Israel shows up in over 20,000 Paradise Paper documents

Israel Offshore Paradise Papers

The world’s affluent elite have, for all intents and purposes, been ravaged by a Bermudan law firm’s release of the so-called Paradise Papers. The international scandal cast a brilliant light on the dark recesses of the global economy: tax havens shielding billions upon billions of dollars from the tax codes of various countries.

The list of elite names brought down by the scandal has proven to be like unto the proverbial red carpet, spanning from the Queen of England to Madonna, including U.S. Commerce Secretary Wilbur Ross and tech titan, Apple, Inc. Among them, Dan Gertler, an Israeli mining magnate, defends himself against claims that the Paradise Papers indicate he may have broken international antitrust laws in order to secure certain mining rights.

Tax havens are, of course, frowned upon but often used in ways that are completely legal; nevertheless, the public takes offense to what is tantamount to legal, tax-evasive loopholes. Appleby, the Bermudan law firm responsible for the leak, released the trove to the public by way of Süddeutsche Zeitung, a German news publication that then disseminated the documents and pertinent information throughout global media rapidly via the International Consortium of Investigative Journalists. A broad and somewhat complex matrix of some 380 reporters and news organizations spanning 67 countries worked on the investigative project.

The name, Israel, shows up in over 20,000 documents with reference to the country, and those references frequently revolve around Dan Gertler. His name is found in 120 documents, and each use of his name is in reference to Glencore, a British mining giant who runs a lot of its own business through Appleby, chiefly its Bermuda branch. Gertler reportedly received a multi-million-dollar loan from Glencore, which is significant because of Gertler’s reputation for having allies who rank highly in government in the Democratic Republic of the Congo.

The allegation is that Gertler’s purpose in taking this loan from Glencore was to use it to tender a Congolese copper mine. Glencore, in fact, told reporters, according to Haaretz, that it ran “extensive and thorough” background checks on Gertler. Haaretz reports that Gertler’s lawyers claim he “rejects absolutely any allegations of wrongdoing or criminality by him.” The leaked documents show that Gertler was mentioned in a U.N. investigation in 2001 wherein he allegedly gave $20 million to DRC President Joseph Kabila for the government to use to buy armaments for combating local insurgents.

The crux of Gertler’s mention in the Paradise Papers is that this $20 million came with strings attached. Gertler supposedly did this to garner a monopoly on DRC diamonds, an industry of such colossal potential that to monopolize it is to monopolize 30 percent of the world’s diamond reserves. Glencore agreed in February of 2001 to loan Gertler $537 million to use to stack the deck in his favor as both he and Glencore had significant interest in DRC mining negotiations, as any mining company would. Congolese taxpayers reportedly lost hundreds of millions on the deal according to the BBC’s Paradise Papers team.

Both Gertler and Glencore deny having done anything wrong, both being long-established institutions in one way or another. Gertler’s grandfather was a co-founder of the Israel Diamond Exchange, serving as its president for many years. It was in 2009, according to the Paradise Papers, that Glencore actually gave the loan to Gertler because of Gertler’s intimate relationships with DRC government senior officials. The agreement made in 2001 was that the loan would be repayable should local authorities not comply. In other words, the deal was meaningless unless Gertler could do his part in delivering the support of local officials.

Gertler has operated in the Congo since 1997, networking and steadily furthering the business of mining for rough diamonds. Given that Gertler has been so active in one of the most mineral-rich countries in the world, it’s no surprise that he gradually diversified his investment portfolio to include gold, agriculture and especially cobalt since the DRC is the world’s leading cobalt contributor. Dan Gertler International is worth $1.22 billion according to Forbes who has historically stated that Gertler’s fortune is the product of African mining industries.

Glencore has responded to the International Consortium of Investigative Journalists with a statement saying that the loan was made on a commercial basis. The statement included in its justification that the deal had been conducted from a distance, so to speak, and that Gertler had already reimbursed the firm. In that statement, which Glencore delivered on Nov. 6, the company said that “Glencore complies with its tax obligations in line with the laws and regulations in the countries and territories in which we operate.”

Glencore asserts in the statement that the company publicly discloses all government contributions and is an active supporter of the Extractive Industries Transparency Initiative. The scandal compounds with other tax problems Glencore is enduring in Australia. The Australian has reported that Glencore is now on the receiving end of a A$100-million tax bill. The bill results from Glencore’s attempt to consolidate and restructure after a thick series of acquisitions.