You can be the smartest trader in the world and you still can’t make money without access to oil. Fortunately, there is always access if you are willing to pay enough cash.
—Swiss commodity broker
When Glencore, the world’s biggest commodities brokerage firm, went public in May 2011, the initial public offering (IPO) on the London and Hong Kong stock exchanges made headlines for weeks in the trade-industry press, which devoted endless columns to the company’s astonishing valuation of nearly $60 billion—higher than Boeing or Ford Motor Company. The massive new wealth turned the nearly five hundred employees into overnight multimillionaires and made billionaires of at least five senior executives, including CEO Ivan Glasenberg. “We are not going to change the way we operate,” vowed Glasenberg, who had started as a lowly coal trader for the Swiss firm nearly three decades earlier and, with the IPO, immediately became one of Europe’s richest men. “Being public will have absolutely no effect on the business.”
Going public forced the firm to pull back the curtain on its famously secretive doings, and what it revealed shocked even seasoned commodities traders. Glencore turned out to be far more globally dominant than analysts had realized. According to its 1,637-page IPO prospectus: the company controlled more than half the international tradable market in zinc and copper and about a third of the world’s seaborne coal; was one of the world’s largest grain exporters, with about 9 percent of the global market; and handled 3 percent of daily global oil consumption for customers ranging from state-owned energy companies in Brazil and India to American multinationals such as ExxonMobil and Chevron. All of which, the prospectus said, helped the firm post revenues of $186 billion in 2011 and employ some fifty-five thousand people in at least forty countries, generating an average return on equity of 38 percent, about three times higher than that of the gold-standard investment bank Goldman Sachs in 2010.
Since the IPO, the company has only gotten vaster in scale by making a series of acquisitions, among them a merger with Canada’s biggest grain trader, Viterra, and a $90 billion takeover of Xstrata, a global mining giant in which it already held a 34 percent stake. Thanks to the latter deal Glencore will rule over an “empire stretching from the Sahara to South Africa,” as Africa Confidential put it. As it is, Glencore already trades, manufactures, refines, ships, or stores at least ninety commodities in some three dozen countries.
Glencore’s physical presence in the United States is modest; it has minor holdings in a few American companies and an office in Stamford, Connecticut, that helps run its oil and gas trading business. But its global market power and reach make its operations important to American policy makers as well as to the public. “Wherever you turn in the world of commodities, you bump into Glencore,” says Nicholas Shaxson, author of Treasure Islands, a book about tax havens and an associate fellow at the British think tank Chatham House. “It is twice as big as Koch Industries, and it has an unhealthy grip on some of the world’s most important commodity markets, with influence that stretches from Texas to Tehran to Taipei.”
Peter Brandt, a longtime commodities trader, echoes that assessment. “Glencore is at the center of the raw material world,” he told me. “Within this world there are giants, and Glencore is becoming a giant among giants.” China’s manufacturing base, one of the world’s economic engines, “could not exist without Glencore, because it is dependent on raw material imports, many of which Glencore plays a major role in trading and producing,” he added.
If the IPO shed light on Glencore’s assets and influence, it did not make clear just how Glencore, founded four decades ago by Marc Rich, a defiant friend of dictators and spies who later became one of the world’s richest fugitives, achieved this kind of global dominance. The answer is at once simpler and far more complicated than it appears. Like all traders, it makes its money at the margins, but Glencore, even more so than its competitors, profits by working in the globe’s most marginal business regions and often at the margins of what is legal.
This means: operating in countries where many multinationals fear to tread; building walls made of shell corporations, complex partnerships, and offshore accounts to obscure transactions; and working with shady intermediaries who help the company gain access to resources and curry favor with the corrupt, resource-rich regimes that have made Glencore so fabulously wealthy. “We conduct whatever due diligence is appropriate in each situation to ensure we operate in line with Glencore Corporate Practice,” was spokesman Simon Buerk’s terse reply when I asked how the firm chooses business partners and local representatives.
Given the nature of its business, there’s simply no other way for a company like Glencore to thrive. “Unlike the case with many industries, minerals and energy are often owned by the state in Third World countries,” says Michael Ross, author of The Oil Curse and a professor at the University of California, Los Angeles. “And in a number of countries where Glencore operates, doing business means putting money into the pockets of repressive governments and corrupt rulers. In some of those places … it’s hard to draw a line between what’s legally corrupt and what’s not.” Traders like Glencore—which Reuters once called “the biggest company you never heard of”—are largely invisible to the public. One obvious reason is that, with the exception of post-IPO Glencore, all the big traders are privately held and not subject to corporate disclosure laws. Another is that energy companies that produce oil, like ExxonMobil and Shell, also sell it at the corner gas station. Consumers don’t have that sort of interaction with trading companies, so they get less scrutiny.
Furthermore, oil traders are not obliged to disclose the amounts they trade, and the firms operate under different names and affiliates. Jack Blum, an attorney and former Senate counsel who played a key role in investigations into Bank of Credit and Commerce International (BCCI), said regulating hedge funds would be easier than keeping tabs on traders. “They operate through a maze of subsidiaries, and it’s virtually impossible to know who they are trading with and how much and at what prices,” he told me.
