Diamonds / Industry / Legal

U.S. Reimposes Sanctions On Diamond Trader Gertler


The U.S. government taketh away, and then it giveth, and now it taketh away again.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has revoked a one-year license given to Israeli diamond trader Dan Gertler (pictured) it issued only about five weeks ago. The license had effectively nullified sanctions that were placed on the 47-year-old Gertler three years earlier.

“As the original designation…made clear, Mr. Gertler engaged in extensive public corruption,” said the decision announcing the license revocation. “The United States will continue to promote accountability for corrupt actors.”

The temporary license, issued without public notice in the waning days of the Trump administration, drew fire from critics, who called it an abrupt and irregular departure from established policy.

In 2017 and 2018, the Trump Treasury Department branded Gertler and 33 related entities as specially designated nationals (SDNs) under the Global Magnitsky Act. OFAC charged that the billionaire engaged in corrupt acts in the Democratic Republic of Congo (DRC), in conjunction with the country’s former president, Joseph Kabila.

Under federal law, U.S. companies, including banks with a presence here, are banned from dealing with SDNs, and all their U.S. assets are frozen.

The OFAC license granted in January didn’t remove Gertler and his companies from the SDN List, but it did authorize all transactions and activities that had previously been banned. As a precondition, Gertler agreed to adopt what he called “the most stringent anti-bribery and anti-corruption policies and measures across all our global practices,” and pledged to report any U.S. transactions to the U.S. Treasury Department every 90 days.

“The license was issued on the basis of my commitment to OFAC to comply with the terms and conditions set by OFAC and with the law,” Gertler said in a statement. “[M]oving forward, transparency and accountability will be the foundation of our business.”

The new license came after a flurry of last-minute lobbying from high-powered Washington figures, including former Harvard Law School professor Alan Dershowitz, who defended President Trump at his first impeachment trial, and former FBI director Louis Freeh.

The license was always considered temporary, but now it’s lasted for less time than anyone expected, as the move quickly drew fire.

A New York Times report claimed the episode stretched the limits of federal law, which generally prohibits sanctioned individuals from paying lobbyists.

John Smith, OFAC’s director when the sanctions were imposed, told the Times he was “astounded” by the action.

“It appears to be an abuse of the process,” he told the newspaper.

Just six months prior, NGO Global Witness and Israeli newspaper Ha’aaretz published reports charging that Gertler was using a “galaxy of offshore companies, based in tax havens like the British Virgin Islands,” to evade the OFAC sanctions.

In a statement, Gertler denied the charges and claimed the reports were based on “falsified documents.” Global Witness responded that, prior to publication, it asked Gertler’s attorneys for evidence the documents were fabricated but weren’t provided with any.

In late February, two former employees in the audit department of a Congolese bank leaked even more documents that they said prove that Gertler had developed an extensive network to evade sanctions.

The bank subsequently brought criminal charges against its former auditors, who have reportedly been sentenced to death by a DRC court, in what NGOs called retaliation for their whistleblowing. The former employees have both fled the country.

Gertler said he played no role in this court case, blamed the NGOs for exploiting the two workers, and called on their death sentence to be commuted.

Gertler’s spokesperson did not return a request for comment on the license revocation, but Dershowitz told the Times: “This decision was done unilaterally without an opportunity for Mr. Gertler to present evidence that he has been complying with all the requirements and conducting himself properly. We are now in the process of considering all of our options.”

Activists hailed the Biden administration’s decision to revoke the license.

“The revocation of the license given to Dan Gertler and his network is a critical step for the Biden administration to turn the page on the damaging process that led to its issuance in the first place,” Brad Brooks-Rubin, general counsel at the Sentry and former conflict diamonds advisor at the U.S. State Department, said in a statement.

(Photo courtesy of Dan Gertler)




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By: Rob Bates

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