WASHINGTON – In early December, an Israeli billionaire named Dan Gertler made an unusual request to the Treasury Department.
Mr. Gertler, a mining tycoon who had been charged for years of corruption in dealings with leaders of the Democratic Republic of the Congo, had been beaten severe sanctions from the Trump administration in 2017 by effectively blocking his access to the international banking system and freezing money in US banks.
He had since tried unsuccessfully to roll back the sanctions by hiring high-performance workers Lobbyists and lawyersincluding Alan Dershowitz, who represented President Donald J. Trump in his first impeachment trial, and the former F.B.I. Director Louis Freeh.
However, with the Trump administration and the incoming Biden administration running out of time to hear his requests, Mr. Gertler put one final offer on the table: he would allow external monitors to track his business and provide regular reports on his financial transactions, if the United States lifted the sanctions.
The answer came in mid-January, just a few days into Mr Trump’s tenure: Treasury Secretary Steven Mnuchin granted Mr Gertler much of what he wanted and signed on without public announcement a one-year agreement This gave him access to money that was frozen in US banks and again enabled him to do business with financial institutions worldwide.
The decision baffled and angry American diplomats in Washington and Africa, as well as government officials and human rights activists in the Democratic Republic of the Congo, where Mr Gertler had been accused by the EU years earlier United Nations and other groups to work with the then ruling family on deals that plundered the nation’s mineral wealth and propped up a corrupt regime.
And the Biden administration has tried to find out how Mr Gertler managed to get it done – and whether it can be reversed.
The episode recalls Mr. Trump’s short-term pardons to political and personal allies and people with ties to him, including the involvement of Mr. Dershowitz. It also highlighted Mr. Gertler’s use of high capacity connections in Israel, including people with ties to Prime Minister Benjamin Netanyahu, and efforts to enlist the support of the US Ambassador to Israel.
But the result was also characterized by the secrecy of the process by which the American diplomats, who are most directly responsible for dealing with the Congo and fighting corruption in Africa, were excluded and apparently largely at the level of Mr Mnuchin and Secretary of State Mike handled Pompeo. The decision only became public after Mr Trump stepped down from office.
The abrupt reversal of policy toward Mr. Gertler was extraordinary in many ways, a New York Times investigation found.
Among the results:
The swift decision to give Mr. Gertler much of what he wanted went against the norms of the Treasury Department, according to three former lawyers for the agency, and effectively reset the sanctions with no public records justifying the move and without the State Department officials or officials to consult the National Security Council fully. It was only last year that some American diplomats and members of Congress from both parties tried to extend the sanctions against Mr. Gertler.
Mr. Gertler tested that Limits of Federal Law by hiring attorneys that too worked as a lobbyist in Washington to advance his case, including Mr. Dershowitz, who was instrumental in winning Mr. Trump’s grace for a number of clients, and Mr. Freeh. Treasury rules generally prohibit People under sanctions who spend money on lobbyists in the United States.
The decision of the Ministry of Finance to grant Mr. Gertler a special license In part, this was based on allegations that the United States had a “national security interest” in Mr. Gertler’s business dealings in Africa, lawyers involved in the effort said and Israeli officials. However, some State Department officials were skeptical that his safety value could outweigh the human, economic and moral harm contained in the allegations against him. It’s also unclear how the balance could have shifted since sanctions were imposed in 2017.
Pressure also came from Israel, where Mr. Gertler is represented by prominent lawyers, including Boaz Ben Zur, whose customer list includes Mr. Netanyahu. David M. Friedman, then the US Ambassador there, was targeted in the advance and informed Mr Mnuchin and Mr Pompeo that he supported the sanctions easing requested by Mr Gertler, provided that the Treasury Department could clarify this.
“I’m amazed at that,” said John E. Smith, who served as a director of the Foreign Property Control Office of the Ministry of Finance at the time the sanctions were imposed on Mr. Gertler. “It appears to be an abuse of the process.”
Mr Mnuchin and Mr Pompeo, who are also supposed to support the decision, declined to comment.
