dubious tax practices and exploitation of African workers
By RUTH SUNDERLAND and ROB DAVIES
Last updated at 8:58 AM on 4th May 2011
Controversy: Simon Murray, 71, caused a storm when he said 'pregnant ladies have nine months off'
News that the London Stock Exchange is on the verge of a mammoth flotation didn’t spread quite as far as the Zambian mining village of Mufulira. Even if it had, it’s unlikely the villagers there would have seen much cause for celebration.
While the rich seams of copper that lie deep in the ground beneath Mufulira have helped to make Swiss-based Glencore the largest and wealthiest commodities trader in the world, the African villagers are still struggling to get by on just a few dollars a day.
This is barely enough even to feed their families, let alone pay for the medicine they need to treat the illnesses caused by the dangerous levels of pollution spewed out by Glencore-controlled mines.
Thousands of miles away, in the oak-panelled boardrooms of London’s Square Mile, Glencore’s announcement that it is to launch one of the biggest stock-market floats the City has ever seen — valuing the company at around £30 billion — has caused much controversy.
The size of this secretive, shadowy company will see it propelled straight into the FTSE 100 index of the biggest British firms. That means millions of Britons — whose pension pots are linked to the performance of the FTSE 100 — could find themselves benefiting from the morally dubious activities that have brought such vast wealth to Glencore’s coffers.
Most British investors will focus on the huge profits Glencore generates — its £89 billion turnover last year was more than the GDP of New Zealand. But some, including the Church of England, whose investment portfolio helps pay for clergy pensions, are already expressing concern about the enormous profits being generated by the firm at the expense of some of the world’s poorest people.
Glencore is today expected to publish its flotation ‘prospectus’, including details of any legal actions and complaints levelled against the company in the dozens of countries in which it operates.
But an investigation by the Mail has already uncovered evidence of the gut-wrenching impact of its operations on one impoverished community.
In Zambia alone, Glencore is accused of manipulating its financial accounts in order to reduce its tax bill, deliberately depriving that poverty-stricken nation of much-needed income.
Poor: A Mopani copper mine in Zambia where villagers have just a few dollars a day to get by on - despite Glencore being the largest and wealthiest commodities trader in the world
Indeed, the foul-smelling sulphur clouds that hang low over Mufulira are not the only thing about this obsessively secret company leaving a bitter taste in the mouth.
The truth is that until now, most people would not have heard of Glencore — it’s only as a result of the proposed flotation that questions about its practices are being asked.
The company is so notoriously secretive that when it published a few details about itself on its website seven years ago, industry observers thought the information had been put up by mistake.
Its empire stretches from the jungles of Colombia to the plains of Australia. It makes its money from metals, minerals, oil, sugar, grain — commodities that form the very building blocks of world trade. And, armed with the best possible knowledge of global events, its traders buy these at the lowest possible price and sell at the highest possible mark-up.
The company revealed the extent of its grip on commodity markets last month, releasing figures showing it controls 60 per cent of the world’s trade in zinc and 50 per cent in copper.
Glencore is involved with the commodities market at all levels, from mining to shipping and ultimately trading them — by which method they make money by effectively betting on movements in the prices.
Glencore: Swiss company have grown rich - while Zambians continue to live on a few dollars per day
Although the exact figure is unknown, the company hasn’t denied reports that it profited from betting that the price of Russian grain would skyrocket last summer — as the former Soviet Union wrestled with a devastating drought.
Senior traders at the company even lobbied Moscow to impose a ban on the export of grain. The Kremlin did exactly that just days later, sparking a surge in the value of the Russian wheat and corn Glencore had bought. This kind of incident is unsurprising, for the story of the firm’s rise reads like the plot of a John le Carré novel.
Its colourful British chairman, 71-year-old Simon Murray, is a former French foreign legionnaire who, in his 60s, was the oldest man to reach the South Pole unassisted; he has survived being chased by a leopard and dodged machine-gun bullets during his eventful career.
He had been in his post for a matter of days when he sparked a sexism storm by proclaiming his wariness over hiring women because ‘pregnant ladies have nine months off’.
The chief executive is Ivan Glasenberg, whose stake in Glencore is estimated to be worth up to £6 billion.
Glasenberg is at the centre of a web of oligarchs and multi-millionaires. His close friends include controversial British banking heir Nat Rothschild, who stands to double the £25 million investment he made in Glencore in 2009 when it floats.
On board:Tony Hayward, the former BP boss, criticised for his handling of the oil spill in the Gulf of Mexico is a director
The Glencore boss’s contacts among the world’s super-elite also include the Russian oligarch Oleg Deripaska, who hosted both George Osborne and Peter Mandelson on his yacht three years ago when they were guests of Rothschild at his estate in Corfu.
The meetings led to an ugly spat and furiously denied allegations from Rothschild that Osborne had tried to secure a political donation from the Russian.
A 54-year-old champion race-walker for both South Africa and Israel (he has dual nationality), Glasenberg runs and swims every day to maintain his lean physique. Selected colleagues accompany him on his early-morning jogs — some say under sufferance — to display their loyalty to the workaholic Glencore ‘cult’.
Insiders say most are so work-obsessed that, despite their typical average basic salaries of £800,000, they have little time for fripperies such as Ferraris or luxury holidays. Staff are said each to receive up to 500 emails a day, are constantly on call and have to be prepared to fly to inhospitable parts of the world at a moment’s notice.
Another name on Glencore’s board of directors is Tony Hayward, the former BP boss reviled across the world for the incompetent way he handled last year’s Deepwater Horizon oil spill in the Gulf of Mexico.
Ce que l'on conçoit bien, s'énonce clairement, Et les mots pour le dire arrivent aisément. BOILEAU