Legal warfare has erupted in the Democratic Republic of Congo (DRC) between Glencore and Israeli entrepreneur Dan Gertler who is claiming a total of $2.9bn in damages from two Glencore copper mining subsidiaries.
At the heart of the dispute is the action taken by the United States in December 2017 to designate Gertler and his affiliated companies as Specially Designated Nationals (SDNs). In terms of US Treasury regulations the assets of SDNs are blocked and US persons are generally prohibited from dealing with them.
Gertler is claiming a total of $2.9bn from two Glencore subsidiaries – Mutanda Mining (Mutanda) and Kamoto Copper (Kamoto) – and has slapped “freezing orders” on both companies.
Glencore said in a statement released late on April 27 that it was “assessing the impact of the freezing order on Mutanda and Kamoto’s operations in the DRC.” It added the freezing orders “may materially adversely affect such operations.”
The freezing orders authorise the bailiff of the commercial court of Kolwezi to freeze certain bank accounts, tangible movable assets and intangible movable assets, such as receivables, of each of Mutanda and Kamoto as well as the mining titles, in each case up to the amount of the freezing order, and prevent Mutanda and Kamoto from disposing and/or utilising these assets.
The claims amount to $2.28bn against Kamoto and $695m against Mutanda.
Gertler’s actions follow hard on the heels of legal action brought against Kamoto and another Glencore subsidiary in the DRC – Katanga Mining – by DRC state mining company Gecamines which has applied for Kamoto to be dissolved.
Gertler’s lawsuit has been brought through a company called Ventora Development Sasu. Ventora alleges that Mutanda has breached an agreement with Ventora “pursuant to which it alleges Mutanda is required to make royalty payments to Ventora by indicating that it will not pay such royalties as a result of Gertler’s designation as a SDN.”
Ventora alleges a similar breach between Kamoto and a company called Africa Horizons Investments Limited (AHIL) .
Glencore said the agreements with Ventora and and AHIL were concluded prior to the designation of Gertler as a SDN and “arose when the Gertler-affiliated entities acquired these rights from Gecamines.”
Glencore said Kamoto “disputes the assignment by AHIL of its rights under its agreement with Kamoto to Ventora and that Ventora has any claim against Kamoto under such agreement. “
Glencore added that Mutanda and Kamoto will “vigorously contest the freezing order and any subsequent proceedings. Glencore denied that Mutanda and Kamoto were in breach of any of their obligations under their respective agreements with AHIL and Ventora.
Glencore said it also “entirely rejects” Ventora’s calculation of the value of the future royalties allegedly owed to Ventora.