Glencore’s effective global tax rate for 2010 was just 9.3 percent, in large part because nearly half its forty-six subsidiaries are incorporated in “secrecy jurisdictions,” opaque financial havens like the Netherlands, according to a report by the nongovernmental organization (NGO) Publish What You Pay. Glencore’s Rotterdam-registered Finges Investment is worth $18 billion, but doesn’t have a single employee, according to corporate records filed in the Netherlands. Finges, a Dutch financial expert told me, is “nothing more than a piece of financial engineering.”
When it comes to the media, oil traders consciously seek to stay out of the public spotlight. Sylvain Besson of Le Temps, a major daily newspaper in Geneva, describes a “culture of discretion” that prevails across the industry. “It’s a hard world to penetrate,” he said. “Banks will take very public stands, but not traders. It is the most discreet profession, and we have many discreet professions. They prefer we not write about them.”
Glencore in particular is known for its incredibly secretive corporate culture. One source compared the company to the CIA. Another said, “It’s like a church. They buy loyalties; no one ever talks.”
Traders have enormous political power, and because they are less regulated and scrutinized are able to do things that most energy-producing companies wouldn’t dare. In 2007, Glencore effectively helped bankroll Ivory Coast strongman Laurent Gbagbo by discreetly providing his cash-strapped state oil company with an $80 million loan that was to be repaid with future exports. Gbagbo was overthrown four years later, at which point the loan had been renewed three times, and the state company, Petroci, still owed Glencore around 650,000 barrels that were worth about $70 million.
During the early stages of the 2011 revolt that drove Libya’s Muammar Gaddafi from power, Vitol, one of Glencore’s chief competitors, secretly delivered (on credit) hundreds of millions of dollars worth of fuel to the opposition. The grateful rebels awarded Vitol the first contract to lift Libyan crude after the country resumed exporting oil following Gaddafi’s overthrow.
Going public is unlikely to change the broad business model created and perfected by Rich, who, before his controversial pardon by US president Bill Clinton, was a legendary fugitive, a regular fixture (along with Osama bin Laden) on the FBI’s Most Wanted list. The new Glencore will be like the Glencore of old—only much, much bigger. In today’s superheated market for natural resources, driven by markets such as Brazil, China, and India, Glencore wants to grow—and in a major way. Already the world’s biggest middleman, it now wants to control the entire business chain, from mines and smelters to storage facilities for finished products, and from pumping oil to shipping it to refineries, while trading and hedging all along the way.
Take copper, for example: Glencore mines it, refines it, transports it, and makes wire and other finished products. “That’s one way that Glencore makes so much money,” a Geneva-based industry source told me. “When you are vertically integrated you make more at every step. The money stays in the same pocket.”
Another way Glencore makes so much money is by leveraging information to take advantage of the wild swings that have marked global commodity prices in recent years, with oil yo-yoing from $147 a barrel in mid-2008 down to $40 later that year.1 Poor countries that sell commodities often end up losers when prices go down—like Zambia, which in recent years has been intermittently walloped by a combination of rising prices for agricultural products and sharply falling prices for copper and the other mineral exports on which it depends. But Glencore, like a casino where the house always wins, “benefits directly from the volatility,” as Deutsche Bank noted cheerfully in a report issued prior to the IPO for potential investors.
Michael Masters, founder of both a global investment management firm and of Better Markets, a Washington DC–based group established to promote transparency in the financial markets, takes a far less rosy view. He described Glencore as an “active predatory force” that has an inordinate influence on the price of raw materials that are important to the US and global economy. “They are smart and good and know how to use information to exploit other investors,” he told me. “When they’re selling you don’t want to be buying, and when they’re buying you don’t want to be selling.”
Still, the real secret to Glencore’s success is operating in markets that scare off more risk-averse companies that fear running afoul of corporate governance laws in the United States and the European Union. In fact, those markets are precisely where the future of the company lies. Deutsche Bank identified Glencore’s “key drivers” as: the growth of copper in the Democratic Republic of the Congo; coal in Colombia; oil and natural gas in Equatorial Guinea; and gold in Kazakhstan. All are places with a heady, dangerous mix of extraordinary natural wealth and various degrees of instability, violence, and strongman leaders. Glencore’s experience and adeptness operating in these “frontier regions” and “challenging political jurisdictions”—Deutsche Bank’s delicate euphemisms for countries known for corruption, autocracy, and human rights abuses—is central, the investment firm wrote, to Glencore’s “significant growth potential.”
The oil trading business—by which firms negotiate and purchase output from energy-producing nations, find buyers, arrange financing, and charter tankers to ship oil—didn’t exist in its current form until after the 1973 Israeli-Arab war. Until then a few Western multinational companies dominated the oil business: They controlled the fields, the ships, and the refineries. Meanwhile, the United States and a handful of other industrial powers consumed 90 percent of exports, and so there existed a rough pipeline that moved global oil from the Third World to the First World. Daniel Yergin writes in his book The Quest:
Most of the global oil trade took place inside each of the integrated oil companies, among their various operating units … Throughout this long journey, the oil remained largely within the borders of the company. This was what was meant by “integration.” It was considered the natural order of the business, the way the oil industry was to be managed.
