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“The way in which I held the rights for Katumba was not uniform. In some of the ventures I held the rights for Katumba through separate companies from the companies through which I held my rights,” Gertler testified in the arbitration, according to the decision. For example, “one company for myself and one company for Katumba,” he said, according to the decision.
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In some ventures, the same company held the rights intended for both Katumba and Gertler, he testified, according to the decision.
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“Either way, the rights intended for Katumba had to be retained by me in order for me to transfer them to Katumba at his request, or make any other use of them as Katumba directs,” the arbitration document quoted Gertler as saying.
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Gertler testified that he didn’t know who Katumba’s local partners were.
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The arbitrator decided on a monetary award in favor of the Gertner brothers, though far less than they had sought. The decision — most of which is in Hebrew — indicates it was based on more than 10,000 pages of testimony and other documents including payment records.
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Bloomberg and PPLAAF haven’t seen the full affidavits, or complete correspondence including emails and text messages, cited in the decision. Gertler, who has applied to cancel the decision, declined to share additional documents while the process is ongoing, and a spokesman for the Gertner brothers told Bloomberg that they can’t disclose details about the confidential arbitration.
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According to testimony quoted in the case, Gertler in 2014 said his relationship with Katumba was “based on trust, on large payments,” and that Katumba worked with other parties and “didn’t bring such assets for free.”
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“Payments made to Mr. Katumba were based on the necessary community and other local investments connected to each commercial opportunity,” Gertler’s lawyers told Bloomberg in response to questions about the proceeding.
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Gertler also said that “a lot of money” was paid to Katumba, according to excerpts of his testimony in the arbitration document. He also described Katumba as “necessary” and someone who dealt with local communities and government and tax officials, in testimony referring to diamond activities in Congo.
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“The joint projects of Mr. Gertler and Mr. Katumba that resulted from their partnership are numerous,” Gertler’s lawyers told Bloomberg. “There is absolutely no proper basis on which to paint the payments to Mr. Katumba as improper.”
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Loans
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Gertler also testified that he gave the country loans. In the arbitration, he said that he “gave in cash to the government. To the central bank of Congo in cash.”
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Gertler’s lawyers told Bloomberg he had been referring to a loan to state diamond company Miba. They said such payments were “in no way improper or unusual” at the time and were used to ease cash-flow challenges in the country. Cash payments were also common for business purposes due to a limited banking system at the time, they said.
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Summarizing some of Gertler’s defense in the case, arbitrator Eitan Orenstein said that as part of their business partnership, “Katumba had leveraged his connections with local entities in Congo, to ensure that business opportunities for the mining assets in Congo would be referred first and foremost to Gertler.”
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Gertler and the Gertners “were literally dependent on the services of Mr. Katumba,” which is why they agreed to pay him “such substantial payments, percentages from transactions of many hundreds of millions of dollars,” Orenstein wrote in the decision.
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“The Gertner brothers were not involved in managing any aspects of any business in the DRC, which were run exclusively by Gertler, causing the Gertner brothers significant financial damage,” a spokesman for the Gertner brothers said in an email sent to Bloomberg.
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