In 2010, a powerful mediator in the Democratic Republic of the Congo (DRC) allegedly organized a $500,000 bribe to get a local judge to dismiss a $16 million lawsuit against Glencore’s subsidiary, the Katanga Copper Company (KCC).
case overturned
The 2010 DRC court case that allegedly struck down the Glencore fixer had been brought by a company called Crusader Health, owned by South African medical couple Ian and Laurethé Hagen.
In 2010, the Hagens were seeking damages in a DRC court after Glencore abruptly canceled their company’s contract to build and operate hospitals at copper mines in the DRC.
The cancellation of Crusader Health’s contract reportedly followed the Hagens sounding the alarm about a new medical director imposed by Glencore.
They raised questions about whether the new manager, fellow South African André Hattingh, had the proper medical qualification, and claimed that his influence stemmed from his being “closely connected to and sponsored by” Glencore and their DRC agent.
The Hagens’ contract pre-dated Glencore and Gertler taking control of the mines in question, while Hattingh had already established a hospital for Glencore at another mine.
The Hagens’ objections to their new medical manager were reportedly met with a bewilderingly aggressive pushback that culminated in their firing from their company, and then the launch of their ill-fated claim for damages.
Gertler’s lawyer told amaBhungane: “Mr Gertler or anyone on his behalf was not a party to the proceedings brought by the Hagen family against Glencore. As indicated, neither Mr Gertler nor anyone on his behalf was involved in the hospital construction matter mentioned in your letter and neither Mr. Gertler nor anyone on his behalf is familiar with the Hagen family or Mr. Hattingh.”
When amaBhungane spoke to Hattingh, he partly contradicted him, confirming that he knew Gertler but was unaware of what he called “the politics” of the Hagens’ termination of contract and the subsequent consequences.
The Gertler Family Foundation on its website mentions that it “engaged renowned South African physician, Dr. Andre Hattingh, to manage all aspects of the [Kisingani] hospital”, which he describes as a “signature” project.
Glencore’s version
In Glencore’s court filing establishing the corrupt activities for which it is settling, the company explained how the DRC judge was paid through the “DRC Agent”.
The agent emailed a Glencore executive on November 3, 2010 saying that he had spoken to an anonymous “DRC official” and that he and this official would meet with the judge in the Crusader matter to work things out. .
The agent allegedly wrote that “[w]without [the DRC official’s] Help, we’ll be screwed big time I think. We need political pressure.”
They then “suggested that Glencore could ensure that [it] would prevail in the contract dispute if [he] he had a “reasonable amount of ammunition to make it happen.”
The “ammunition” needed was $500,000, and the agent sent Glencore a false invoice for this amount, purportedly from his attorney for work done on the Crusader dispute.
In reality, the money “was used as a bribe payment to get the lawsuit dismissed,” says Glencore.
Adding insult to injury, the agent allegedly also told the Glencore executive that Crusader’s own lawyer was involved and “ready to play along for the good cause.”
Intervention
Now, 12 years later, Glencore has pleaded guilty to a staggering bribery campaign across the African continent, as well as in Brazil and Venezuela, including bribing to quash the Hagens’ case.
The Hagens have used these admissions to intervene in the liquidation process, demanding that Glencore settle with them before the larger deal is finalized.
Like Glencore, the Hagens anonymized the “DRC agent” in their documents. Unlike Glencore, they did everything they could to identify this agent.
“At the request of [the Hagens]the [US] The government has confirmed the identity of the DRC agent. He is an individual who operated on behalf of the DRC partner in the DRC and facilitated the payment of bribes to further the interests of the DRC partner,” they said, referring to an Ontario Securities Commission settlement agreement that left it was clear that they were accusing Deboutte and Gertler.
The episode raises questions about Glencore’s motives for allegedly so aggressively voiding a seemingly innocuous hospital contract.
A more immediate concern for Glencore, however, is the threat that the revival of the Hagens case poses to their landmark settlement because of its abundance of past sins.
The company agreed to two separate settlements in the US: one for $700 million for bribery and corruption, and another for $385 million for manipulating fuel prices. These are separate from settlements in the UK and elsewhere.