The system broke up because producer companies got tired of bring ripped off by the multinationals and their home governments. One way they fought back was through the Organization of the Petroleum Exporting Countries (OPEC), which was founded in 1965 but only closely coordinated members’ output to determine production after the Yom Kippur War. The conflict prompted OPEC to launch its embargo against the West, leading to an explosion in the price of oil. While the West viewed this as unfair collusion and political manipulation of oil prices, OPEC producers understandably saw it as a means of gaining a fairer share of the profits from the global energy business.
The emergence of independent trading also allowed producer countries to alter the balance of power. “The major companies were screwing the producer countries,” a Geneva oil trader said. “They said, we’re taking your oil, and we’ll tell you what it’s worth, and we’ll refine it and sell it. But that all changed the day a trader turned up and said, I’ll pay you twenty-one dollars instead of the twenty dollars they’re paying you.”
Oil trading proved to be hugely profitable, and before long the major companies had created their own trading wings. With the run up in global demand of the past few decades, the market has gotten far bigger and more lucrative. Glencore was valued at less than $1 billion in the mid-1990s, about one sixtieth of its value at the time of the IPO.2
Traders have flocked to Switzerland ever since the early days of the industry. The reasons for that choice are numerous, among them the country’s long record as a financial haven that offers strict rules on bank and corporate secrecy and its weak business regulation. For years Swiss authorities did not prosecute bribery, and banks were not subject to money-laundering laws. Some rules have been tightened, but commodity traders and financial intermediaries are still largely unregulated. “It’s a light touch here,” one Swiss trader told me during a trip I made to the country in 2011.3 “There are rules, but they are not always applied.”
For traders, another major advantage of operating in Switzerland has been the country’s political neutrality and its reluctance to enforce international sanctions and embargoes. Swiss-based traders supplied oil to the South African apartheid state despite a UN embargo against Pretoria. Switzerland joined the UN in 2002, but is not a member of the European Union, and applies EU sanctions selectively. Ten years later Vitol bought fuel oil from Iran and offered it to Chinese buyers—and allegedly blended it with fuel oil from Europe to hide its origin—despite an EU embargo on oil trading with Iran. But Swiss-based firms could evade the embargo, because the government, citing unspecified “foreign policy reasons,” rejected the ban.
Low corporate and personal taxes are another draw. Switzerland even offers special tax arrangements to attract rich individuals (and indirectly their companies) through a simple process known as the Forfait fiscal. The list of Forfait recipients and details of the individual deals are kept secret, but the total number of beneficiaries is public. Until a decade ago, about two thousand people had negotiated individual tax deals with Swiss authorities; by 2012 that number has climbed to about six thousand.
The names of a few recipients have leaked and include a number of big oil traders, such as Gennady Timchenko of Gunvor, a Russian firm with close ties to the Kremlin. Another person granted a Forfait was Chechen oligarch Bulat Chagaev, an intimate associate of ex-warlord and President Ramzan Kadyrov, who owns two Geneva-based firms, Dagmara Trading and Envergure Holding, which reportedly oversee his oil and gas trading, real estate, and construction empires. During an interview with Swiss national television, Chagaev declined to state the size of his fortune—“I don’t know as I never count my money, nor that of others”—or to comment on allegations that he had purchased a major Swiss soccer team as a vehicle to launder money. “I don’t know what clean or dirty money is,” he said of the latter charge. “Money has no family name or country; it’s just money.”
The political influence of the financial and trading sectors is also reassuring to commodity traders and other investors. “Creating favorable conditions to attract money from abroad is the basic strength of the whole Swiss system,” says Besson of Le Temps. “Traders don’t often take a highly visible political role—the banks are the most powerful visible lobby—but the political world is very sensitive to the broad needs of the offshore sector, including traders. Their influence is constant if not visible.”
“It’s a banana republic in extremis,” says Oliver Classen, from the Berne Declaration, a NGO that tracks traders, of their political influence.
Geneva is now reckoned to have surpassed London as the world’s biggest center for physical oil trading, and hundred of traders are based in or have major operations there. These include American corporate behemoths such as Cargill, state energy firms from Ukraine and Azerbaijan, and the trading houses of multinationals such as Total of France.
Independent traders are heavily represented in Switzerland as well. Vitol, which pled guilty for paying illegal commissions to Saddam Hussein’s government under the United Nations oil-for-food program, also has a checkered past when it comes to hiring shady middlemen. In the mid-1990s the company paid Željko Ražnatovi?—better known as Arkan, the Serbian career criminal and paramilitary leader who the UN later indicted for crimes against humanity—$1 million to serve as a consultant on a deal in the former Yugoslavia.
During the huge energy price run-up in 2008, the Commodity Futures Trading Commission labeled Vitol a “speculator” that bought oil contracts to hold as investments instead of delivering fuel. At one point during the price spike Vitol held more than 10 percent of all oil contracts bought and sold on the New York Mercantile Exchange.
Frenchman Jean Claude Gandur founded Addax, another giant with offices in Geneva. Over the years it won various contracts in Africa and the Middle East by partnering with locals tied to ruling families and leaders. “In these parts of the world you are invariably going to be dealing with people connected to someone powerful in the ruling elite,” Michael Ebsary, a firm executive, once explained. “That’s just the way it is.” Addax also has major interests in Iraqi Kurdistan, including oil fields and a refinery. In 2009, Sinopec of China bought Addax in a move seen as a sign of Beijing’s ambitions to lock up its growing global energy needs.
