Diamond in the rough
By Yossi Melman and Asaf Carmel
With two generals in Kinshasa
Gertler’s big business breakthrough came in 2000. The principal motive was to eliminate the middleman. Gertler decided to invest in Congo, a vast country in Central Africa with a population of 60 million and extensive natural resources including diamonds, gold, uranium, copper and cobalt. Congo, where Conrad set “Heart of Darkness,” was for decades the private property of the king of Belgium, who in 1885 established one of the most brutal regimes of oppression in the history of colonialism.
After becoming independent in 1960, Congo experienced a savage civil war. In 1965 the chief of staff, Mobutu Sese Seko, seized power and introduced a cruel, corrupt, despotic regime that turned Congo into a backward country. The average life expectancy there is 41 years, as in Angola. The number of AIDS carriers is thought to be in the millions. Most of the inhabitants are desperately poor. Only a handful of officials, army officers and cronies of the powerful enjoy the country’s riches.
After Mobutu was deposed, in 1997, the country was again plunged into civil and tribal war. The neighboring countries, coveting Congo’s resources, sent in their armies. Amid this turmoil, the young diamond merchant Dan Gertler arrived in Kinshasa, the capital, at the beginning of 2000 and started to look for ways to reach the new ruler, Laurent Kabila. With the help of local and foreign liaisons, he managed to arrange a meeting. Gertler persuaded Kabila to give him exclusive rights to all the country’s diamond exports.
It wasn’t as difficult as it might sound. Kabila desperately needed cash. Gertler offered to pay $20 million for the monopoly. Kabila accepted and Gertler established IDI (International Diamond Industry), a branch of DGI, in Congo. Kabila had one additional small request: security advice. Gertler did not want to say no, but lacked experience and understanding in security affairs.
In a chance meeting at a wedding in Israel, he got to know Yossi Kamisa, who had been a master sergeant in the Border Police anti-terrorism unit (known as Yamam in Hebrew). Kamisa persuaded Gertler that he was not only a daring fighter but also a first-rate military strategist who could create a modern army for Kabila out of thin air and thus enable him to consolidate his power. The details of the agreement between the two remain in dispute. A year ago Kamisa sued Gertler for NIS 2.55 million, for breach of contract. In the suit he said he had met Gertler through Avigdor Lieberman. (Lieberman declined to respond to this article.) Gertler denied this, saying there was no foundation to Kamisa’s demands, but agreed to pay him NIS 1.4 million in return for Kamisa’s written retraction of all his allegations. The retraction persuaded Judge Adi Azar, in one of his last decisions before he was murdered (his murder had nothing to do with this case) to reject Kamisa’s suit outright.
The court case exposed the fact that in place of Kamisa, Gertler had hired the services of a more highly regarded expert, Major General (res.) Avigdor (Janusz) Ben Gal. Ben Gal, in turn, brought in another retired major general, then unemployed, Meir Dagan, who had tried his luck in arms deals in Africa and is now the chief of the Mossad espionage agency. The three – Gertler, Ben Gal and Dagan – flew to Kinshasa to meet with Kabila and impress him with their know-how. According to documents of the Defense Ministry, Ben Gal contacted Israel Military Industries, which then asked the ministry for permits to conduct negotiations to export light arms and ammunition and train the Presidential Guard in Congo. The documents also indicate that little came of this adventure. Defense Ministry data show that in 2001-2002 light arms worth only $700,000 were sold to Congo. (Ben Gal declined to respond to this article.)
In the wake of the reports generated by Kamisa’s suit, Gertler claimed that he was not involved in any arms deals. He says he brought in Ben Gal in order to advise the Congolese government how to improve security at the mines and prevent diamonds from being smuggled out of them. This is a claim commonly made by diamond merchants and other businessmen who find themselves in similar situations. In the view of international human rights organizations and investigative journalists, such actions perpetuate the rule of despots.
A United Nations commission that investigated the plunder of Congo’s natural resources by the armies of Rwanda and Uganda, cited Gertler and his business dealings in two reports. According to these documents, Gertler reneged on his original offer and paid only $3 million for the export rights. However, Gertler and Leibowitz inundated the UN with documents intended to show that they had honored the agreement and transferred the entire amount to Kinshasa. The world body was apparently persuaded – its latest report on the subject no longer mentions Gertler or his Congo-based company.
In January 2001, Kabila was assassinated by his bodyguard, and his son seized power. Joseph Kabila, who says he wants to stabilize Congo and democratize it, sought to show good will to the West. In April 2001, under pressure of the International Monetary Fund, which objects to monopolies, and because of competition from other diamond merchants (Israelis and Lebanese), who were envious of Gertler’s success, Kabila revoked Gertler’s monopoly. The main beneficiary of this development was Lev Leviev. The opening of the Congolese market to competition enabled him to obtain a hefty slice of the diamond exports from Angola. But Gertler, not one to capitulate, looked hard for a way to resume his operation in Congo.