The corruption deal with the US was substantially finalized in May of this year, but the date of the final judgment was repeatedly postponed.
The United States has been negotiating with Swiss authorities to create a compliance monitoring scheme to keep Glencore honest going forward. The mining giant is based in Geneva. The current estimate is that the Swiss will make a determination by the end of January 2023.
The Hagens have now thrown a further monkey wrench in the works with their $50 million claim, a significant addition to the $700 million corruption settlement and potentially an example for others to follow.
The Hagens base their claim on Glencore’s own estimate of $16 million of what it saved the multinational from paying the bribe by changing the 2010 case, plus claims for the loss of their business and legal expenses.
Glencore, in its own response court papers, readily admits that it owes Hagens restitution, but argues that the appropriate amount is closer to $10 million.
doctors against doctors
Crusader Health had been appointed by the previous owners of two copper mines in which Glencore and Gertler, through KCC, acquired majority stakes in 2009.
Soon after, Glencore brought in Hattingh, who was already running hospital operations at another Glencore mine in the DRC called Mutanda.
Ian Hagen, who was residing in Australia with his wife at the time, alleged in his court papers:
“Crusader DRC medical staff, who were working with Medical Manager [Hattingh], informed me that his medical knowledge and competence were suspect and ‘paramedic level at best’. My staff and I began running errands to verify the medical credentials of the Medical Manager.”
Hattingh now runs an NGO called Pediatric Care Africa. She on her website claims to have a medical degree and PhD in neuroscience after studies conducted in the US and Taiwan, specializing in fetal alcohol syndrome and related disorders.
He told amaBhungane: “It is my understanding that the Crusaders services were discontinued as a financial decision and requirement by the DRC government to provide a hospital for mine staff at KCC as that is what Glencore told me. he said at the time.. The rest of the politics I never got involved in.”
Hattingh was employed by Glencore between 2008 and 2013 to build four hospitals, including the ones the Hagens were originally due to build.
He then opened another hospital for the Gertler Family Foundation, Dan Gertler’s philanthropic team.
He told us: “The Gertler family foundation in Kinshasha paid my salary and paid the initial cost to open Kisangani Hospital… I met Dan Gertler on several occasions at the Gertler foundation offices in Kinshasha. He was my employer. So yeah, I know him.”
The Hagens claim that challenging Hattingh’s appointment sparked a campaign of harassment during which “a senior KCC executive told the Hagens if they didn’t turn a blind eye to this issue [Hattingh’s expertise]they would never work in the DRC again.”
They state: “Glencore admits that it acted in bad faith and terminated the Crusader DRC contracts, not for any legitimate business reason, but because the Hagens were causing trouble by investigating the Medical Manager…thus jeopardizing Glencore’s relationship with the DRC Partner”.
“A true journey through the penal code”
It is not entirely clear from Hagens’ court documents why Hattingh allegedly found such favor.
What followed is, however, more easily understandable.
When Crusader was canned and later returned with a court challenge, he was taken seriously enough to justify bribing the judge to secure a favorable outcome based on a technicality rather than the merits of the claim.
Still, Crusader’s claim, then worth around $10 million, seems like small change for Glencore.
Hagen theorizes that the claim had to be struck down and hushed up because it coincided with a sensitive deal involving a $110 million loan being negotiated with global asset management firm Och-Ziff.
Och-Ziff (now renamed Sculptor Capital Management) previously signed an agreement (similar to Glencore’s) related to bribes paid in African countries.
Whatever the reason for Glencore’s decision to freeze the Hagens, they insist the company must make full restitution.
“For more than a decade, Glencore has engaged in criminal and corrupt activity directed against the Crusader DRC and the Hagens. Glencore’s conduct has been a veritable journey through the penal code: bribery, corruption, intimidation and threats of physical violence that caused Crusader DRC to leave the country, all of which crippled the Hagens’ business and denied them their rightful recovery.”
Glencore is certain to pay; the question is how much.
The biggest question raised by Glencore’s larger deal is whether the liability web will extend to its former executives and “DRC Partner.”
AmaBhungane is a non-profit center for investigative journalism. We co-publish our research, which is freely available, on news sites like News24. For more information, visit us at www.amaB.org.