Trafigura, one of many trading companies established by veterans of Marc Rich & Company, gained notoriety in 2006 for dumping toxic waste in the Ivory Coast (see p. 6). Through at least late 2011 Trafigura was selling fuel to Bashar al-Assad’s regime in Syria as it intensified a bloody crackdown on its opposition and the country lurched toward chaos and civil war.4
Gunvor of Russia, which swiftly grew to become the world’s third-largest oil trader, was founded by its owners—Torbjörn Törnqvist and Gennady Timchenko—as a series of mailbox companies in the British Virgin Isles, Cyprus, and the Netherlands. They moved the firm to Geneva in 2003, the same year that the Russian government took over Yukos and tossed CEO Mikhail Khodorkovsky into jail. Gunvor took off after that; its rivals say the company has thrived due to favorable treatment from Vladimir Putin. International press reports have periodically suggested that Timchenko is a front for Putin.
Uniquely among the giant trading firms, Glencore is located in Zug, a charming canton a few hours from Geneva and just north of the Alps. This is where Marc Rich founded the firm, and today Glencore operates there out of a gleaming white steel-and-glass headquarters.
Zug’s population of residents and registered companies both hover around twenty-seven thousand, and the corporate tax rate averages around 15 percent, low even by Swiss standards and far below top rates in the US. Burger King Holdings, Adidas, Siemens, and Transocean Ltd.—owner of the Deepwater Horizon drilling rig that sank in the Gulf of Mexico in 2010—are among the multinational giants headquartered in Zug. Income taxes are also low, and in Rüschlikon, where Glasenberg lives not far from the Glencore headquarters, citizens voted to drop them further after the IPO, as his fortune at that point had swelled to an estimated $7.3 billion and was so huge that his taxes alone were sufficient to fund the town’s entire budget.
The conventional view of oil traders is that they make money by leveraging information to buy cheap and sell high. They are, as Daniel Yergin writes in his book The Quest, “nimble players who … with hair-trigger timing, dart in and out to take advantage of the smallest anomalies and mispricings.”
During a trip to Switzerland in 2011 I interviewed half a dozen traders; all would speak only off the record, given the sensitivity of their business and their forthrightness about it. All of them spoke of the range of expertise required to succeed in the business, from hedging and currencies to shipping, logistics, and pricing. “There’s a lot of know-how involved,” one former trader, who worked for Glencore in Africa, told me. “Not everyone knows how to paddle up shit creek without oars. It won’t work if you’re sitting at a desk in London; you have to be down there.”
Yet all of them acknowledged that political connections were even more vital than technical expertise. “The oil business has now and then involved sharing the benefits,” this person put it euphemistically. “It always comes down to the same thing.”
The right contacts are just as important on the downstream side as they are upstream. One trader told me about his company’s local office in an Asian country, which sold refined products to major petrochemical plants. His office, he said wryly, was staffed by “a bunch of drunks.” Their chief strategy for finding deals and beating out their competitors was to “wine and dine the procurement guys”—karaoke nights were a particular favorite—at the plants they sold to. “Through those relationships, we knew the procurement schedule at the big buyers,” he said. “It wasn’t a straight market play; it was a play based on friendships. It’s not a black-and-white world.”
Another trader, who bought and sold oil exclusively in Africa, met me at his elegant office on the outskirts of Geneva and offered a curious defense of bribery. He led me past an open area, where about six traders were scanning information onto their computers and into a large conference room that had a beautiful wood table, polished to a waxy sheen. Most Westerners misunderstood the concept of corruption, he told me after a secretary had served us espressos in small white cups. “In a lot of Third World countries there is no functioning government and no tax collection, so the head of state gives a mine or an oil concession to a chief or a minister and tells him to go feed his family. What NGOs call corruption is a system of distribution; it’s an inefficient system, but it’s a way of putting money into the country.”
He acknowledged that companies sometimes arranged payoffs, legal or otherwise, to win favor with Third World leaders, but argued that this was fundamentally no different from what happens in Europe and the United States. “If you want to talk to a senator, you give money to his PAC. And look at Goldman Sachs, which hires every ex- and future secretary of the treasury. It’s the same shit. You pay for access.”
“But that’s a form of corruption too, isn’t it?” I asked. Wasn’t he just arguing that the West had its own skewed “systems of distribution”? And what about what the other traders had told me? If you don’t have access to oil, you can’t make money, and so he, like all traders, tried hard to get better access than his competitors, even if it meant cutting a few corners. Wasn’t oil trading fundamentally a dirty business?
He waved this off impatiently: “Yes, you need oil, but there is always someone who can sell you it. And yes, there have been traders who have broken embargoes and made a lot of money, even though, putting aside the moral arguments, they probably didn’t do anything illegal if they were Swiss traders. But everything has become more transparent because of the globalization of ethics. Today no one will sell to Iran, except China. The banks won’t lend the money. Even fifteen years ago you could send a rust bucket to Africa. Today all tankers are high quality. There is a tendency toward specificity of standards in a global market.”
His view was that oil trading is no different than trading in other goods and commodities. “It’s really about transportation,” he said, as his secretary poured another round of espresso. “Trading is just moving a product from an area of surplus to an area of deficit. You are selling a product that is the same everywhere else. The only reason people buy it from you is because it’s cheaper. You have no reason to be loyal and buy from one company.”
