gertler to “maintain relations” with the Congolese government, including legal, tax and customs clearing services.
The Wall Street Journal reported Sunday that Katanga and several of its executives and former directors had agreed to pay more than 30 million Canadian dollars (US$22 million) to settle the allegations, which also include claims that the company overstated copper production over the course of several years.
The OSC said it would hold a hearing on the settlement in Toronto on Tuesday.
Glencore owns about 86% of Katanga after buying out Mr. Gertler’s stake in the mining company in 2017. The OSC alleged that starting in 2010, a close associate of Mr. Gertler’s was “tasked with the responsibility for engaging” with the Congolese government on Katanga’s behalf.
In 2013, a unit of Katanga formalized the relationship by entering into a contract for services with De Novo Congo SPRL, a company associated with Mr. Gertler, the OSC said. The Journal first disclosed the contract with De Novo in July.
The OSC also alleged that a unit of Katanga Mining for several years failed to disclose that it had diverted more than $100 million in royalty and other payments from Congo’s staterun mining company to a company controlled by Mr. Gertler.
A Glencore spokesman declined to comment after the OSC news release on Monday. A spokesman for Fleurette Group, Mr. Gertler’s main company in Congo, said it “has always acted appropriately and with integrity in the DRC. Nothing has ever been proven against the company or its executives in a court of law.”
Mr. Gertler has denied wrongdoing.
Mr. Gertler was a central figure in a $412 million settlement between the U.S. Justice Department and the Securities and Exchange Commission with New York hedge fund Och-Ziff Capital Management Group LLC.
An Israeli businessman paid more than $100 million in bribes to Congolese government officials, including Congo President Joseph Kabila, to get beneficial terms for deals in the Central African country, the Justice Department and SEC alleged. The Israeli businessman was Mr. Gertler, according to people familiar with the matter.
A year ago the U.S. Treasury Department sanctioned Mr. Gertler, alleging he traded on a friendship with Mr. Kabila to amass a fortune through “opaque and corrupt” deals on behalf of multinational companies seeking to do business in Congo.
Glencore said in July that it had received a subpoena from the U.S. Justice Department demanding records related to its compliance with American antibribery and money-laundering laws in Congo, Nigeria and Venezuela.
The Journal reported that a focus of the probe is Glencore’s ties to Mr. Gertler.