The Washington connection
In 2003, Gertler signed a contract that once more made him a key player in the Congolese diamond market. According to Newsweek, the contract was secret and its existence was revealed only because of a dispute between Congo’s minister of mines and his deputy. The contract was actually signed between Emaxon Finance Corporation, a Canadian firm controlled by Gertler (and also by Leibowitz, according to some reports) and MIBA, the government diamond company of Congo. Under the terms of the contract, Gertler organized a $15 million loan to MIBA for the purchase of mining equipment. In return, he received a franchise to export 88 percent of MIBA’s diamonds, which he purchases at a 5 percent discount.
This new agreement also sparked controversy in Congo. According to Newsweek, the former minister of mines termed it “terrible.” The magazine added that Gertler obtained the contract because of the good relations he re-established with President Kabila. Gertler, for his part, in a letter to Newsweek, said he was proud of his ties with the president but denied that the contract was signed secretly or was attained by underhanded methods. His confidants emphasized that in their view, criticism of the former minister, who was fired, stemmed from personal motives.
In the letter, Gertler also describes his generous donations to charities in Congo. He has told his confidants that he is truly affected by the country’s distress. The proof is that he donated hundreds of thousands of dollars to a fund for AIDS sufferers. However, he has not forgotten his roots. Gertker is financing the Chabad House in Kinshasa, which operates in a community of some 250 families of Israelis and Jews. Chabad House supplies the food for Gertler, Leibowitz and PR man Horev when they visit Kinshasa.
Since then, Gertler’s business dealings in Congo have grown. He has purchased a diamond mine, which is being readied for operation. He also received, together with the Canadian company BHP and De Beers, a franchise to mine diamonds. But the relations between Gertler and Leibowitz and Kabila go beyond diamond deals. They also want to help their admired leader and improve his country’s poor image in the corridors of power in Washington.
In 2002, the president authorized Gertler and the Brooklyn-born Leibowitz to act on his behalf with the U.S. administration. The two met with Condoleezza Rice, then the national security adviser and now secretary of state. She sent them to Jendayi Frazer, a former student of hers who was then responsible for Africa on the National Security Council and is today the U.S. ambassador to South Africa. The two guests asked Frazer to help Kabila and reduce the pressure he was under from human rights organizations.
Frazer’s meeting with the two Israeli diamond merchants drew criticism from the State Department. Whether thanks to their lobbying or not, President George Bush in November 2003 hosted Kabila in the White House. The two have also said on several occasions that their activity is helping to establish peace in Congo.
For Gertler, Congo and the close ties with Kabila were an important springboard. He serves as honorary consul of Congo in Israel. Thanks to his ties and the reputation he has gained in Congo, he also succeeded in penetrating the Angolan market. The fact that Sindika Dokolo, the husband of Isabel dos Santos, is a citizen of Congo, also helps.
Isabel is a member of a group called Futungo, a mysterious and highly powerful elite consisting of about 200 families of government officials and army officers concentrated around the president. The group enjoys fat commissions from trade in oil and other raw materials. When the International Monetary Fund and other international organizations refer to the billions of dollars missing from the state coffers, they point out that the money went into the pockets of this group.
To conquer Angola, Gertler is also drawing on his ties with Gaydamak. The size of the franchise Gertler will get in Angola is not yet known, but it is clear that anything he is given will reduce Leviev’s holdings in the country. Sources in Angola say that this is a zero-sum game: the victory of one of them is the rout of the other. Leviev, who refused to comment, explained in the past that he is not envious of the business of other diamond merchants. Not of Gertler, not of Steinmetz and not of anyone else.
However, there is also a widespread view that this is only a pretense by the main players, who in the end prefer to adopt the approach that “if you can’t beat them, join them.” It may well be that Gertler, Gaydamak and Leviev have already decided to carve up the Angola booty among them. Sources in the Diamond Bourse of Ramat Gan say that Gertler is following the very same path that Leviev created, aiming to dominate the entire chain of production of the diamond industry, from mining, export and polishing to the jewelry store.
That comparison irks Gertler. He has only one role model: his grandfather, Moshe Schnitzer. “Like his grandfather,” his parents say, “he has a vision and he has the forbearance to persist in order to achieve the goals he sets himself.” In any event, his activity in Congo, Angola and the United States is imbuing Gertler with a sense of power. From his point of view, he has entered the premier league and is playing on the big boys’ field.