He also dismissed my suggestion that traders profited from speculation and price gouging. “Speculators don’t make the market; they amplify trends, and if they go against the market they end up getting smacked,” he said. By way of illustration he noted that commodities trading boomed in the 1970s, busted in the 1980s and 1990s, and boomed again in the 2000s. Gold prices tanked through the 1990s, and no amount of manipulation would have changed that; gold soared in the 2000s “because of the stupidity of the US in Iraq and other reasons, not because of speculators.” With regard to oil, traders might affect daily fluctuations, but big price movements up or down were caused by broader trends.
Others I spoke with acknowledged—some with satisfaction and others dismay—that traders played a more substantial role in the speculation that has agitated oil markets in recent years. I took a fifty-minute train ride from Geneva to the town of Montreux, at the foot of the Alps, to meet with a retired commodities broker who got his start in the 1980s trading cement, rice, and spices before moving on to buying and selling oil and refined products. We had lunch across the street from the train station at the Grand Hotel.
Since the oil shocks of the 1970s, the prevailing analysis has tended to describe oil prices in strict supply-and-demand terms, often placed in a geopolitical context. If it wasn’t conflict in the Middle East that was jacking up prices, it was devious oil cartels tinkering with the spigot, Hugo Chávez nationalizing refineries, rebels in the Niger Delta blowing up pipelines, or demand from the emerging middle class in India and China.
But for the past seven years the price of oil had been swinging wildly in the face of contradictory supply and demand data. After floating in the $10 to $40 per barrel range for almost twenty years, it started to climb sharply in 2005, when it crossed $70. After falling back a bit, it spiked to $140 in the middle of 2008. (On September 22 of that year, the price actually jumped $25 in a single day.) But then the price fell off a cliff, down to a Clinton-era price of $30, in just six months. Within two years it had tripled again.
A cause and effect of the big price swings is what my lunch companion called “the horrendous development” of a variety of hedging techniques and their growing sophistication.5 At most trading companies, he explained, one desk handles the physical trade in oil and another handles the paper trade. The job of the latter is to hedge the sales of the former, but in the past few decades the ratio of the daily physical trade to the paper trade has gone from roughly 1 to 1 to 40 or even 50 to 1. “People are sitting there all day just buying and selling paper barrels,” this person said. “Everyone knows we need better rules and regulations, but the people who are making money don’t want the rules to change. Historically paper markets were created to facilitate trade by letting buyers and sellers hedge their bets. The intention was not for people to gamble or to give them the ability to manipulate the market, which is what happens today.”
“That sounds conspiratorial,” I said. “Is there a lot of collusion between the traders?”
“I’m not talking about a formal conspiracy, but these guys all know each other,” he replied. “It’s so easy to influence prices. If someone at one trader decides he’s going to start selling one hundred million barrels of [oil], the market will obviously go down. No doubt if he makes a call to his friend, and that friend talks to his friend, in a few days everyone is selling, selling, selling—and the insiders sell early and make a giant profit.”
My lunch companion had traded mostly in sub-Saharan Africa, but he had also closed deals in Algeria, Venezuela, Russia, and Libya. Not surprisingly, he had a fairly jaded view about the nature of the business. “Ten years ago, I’d get on a plane with money straight from the bank to spread around; that’s how deals were done,” he told me forthrightly. “Now you sign a contract with an offshore company that’s owned by the relative of some government official you need. The company may not be strictly legitimate or conduct any real business for you, but everybody’s happy. Western banks might want to know who the real owners of the offshore company are, and they will zero in on you if the firm is not legitimate. But in the Far East—Singapore, China, Hong Kong—banking is far less restrictive. The same is true on weapons deals and other big contracts. It’s the way of the world.”
But the most unapologetic cynicism came from two men with decades of experience in the oil trading business that I met for dinner one evening in Geneva. The first (a Frenchman whom I’ll call Philippe) began his work career with French intelligence before moving to oil giant Elf. Now privatized and part of Total, Elf built a stronghold in Africa on the basis of massive bribes to political leaders. In 2003, three senior company executives were sentenced to jail for siphoning off corporate funds and making payoffs in what the Guardian described at the time as “the biggest political and corporate sleaze scandal to hit a Western democracy since the Second World War.” “During the Elf years we had a lot of connections in Africa,” Philippe told me at his beautiful home on the city’s outskirts. “They are small countries, and you can get to know everyone; it’s not hard to meet presidents.” After leaving Elf, Phillippe in fact served as an adviser to several African presidents and to a variety of oil trading firms that do extensive business in Africa.
He and I drove to a restaurant called Au P’tit Bonheur. The temperature was mild and the sky clear, and we sat on a terrace that afforded a splendid view of the city’s famous lake and the surrounding Alps. We were soon joined by his friend Alain (not his real name), an executive in the oil and gas industry who frequently deals with the trading houses. Whereas Philippe was dressed simply but elegantly in jeans, a brown-and-white checked shirt, and mono-grammed tennis shoes, Alain favored more traditional business attire. “The oil business is a service-intense industry, which requires a lot of related expertise,” he told me. “Networking is extremely important, and so is information. Geneva is a village; everyone I need to know is here.”
