Dan Gertler Attacked Over $150m Sale of Congo Oil Rights That Cost $500,000

Dan Gertler

Dan Gertler, one of the world's most controversial mining tycoons, was back in the spotlight last night over his dealings in the impoverished Democratic Republic of Congo, after it emerged that he is set to sell oil exploration rights that he bought from the government for $500,000 for a staggering $150m.

The Israeli businessman is selling them to oil companies owned by the people of the DRC and neighbouring Angola for 300 times what he paid eight years ago, despite having made no significant investment into the asset. Mr Gertler has been widely criticised for the way he has bought mining rights from the DRC government, run by his friend, President Joseph Kabila, and sold them at huge mark-ups, arguably to the detriment of the Congolese people.

But, even by his standards, to make such a return on an investment of little more than £300,000 is extraordinary.

News of the sale emerged as the DRC government puts the final touches to a code of conduct to cover its dealings with overseas investors in its little-explored oil reserves. It was highlighted by the NGO Global Witness, which has been calling for the code to be made tougher in order to keep deals transparent and minimise corruption risks.

It claimed that Mr Gertler's company, Nessergy, was sold the rights far too cheaply and called for details of the deal to be made public. The DRC government said it would publish them only after the final agreement had been made. Currently, it is only a memorandum of understanding.

Mr Gertler's spokesman said the sale was "compensation" for the fact that Angola's state oil company will not allow the tycoon to develop the oilfield himself.

Had he been able to do so, he would have made far more than $150m, sources at his firm said, although he would have also had to invest a lot more in development. The DRC's half of the project will be worth between $1.3bn and $3.6bn, Mr Gertler's Fleurette holding company said.

Global Witness also condemned Mr Gertler's use of secretive offshore companies to conduct such dealings. Nessergy is based in Gibraltar, which means it is impossible to ascertain exactly who its beneficial shareholders are, although Fleurette confirmed it was the substantial owner. It said no Congolese officials had any "legal or beneficial interest" in the company.

Last year, former UN chief Kofi Annan's Africa Progress Panel reported that the Congolese people lost out on at least $1.36bn in five mining deals with Mr Gertler's firms between 2010 and 2012 – a claim Mr Gertler vigorously denies.

Mr Gertler's spokesman denied the rights had been sold to him on the cheap, pointing out that, at the time, other companies, including the London Stock Exchange-listed Soco, also paid $500,000.

It was not clear then that there was so much oil in the area and until Mr Gertler got involved, he added, the waters and oil deposits were owned entirely by Angola.

It was only after Mr Gertler employed experts to argue the case that the Congolese were able to negotiate an agreement with Angola to share the area's oil spoils.