British Brothers Take on Israeli Lawyer in Multi-million Dollar Dispute Over African Diamonds

Two ultra-Orthodox Jewish brothers from U.K. are secretly fighting a high-powered Israeli lawyer over tens of millions of dollars from a failed Congolese mining business.

The long-hidden drama involves massive African cobalt mines, tens of millions of dollars, ultra-Orthodox businessmen, rabbis and elite lawyers. And the star is one of the most prominent criminal attorneys in Israel.

Yaakov Weinrot has represented Prime Minister Benjamin Netanyahu, MK Avigdor Lieberman (Yisrael Beiteinu), MK Tzachi Hanegbi (Likud), oligarch Michael Chernoy and many others on the money-government playing field. For many years, he was a lawyer for one of the more controversial figures in the African business world: Dan Gertler, a young, ambitious Israeli who became newly religious.

At the end of the last decade, Gertler formed excellent relations with the centers of power in the Democratic Republic of the Congo – a country bleeding from civil war. For more than ten years, he has been known as the most influential white man in Congo and the closest confidante of President Joseph Kabila.

Kabila was born in a revolutionary camp from which his father Laurent Kabila commanded the struggle to depose the corrupt dictator Mobutu Sese Seko. The elder Kabila, who later came to power, was assassinated in 2001 by two of his bodyguards, and his son succeeded him at the age of 30 and at the height of the civil war in the country.

Since then, the younger Kabila has ruled Congo, being reelected in 2011 despite harsh international criticism.

International organizations and election observers said the outcome of the voting was falsified and the government’s security forces carried out killings, according to a report by the anti-corruption organization Global Witness.

Gertler established the Dan Gertler International group (DGI) when he was just 22 years old. The demobilized Israeli soldier who was already in the process of becoming religiously observant decided not to follow his conservative family into the polished-diamond trade but instead to move up to the big league and trade in raw diamonds. Since then, he has managed businesses in Russia, Angola, Sierra Leone and elsewhere. But Congo has remained the anchor of his business interests. Gertler also maintains good relations with the political elite in Israel, especially Yisrael Beiteinu chairman and former foreign minister MK Avigdor Lieberman.

The young ultra-Orthodox businessman is a member of the third generation of the most-important and best-known family of diamond merchants in Israel. His grandfather, Moshe Schnitzer, was president of the Diamond Exchange and was awarded the Israel Prize for his life’s work. It was from his admired grandfather that the young Gertler learned the ins an outs of the glittering profession in which his father, Asher Gertler (formerly a goalie for Maccabi Tel Aviv) also engaged. His mother was businesswoman Hannah Gertler. 

“He is a person who goes to the brink, who takes tremendous risks,” says someone who knows him well.

Blood and treasure

Over the past decade, Gerler began looking past diamonds to the other natural resources Congo is abundantly blessed with. The country embodies the African paradox: Despite being rich in minerals (cobalt copper, diamonds and more) it is one of the poorest places on earth. In fact, the United Nations ranked the Congo as the least developed in the world. Half its inhabitants die before they make it past the age of 40. The country is at the center of international criticism and has been the object of investigations by leading non-governmental organizations and newspapers around the world.

About a year ago, Global Witness published a report that claimed the government of Congo sold parts of major mines in the country at very low prices relative to the assessed value of the assets. The sale process was carried out, according to the report, secretly and by means of foreign companies, most of which, the organization says, are connected to Gertler.

For more than a decade, various organizations and the Congolese opposition have been attacking Gertler on the grounds that he is exploiting his relations with Kabila to acquire the country’s assets. Gertler has a consistent line of defense: He is not a tourist just passing through but rather a businessman who has taken tremendous risks to invest in Congo over many years.

“I should get a Nobel Prize,” said the ambitious entrepreneur to Bloomberg correspondents who accompanied him to Congo as part of an investigative report on his business network. “They need people like us, who come and put billions in the ground. Without this, the resources are worth nothing."

In the mid -2000s, Gertler, in tandem with tycoon Benny Steinmetz, purchased a number of copper and cobalt mines from the Congolese government. Later, the brothers Moises and Mendi Gertner – two London-based ultra-Orthodox tycoons who have close ties with top people in the Degel Hatorah party, like MKs Meir Porush and Yaakov Litzman and are major donors to religious institutions in London and in Israel – bought in.