Soon bottles of white wine and plates of food were brought to the table, beginning with foie gras and other appetizers and moving on to a main course of trout and grilled vegetables. “The problem for traders is, they need something to sell,” Philippe said between forkfuls of food. “The major oil companies produce oil directly, so their trading wings have no problem. Russian traders have strong links home, so they also have no problem getting access to production. But independent traders don’t produce their own oil, so if they want access they need to have special relations with the chiefs of state.”
“Trading oil is built on money,” Alain joined in. “If you get my volume, then you support me and I support you. Maybe that’s a bit rough, but that’s the way it is.”
Alain offered what he called “the proof of the importance of politics and money.” A business associate, he said, was familiar with the 2006 incident in which a Trafigura-leased ship carrying toxic waste was turned away in several European ports but was finally allowed to dump its contents at Abidjan in the Ivory Coast.
“Trafigura made a trading decision to get rid of that stuff, and in Holland there was no way to get rid of it, so they sent it to Africa,” he said. “There was a scandal, but that didn’t break the company’s relationship with Ivory Coast. After everything died down, Trafigura started doing business with the government again, and does business with it now. Why? Money is changing hands. You’ll never clean corruption from the system.”
“The Chinese are strong in Africa because they make unconventional deals,” Philippe added, as he called a waiter over to order dessert. “In countries like Equatorial Guinea, if you want a deal, it’s simple: They get 50 percent. You have no choice.”
After espresso and dessert were served—chocolate mousse topped with ice cream and berries—the table talk turned to the business and personal pleasures of living in Switzerland. “If it were only a question of taxes, you could do better offshore, but that doesn’t give you the stability and security of Switzerland,” Phillipe said, with a contented smile. “The services are excellent, and there are excellent international schools if you have kids. There’s skiing, biking, and sailing. Life here is not so bad.”
“We’re all bandits here,” Alain added. “You can be accepted as long as you bring a lot of money.”
To which Philippe heartily agreed, saying: “You have to pay your parking and your taxes and respect your neighbors, but if you want to cut a deal with a bandit, it’s OK.”
* * *
Leveraging ties to dictators has always been at the heart of the business empire built by Rich, the Belgian-born US citizen who founded what would become Glencore in Switzerland in 1974. Undeniably brilliant, Rich started in 1954 as a mail clerk at Philipp Brothers, then the world’s dominant commodities firm, and within two years had worked his way into the position of junior trader. His own politics were conservative, but money trumped ideology for Rich; he was just as willing to cut deals in fascist Spain—where he worked for a time at the company’s Madrid office, which specialized in handling business in rough countries in Africa and the Middle East—as in communist Cuba, where Philipp Brothers had dispatched him soon after Fidel Castro took power. He went on to travel frequently to Havana, where, in addition to picking up a lifelong fondness for Cohiba Cigars, he did business in pyrite, copper, and nickel.
He and Pincus “Pinky” Green left Philipp Brothers in 1974 and established Marc Rich & Co. in the canton of Zug, Switzerland’s most business-friendly tax and secrecy haven. From early on, Rich cultivated ties to monarchs and presidents, diplomats and intelligence agencies, especially Iran’s SAVAK under the shah. During the Arab oil embargo of the early 1970s Rich brokered a deal by which Iran secretly supplied Israel, which proved to be a vital economic lifeline.6 Rich also periodically lent a hand to the Mossad’s clandestine operations, among them the evacuation of Ethiopian Jews to Israel in the 1980s.
Rich made a fortune by buying oil from Iran during the hostage crisis and from Libya when Ronald Reagan’s administration imposed a trade embargo on Muammar Gaddafi’s regime, as well as from supplying oil to apartheid South Africa. An inveterate sanctions-buster, Rich used offshore front companies and corporate cutouts to try to stay below the radar. He also pioneered the practice of commodity swaps, like the uranium-for-oil deals he brokered in the 1980s between apartheid South Africa and Iran. Such deals frequently caused him trouble with US authorities, and in 1983 Rich fled his home in New York to Switzerland just before the Justice Department issued an indictment against him and Green on charges of racketeering, illegal trading with Iran, and tax evasion. A House committee later described his business as “based largely on systematic bribes and kickbacks to corrupt local officials.”
Still Rich continued to thrive, until he unsuccessfully tried to corner the global zinc market in 1992 and nearly bankrupted the firm with $172 million in losses, at which point he was forced out in a management buyout. The new directors renamed the company Glencore, reportedly short for Global Energy Commodities and Resources.
Rich’s forced exit from Glencore and the US indictment hanging over his head had little impact on his business success. He created a new, independent firm and within a decade was trading 1.5 million barrels of oil a day, with an annual turnover of $30 billion. Then, in 2001, on Clinton’s last day in office, the president granted Rich a controversial pardon7 stemming from the eighteen-year-old indictment; critics argued that the pardon was connected to the generous contributions that Rich’s ex-wife, Denise, made to a variety of Democratic causes, including Hillary Clinton’s successful 2000 Senate campaign and the Clinton presidential library fund. A number of prominent American Jews and Israelis, including then prime minister Ehud Barak and former Mossad director general Shabtai Shavit, also pressed the White House on Rich’s behalf.