In a statement, Mr. Gertler said the decision was not the result of a campaign with particular influence in Israel or the United States, but rather his promise to make its business operations more transparent around the world.
“We will adopt and implement the strictest guidelines and measures to combat bribery and corruption in all of our global practices,” said Gertler.
But diplomats and human rights activists said they could see no justification for giving Mr Gertler, who it was, a break described by the finance department in 2018 as “involved in the plunder of natural resources and the humanitarian consequences” that followed in poor, unrest-stricken Congo.
Senior State Department officials in the Trump administration – including Michael Hammerthe US Ambassador to the Congo; J. Peter Phama special envoy; and Tibor P. Nagy, the Deputy State Secretary for African Affairs – were not informed in good time about the step of granting Mr. Gertler the license contrary to normal practice.
“Here you have one of the most poverty-stricken nations, with a population that has suffered immensely over the past few decades, and we have worked to reverse that. So why?” said Mr Pham, who served as senior advisor to the Ministry of Foreign Affairs for Africa until January 20.
Mr. Gertler came to the Congo in 1997 as a 23 year old diamond trader determined to challenge the global giant in supplying rough diamonds, South Africa based De Beers.
One of his first major pauses came about three years later when Laurent Kabila, then President of the Congo, needed weapons to wage a war that would last more than a decade.
One way for Kabila to do so was to offer monopolies to foreigners who wanted to develop the Congo’s rich natural resources Raise money wage war. Among them was a diamond export deal with Mr. Gertler, who was seen as an attractive broker for him Connections to generals in the Israeli army, which could help the Congo obtain weapons, according to to two United Nations reports from 2001. (Mr. Gertler denied the results.)
But the U.N. completed that Mr Kabila used money to gain access to the nation’s mineral wealth – including his contract with Mr Gertler – to expand the Congolese armed forces, a move that helped spread the word “conflict diamonds” and “blood diamonds” .
“Conflict diamonds are exchanged for money, weapons and military training”, a U.N. report describing Mr Gertler’s work said.
Mr. Gertler was also indirectly accused in a 2016 Justice Department trial of paying more than $ 100 million in bribes to government officials in the Congo on behalf of a company called Och-Ziff. “to get special access to and preferential rates for opportunities in the state-controlled mining sector. “
A spokesman for Mr. Gertler, Aron ShavivMr. Gertler was never interviewed or charged in the case and denied any wrongdoing. Instead, said Mr. Shaviv, Mr. Gertler’s company took over invested more than $ 1.5 billion directly in the Congo, one of the country’s largest employers and taxpayers, starting when no other foreigner was willing to take the risk of doing business in the middle of a war.
“He’s bought cheap and can sell at a much, much higher price because he made the investment when no one else did, no one else would dare go to the Congo,” said Shaviv, a political adviser to the as Mr. Netanyahu’s campaign manager in 2015.
Mr. Gertler first appeared on White House officials’ radar in 2002 when Joseph Kabila, who took over the nation after his father was murdered the previous year, sent a letter to President George W. Bush asking for help End of the war asked.
“Please accept my appointed envoy, Mr. Dan Gertler, a respected and well-known international businessman, to speak on my behalf on the needs of the Democratic Republic of the Congo.” Mr Kabila wrote in April 2002 Letter to Mr. Bush, copy of which was obtained from the New York Times.
“He played a very important role in advising Kabila, but also in the way he spoke with authority and definitely carried the United States message,” said Jendayi E. Frazer, who then served as Bush advisor on African Affairs acted in an interview.
The work of Mr. Gertler led to a peace agreement in 2003. She also cemented his relationship with Joseph Kabila. The Congolese government began opening new deals to Mr. Gertler and his growing corporate empire, expanding from diamonds to copper, cobalt, oil, gas and gold.
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In just five contracts negotiated between 2010 and 2012 for the sale of copper and cobalt through offshore companies that were with the Fleurette Groupwhich is controlled by Mr Gertler and his family, the citizens of the Congo have lost one an estimated $ 1.36 billion because the nation’s resources were sold at one-sixth of their value, so a Report prepared in 2013 by Kofi Annan, former United States Secretary-General, and other prominent African officials.
