Dan Gertler, whose grandfather co-founded Israel’s diamond exchange in 1947, arrived in Congo in 1997 seeking rough diamonds. The 23-year-old trader struck a deep friendship with Joseph Kabila, who then headed the Congolese army and today is the nation’s president. Since those early days, Gertler has invested in iron ore, gold, cobalt and .
Diamonds have been a backdrop to Gertler’s life since his childhood in affluent northern Tel Aviv, where he had a secular upbringing. His mother ran a pop-music radio station, and his father was a goalkeeper for Maccabi Tel Aviv, a top-division pro soccer team, before becoming a diamond dealer.
As a youth, Gertler got up at 5 a.m. to learn how to polish gems before heading to school. He joined his grandfather, Romanian emigre Moshe Schnitzer, at business meetings to watch him negotiate diamond deals. When Schnitzer died in 2007, Benjamin Netanyahu, who’s now Israel’s prime minister, gave a eulogy.
Gertler, sitting below a stained-glass dome at his office in one of the Israel Diamond Exchange’s four towers in Ramat Gan, just east of Tel Aviv, turns wistful when he talks about Schnitzer. He recalls a business lesson his grandfather imparted: “He told me: ‘Dan, you meet your bankers and you ask for credit only when you don’t need it. Just to secure it. Because when you need it, it is too late.
At age 22, Gertler started buying rough diamonds so he could work with larger volumes, he says. Gertler flew between war-torn nations such as Liberia and Angola and the major diamond centers in the U.S., India and Israel, buying and selling gems, he says.
“From the beginning, he went his own way,” says his uncle, Shmuel Schnitzer, 63, who was president of the World Federation of Diamond Bourses from 2002 to 2006.“The guy has guts. This is the basic thing about him.”
Gertler broke with his family’s secular tradition when he and Anat decided to adopt an ultra-Orthodox lifestyle. They’ve banned television and computers from their five-story, terraced house in Bnei Brak, whose crisp stone finishing and verdant shrubbery lining each floor contrast with the neighbors’ concrete apartment buildings.
Gertler, meanwhile, won back a near monopoly of Congo’s diamond trade. One of his companies, Canada-based Emaxon Finance International Inc., paid $15 million in cash and loans to the country’s state-owned diamond miner, known as MIBA, for a four- year contract to sell 88 percent of its production.
Congo was desperate for investment at the time, Frazer says. “It’s not like he crowded out a lot of other investors,” she says. “There weren’t many.”
Kabila, who had formed a government in which former rebel chiefs were cabinet ministers as part of the peace deal, tried to kick-start Congo’s economy. The ministers signed dozens of deals to exploit the country’s natural resources with foreign companies, many of them at prices that undervalued the assets, according to reports by the World Bank and the Congolese Parliament.
In 2006, Kabila’s People’s Party for Reconstruction and Development, with a platform of rebuilding the country’s war- ravaged infrastructure, was elected in Congo’s first free elections in four decades, certified by the UN.
Gertler’s dealings can be wildly profitable. In one case, he earned a 500 percent return in just six months without risking a single penny as the middleman in a deal for Societe Miniere de Kabolela & Kipese SPRL, or SMKK, which owns a copper and cobalt deposit in the heart of Katanga’s richest mining zone.
In 2009, SMKK was half-owned by the state’s Gecamines, short for La Generale des Carrieres & des Mines , and half-owned by ENRC, the Kazakh-founded mining company that’s listed on the London Stock Exchange. ENRC wanted to acquire all of SMKK but didn’t exercise its right of first refusal to buy the government’s stake, according to the joint-venture agreement.
Instead, ENRC made a deal with a company controlled by Gertler’s family trust -- Emerald Star Enterprises Ltd., based in the British Virgin Islands. On Dec. 21, 2009, ENRC paid the Gertler firm $25 million for an option to buy the remaining 50 percent stake of SMKK, according to filings ENRC made with the London Stock Exchange.
Gertler didn’t even own the asset he was selling the option on -- at least not yet.
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