After his forced departure from Glencore Rich retired to a lavish estate, La Villa Rose, on the shores of Lake Lucerne, but his influence continued to be felt at the firm and throughout the industry (Rich died in 2013). Glasenberg, the company’s CEO since 2002, got his start under Rich as a coal trader and, like the man who men-tored him, was a quick study. By the late 1980s, just a few years after he was hired, he was managing the firm’s China and Hong Kong offices and had become one of Rich’s most trusted lieutenants. At least four other top Glencore executives at the time of the IPO had joined the firm in the Marc Rich era. They’ve preserved a workaholic ethic at the top of the company and—as a London law firm representing the company warned in a letter sent to major British news outlets soon after the IPO—consider themselves “extremely private individuals.”
This new leadership at Glencore wasn’t about to alter the formula of the firm’s success. In one post-Rich example, the company profited handsomely by dealing with Saddam Hussein under the 1996–2003 UN oil-for-food program, which allowed the Iraqi dictator to trade limited quantities of oil in exchange for humanitarian supplies. The UN’s Independent Inquiry Committee reported in 2005 that Hussein had awarded special “allocations” to companies and individuals who were friendly to the regime. A Glencore agent, Pakistani businessman Murtaza Lakhani, was a conspicuous regime sycophant who hosted a peace concert at his local villa just weeks before the 2003 US invasion. The UN committee determined that Glencore had paid surcharges and raised questions about lavish commissions Lakhani received. The Iraq Survey Group, the US-led fact-finding mission sent after the invasion, concluded that Glencore was “one of the most active purchasers” of oil under the oil-for-food program and had paid $3,222,780 in “illegal surcharges.” Yet Glencore was not charged in the scandal after claiming it was unaware surcharges were being paid and that Lakhani’s high fees reflected the extra risk of doing business with Iraq, not slush money for bribes.
And that’s the heart of the Marc Rich formula: Access is money, and contacts on the ground mean access. The new Glencore, like the old one, relies on a network of fixers, middlemen, and business partners who have special access to key decision makers in the countries where it operates. In South Africa the company is represented by Ivor Ichikowitz, an arms and oil broker who “has made a career from turning political connections into profit,” according to the Mail & Guardian. His ties to the African National Congress allowed Glencore “to secure primacy in government oil business that no other trader was able to,” the newspaper said.
Ichikowitz grew rich by selling surplus South African armored vehicles elsewhere in Africa and in the Middle East. When Thabo Mbeki held power Ichikowitz formed a vast joint venture—its interests ranged from sugar to infrastructure—with the president’s brother. In December 2010 he provided a jet to ferry current president Jacob Zuma to Lebanon and Kazakhstan for ANC fundraising and business meetings.
Oil trading contracts have long been a trough of patronage in Nigeria and provide the government with its single largest revenue stream. Glencore achieved its greatest influence under military dictator Sani Abacha but smoothly transitioned to civilian rule in 1999 by hiring agents with connections to incoming president Olusegun Obasanjo, who had been imprisoned under Abacha. More recently, Glencore’s share of the market has declined, as its rivals have gained greater political influence. Glencore is, however, still authorized to lift sixty thousand barrels per day and is believed to obtain significantly more than that by buying oil from politically well-connected firms that have allocations of their own.
In postcommunist Romania, Glencore discreetly collaborated with a variety of murky partners and agents, some widely deemed to be gangsters. During the mid-2000s it used an Israeli agent named Yoav Stern, who also represented the Romanian interests of Yakov Goldovsky. The latter had been previously convicted in Russia for asset stripping state-run enterprises.
Glencore also cut Romania-related deals with the notorious Ukrainian-Israeli Michael Cherney. Cherney has reportedly been blocked from receiving a US visa since 1999 due to alleged ties to organized crime. A diplomatic cable released by WikiLeaks and written by the US ambassador to Uzbekistan, Jon Purnell, described him as the head of a “Russian crime syndicate.” It said that Cherney’s brother and business partner, Lev, had traveled to Tashkent for a 2006 birthday party for a gangster known affectionately as Salim the Great. Michael sent best wishes to Salim through one of the guests, who included “Russian, Georgian, and Ukrainian criminal underworld figures, along with parliamentarians, singers, actors, and sports celebrities.”
Cherney controlled a Cyprus-based company called Expanet, which bought crude oil from Glencore and resold it to a refinery in Budapest. In a 2006 letter of guarantee, Cherney thanked Glencore for “entering into, at my request, a contract with Expanet,” and promised that if it failed to make payments when due, he would personally cover all debts.
Another Glencore business partner here was Romanian businessman Marian Iancu. Glencore sold him crude oil through an offshore company he controlled, Faber Invest & Trade, for processing at the RAFO refinery in Romania. Iancu was indicted for tax evasion and money laundering in 2006 and convicted in late 2011. A WikiLeaked US State Department cable described RAFO as “embroiled in a web of corruption, money laundering, fraud and criminal charges” and included Faber among its “shady entities.”
Rich admitted that the old Glencore paid bribes. The new Glencore, however, denies doing so: “We will not be complicit in any third party’s violation of the law in any country, nor the payment nor receipt of bribes, nor participate in any other criminal, fraudulent, or corrupt practice,” reads the company’s corporate practices statement.