The lost revenue for the Congo from the deals “was more than double the combined annual health and education budget,” the report concluded.
In the Congo, over 70 percent of the population live in extreme poverty with an income below that than $ 1.90 per day. But the profits for Mr. Gertler were extraordinary, an average of 512 percentAccording to the study, he became one of the 29 youngest billionaires in the world. according to Forbes.
It was not only reported from Mr. Gertler that he became enormously rich through these businesses.
The corruption and exploitation associated with such dealings was exactly the kind that a new member of the finance department named Sigal P. Mandelker faced when she was Approved as Chief Official for Sanctions Enforcement in 2017.
“Our goal is to change behavior, promote democracy and freedom, and disrupt the ability of kleptocrats, human rights abusers and others to steal the wealth of their country,” Ms. Mandelker said in a speech from 2019.
Ms. Mandelker praised both parties for their efforts to take advantage of the new Authority Congress granted to the Treasury Department in 2016. The Global Magnitsky Human Rights Accountability Act, as the law is called, is named after the late Russian tax attorney Sergei Magnitsky in a Moscow prison in 2009 after uncovering corruption by Russian officials.
The new law allowed the Treasury Department to freeze the assets of individuals or companies operating anywhere in the world who were involved in “gross violations of internationally recognized human rights”.
In cooperation with the ministries of state and justice, Ms. Mandelker’s team included Mr. Gertler in the first round of those punished in December 2017 and cited his notes on “opaque and corrupt” mining and oil deals in the Congo. ON second round of sanctions in 2018 targeted more companies associated with Mr. Gertler.
The sanctions against Mr. Gertler severely limited his ability to do business around the world by banning his access to the US banking system and also restricting his access to non-US financial institutions that were concerned about American law to violate.
But less than a year after the sanctions were imposed, Mr Gertler began his campaign to push them back.
The advance began with a seemingly innocuous request: give Mr. Gertler permission to use part of his money for charitable donations to hospitals, libraries and schools in the Congo.
But even this plan met with concern from some State Department officials, who were concerned that the donations would allow Mr Gertler to build his reputation in the Congo and help Mr Kabila’s supporters question the efforts of the new Democratic Party put President-elect, Félix Tshisekedi, to maintain control.
Until last year, Mr. Gertler also struggled to refute a report by two human right Groups quoting what they said were evidence that it was him Circumvention of sanctions using a network of shell companies, frontmen and proxy bank accounts to move millions of dollars into and even out of the Congo to acquire new mining rights There.
Mr. Gertler sued both human rights groups and the Israeli newspaper Haaretz, which published reports on the allegations. Lawyers from Mr. Gertler and a bank in the Congo alleged the reports were based on documents that were stolen and then tampered with. The paper and human rights groups have defended the accuracy of their reporting.
Rather than support Mr. Gertler’s request for permission to donate to charity, Foreign Ministry officials in charge of Africa urged the Treasury Department to extend the sanctions.
By late 2019, key Treasury officials, including Ms. Mandelker, had begun leaving the Trump administration, and State Department officials like Mr Pham said it was tougher to impose new Magnitsky sanctions.
Officials reached out to the Senate Foreign Relations Committee for help in keeping pressure on Mr. Gertler. In August, members of the finance committee’s committee sent a non-partisan letter in which his name was not mentioned but contained a clear message.
To help build democracy and fight corruption in the Congo, the letter saidThe United States should designate “additional officials and companies responsible for or involved in high-level corruption, including misappropriation of government assets, for targeted financial and travel sanctions.”
However, Mr. Gertler’s team, including Mr. Dershowitz and Mr. Freeh, had a different message. They had requested a letter from Ms. Frazer confirming Mr. Gertler’s role in the peace negotiations nearly two decades ago and distributing it to officials in the Trump administration. As early as 2019, they organized meetings with State Department officials to claim that his activities had served United States interests.
“His first effort was lobbying,” Shaviv said of Mr. Gertler’s campaign.