They called the joint company Nikanor. Steinmetz, with 50-percent ownership of the company, was the senior partner, while the Gertner brothers owned 30 percent and Dan Gertler owned 20 percent of it.

According to people close to the deal, Weinrot mediated between Gertler and the Gertner brothers. The company’s management at the time included former key figures in the Congolese government: the former minister of mines and President Kabila’s retired bureau chief. In 2007, Nikanor informed the Alternative Israeli Market in London it had completed the process of pricing an initial public offering. At $1.5 billion, it was one of the largest flotations in the history of the British stock market. Nikanor, which was registered in the Isle of Man, intended to use the funding to develop three cobalt and copper mines in Congo. One of these mines, containing some 170 million tons of copper ore, began operating in the 1960s and shut down in 2000.

In November of 2007, after millions of dollars in capital were raised on the AIM in London, Nikanor merged with the Canadian company Katanga Mining Ltd., which like Nikanor operated cobalt and copper mines in the Katanga province of the Congo. A statement announcing the merger said the new company would be worth $3.3 billion, making it the largest cobalt producer in the world. As part of the merger, Katanga Mining paid the partners a total of more than 400 million euros.

A mining explosion

But over the course of 2008, there was a downturn in the company’s situation. A drop in raw materials prices worldwide and the financial crisis that struck toward the end of the year caused a steep decline in its worth. The company was later acquired by the Swiss commodities concern Glencore. A chain of secondary explosions then occurred that continue to reverberate to this day on the Gertner-Gertler front.

According to sources close to the deal, for quite a while, arbitration has been underway between Gertler and the Gertner brothers, who claim the former wrongfully took hundreds of millions of shekels from them. Gertler, who is represented by attorney Dori Klagsbald and Boaz Ben Zur, riposted with suits of his own, which are also under arbitration. The brothers are represented by attorneys Alex Hartman and Ron Berkman.

The really interesting battle, though, is being waged in secret, between the Gertner brothers and the intermediary in the gigantic deal – Weinrot. The conflict could culminate in independent arbitration. A few months ago, the Gertners contacted Weinrot and demanded that he return tens of millions of dollars to them. Despite attempts by the sides to keep the affair out of sight, Haaretz has learned that the Gertner brothers are saying the prominent lawyer took huge sums of their money that he did not have coming to him.

Over the course of the deal in the Congo, tens of millions of dollars were transferred from the Gertner brothers’ accounts via a foreign bank account belonging to Weinrot into a trust account in Gibraltar that funded the mining activity. According to the Gertners, instead of transferring the entire sum to the account in Gibraltar, Weinrot retained a large portion of the money. According to one estimate, the sum amounts to around 430 million. A person familiar with the details says the number is smaller.

“During that period a number of bank transfers of millions of dollars from the Gertners came into attorney Weinrot’s foreign account. Part of this sum was transferred as agreed into the trust account in Gibraltar, and part of it, about $20 million, remained in Weinrot’s account with the Gertner brothers’ knowledge as legal fees and for brokering the deal. Weinrot made the match between Gertner and Gertler and drew up the contract between them,” the source said.

But another person close to the affair says no agreement on legal fees was ever signed between the Gertner brothers and Weinrot.

“This isn’t the first time Weinrot has agreed with clients on legal fees without a contract,” said an acquaintance of the top lawyer.

When asked about the $20-million figure, he said, “There is no doubt this is a very big legal fee.”

The Gertner brothers say Weinrot was entitled to more like $3 million.

Weinrot has confirmed the Gertner brothers’ demand to Haaretz but has refused to comment on the details. People close to him have said the Gertner brothers found themselves in financial difficulties, which led them to file suits against many of the people involved in mining deals in the Congo, among them Gertler, Weinrot and another attorney who dealt with the Gibraltar trust.

“Weinrot does not discuss his former clients,” say his close associates.

The Gertner brothers’ attorney, Ron Berkman, has refused to comment on the matter, as have Gertler’s lawyers.

Lior Mizrahi