But Treasury rules state that “professional services such as lobbying, public relations, government affairs, advice and business development are not legal services and are generally not covered by an exemption that allows persons under sanctions to hire lawyers.
Mr Dershowitz said the meetings were allowed because he was not advocating the White House or anyone else on the matter.
“My role was limited to the legal issues,” said Dershowitz.
But with After Mr. Trump’s term in office ended and the sanctions were still not lifted, Mr. Gertler decided to make a change in strategy. While Mr. Gertler’s attorneys admitted no past wrongdoing, they told the Treasury Department in early December that he was willing to take reasonable steps to assure the United States that he would abide by the law, including suspension external observer and the submission of detailed reports on financial transactions.
“Our whole approach has been to reassure them that there won’t be a problem in the future,” said Shaviv.
At the same time, it was alleged that Mr. Gertler was of value to US intelligence agencies.
“It is absolutely the case that the national security interests of both Israel and the United States were involved,” Dershowitz said, although he and others refused to give details. Mr Shaviv declined to discuss whether Mr Gertler had undertaken such activities, but said that if they did take place, they would be labeled “Services to the United States of America”.
Whatever Mr. Gertler did to benefit the United States was sensitive enough that Israeli officials said they were aware but declined to comment on its nature. Two Israeli officials told The Times that the United States had informed Israel that, according to a decision by Mr Mnuchin and Mr Pompeo, the terms of the sanctions imposed on Mr Gertler would be relaxed “for reasons of American national security. ”
However, several former State and Treasury officials said that as a foreigner serving in the Congo, Mr Gertler may have information the United States deemed valuable and that Washington had value in placing him on the sanctions list as well keep up by contributing to the advance anti-corruption effort.
“The only national security value that Gertler has is that it is put in the box it was put in with the sanctions,” Pham said.
In any case, the decision to grant him the one-year license is unusual in several ways.
Finance has traditionally agreed not to lift sanctions until individuals have demonstrated they have already changed their behavior and not simply agreed to make such changes in the future, said Mr Smith, the former head of the sanctions department who is now a national security attorney is in the law firm Morrison and Foerster. Mr. Gertler had not previously presented such evidence to the United States.
If Mr. Gertler’s assets were not frozen at US banks and his corporate rights could again do business with US financial institutions, as the license allowed, that type of deal would almost certainly have to be published, not secretly issued like this one. Also, this type of review usually requires months of effort, not the six weeks it took in this case.
“This is a unique, one-of-a-kind response that you don’t see with the US government,” Smith said of the so-called specific license Mr. Gertler received that. “It’s the most shocking license I’ve seen in decades of working on economic sanctions.”
When the decision to grant Mr. Gertler the one-year license leaked after Mr. Trump stepped down, it sparked a firestorm of criticism from officials who said it would undermine the United States’ efforts to fight corruption.
Mr Hammer, the US ambassador to the Congo, was initially so confused by the news, according to a State Department official, that he called officials in Washington to see if there was a mistake.
“That made my job a lot more difficult,” an angry Mr. Hammer told colleagues.
House and senate Democrats fired letters to the Treasury Department and the State Department. ON Coalition of 30 Congolese and international human rights groups attacked the move, with one of the letters indicating the move as “terrible blow at the heart of one of the most lauded and effective anti-corruption programs of the past decade. “
The Biden administration is currently investigating why the license was issued and whether it could be revoked, although Mr Gertler’s team said it had no justification for taking such a move.
In the meantime, Mr Gertler has launched a campaign to restore his image in the Congo, posting promotional videos describing his work in support of local hospitals and schools calling the citizens of the Congo “Brothers and sisters.” He also started a plan so that the residents of the Congo can invest in one of its new mining projects.
Activists in the Congo were not impressed.
“How can someone who has done so much damage to the Congo for 20 years suddenly say that they are an angel?” said Jimmy Kande, a leader of the Congo nonprofit group, is not for sale. “If the Congolese authorities would finally deal with Gertler’s past, he would not have a great future in the Congo.”
Kenneth P. Vogel, Lara Jakes and Julian E. Barnes Contribution to reporting.