Nonetheless, investigations over the past decade have alleged that Glencore’s agents and employees made illegal payments to secure market access in a number of countries. In 2009, US and Bahraini prosecutors investigated allegations that Glencore’s employees had made $4.6 million in improper payments to executives at Aluminium Bahrain, a state-owned smelter, to secure below-market prices on aluminum products. Glencore denied the allegations; in 2009, however, it paid Aluminium Bahrain an out-of-court settlement of $20 million.
A 2008 US Senate report revealed that a client at the LGT Group, a bank owned by Liechtenstein’s ruling family, discussed setting up a Panamanian shell corporation and bogus foundation to pay bribes on Glencore’s behalf.
The unnamed client, an agent for the company, had an existing account at the bank that handled about $1 million annually. “A small portion of the payments go … to the USA and Panama and may be classified as bribes,” according to an internal LGT memorandum obtained by Senate investigators. The agent had set up the account in 2002; prior to then Glencore had made such payments directly, the memo said. An LGT official testified before the Senate but refused to say whether the bank had set up the Panamanian corporation or foundation at the client’s request.
In 2012, a court in Belgium found that a Glencore employee bribed a European Union official for inside information that allowed it to win millions of dollars in cereal contracts. Glencore reportedly treated the official, Karel Brus, to a week’s vacation at a luxury hotel on the French Riviera. Glencore also bought Brus a cell phone and picked up more than $20,000 worth of calls he made to the company, some placed just minutes before bid deadlines.
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The frontiers are Glencore’s growth engine, and nowhere more so than the Democratic Republic of the Congo, the poster child of the resource-cursed failed state. Doing business there is all but impossible without a well-connected political patron, and Glencore’s partner in Kinshasa is perhaps the most wired of them all: Dan Gertler, an Israeli businessman known for his intimate ties to President Joseph Kabila.
The grandson of the founder of the Israel Diamond Exchange, Gertler turned up in Congo in 1997 at age twenty-three as the country was descending into a hellish war that left at least four million dead. Gertler had few contacts when he arrived in Congo, and a confidential report by the international investigative firm Kroll that I obtained described him as having a “poor record in fulfilling promised investments.” But he did have something that a government at war desperately needed: cash. Three years after he arrived in Congo, the government—then headed by Laurent Kabila, Joseph’s father, who was assassinated in 2001—sold Gertler a monopoly on diamond sales for $20 million, though it was reportedly worth hundreds of millions of dollars. Gertler denied charges of promising to provide military aid to Congo in a 2004 Israeli court case brought by Yossi Kamisa, a former Israeli antiterrorism police official who maintains that he accompanied Gertler to Congo—and even met with Laurent Kabila—to train and equip Congolese forces in exchange for diamond concessions. Gertler severed relations with Kamisa, reportedly over negative press regarding the diamonds-for-arms deals; both Kamisa’s suit and a subsequent appeal were dismissed.
In Congo, Gertler’s diamond monopoly became politically controversial and was canceled months after Joseph Kabila came to power. Still, he continued to land profitable deals afterward. Shimon Cohen, Gertler’s London-based public relations adviser, told me that his “family trusts have invested or brought over $2 billion of investment into the mining sector” in Congo. Public records and documents released in late 2011 by a British parliamentarian show that in the previous several years the Congolese government had secretly sold vast mining assets on the cheap8 to various British Virgin Islands–registered shell companies, several of which are linked to Gertler. “Gertler’s philosophy is that everyone has a price and can be bought,” the Kroll report said.
Gertler became the best-connected foreigner in Congo, enjoying “a close friendship with the president,” according to Cohen. He was one of the few Westerners invited to Joseph Kabila’s 2006 wedding, and, in June 2011, he joined the president on the VIP dais during Independence Day celebrations. Gertler was also extremely close to Augustin Katumba Mwanke, whom a December 2009 US diplomatic cable referred to as Kabila’s “Alleged Treasurer and Enforcer.” According to the cable, Katumba—who died in a plane crash in February 2012—“is viewed by many as a kind of shady, even nefarious figure within Kabila’s inner circle [and] is believed to manage much of Kabila’s personal fortune.”
“Dan Gertler is a friend,” Antoine Ghonda, a close aide to Kabila, told the Sunday Times, “The way our president works, he has close contacts and protects them.” For his part, Gertler has called Kabila “the most promising new president in the world—a new Mandela.” That’s not a view shared by most observers. The US State Department’s 2010 human rights report said of Kabila’s Congo:
State security forces continued to act with impunity throughout the year, committing many serious abuses, including unlawful killings, disappearances, torture, rape and engaging in arbitrary arrests and detention. Government corruption remained pervasive.
With vast mineral deposits worth an estimated $24 trillion, though, including enormous amounts of cobalt, copper, and gold, Congo has irresistible appeal to companies like Glencore, which has around $4.5 billion at stake there in three holdings. Operating in the country is simply not possible without high-level political protection, and Gertler offers it for Glencore. One former Glencore employee described the company and Gertler as “totally enmeshed” in Congo. Gertler, this person told me, “managed the entire relationship between Glencore and Kabila and the Congolese government,” with Glasenberg, the CEO, flying into Kinshasa or Lubumbashi on a private jet to meet with him.
Records I examined revealed an extensive set of financial dealings between firms in which Glencore and Gertler hold significant stakes.9 They are, for example, joint shareholders in Katanga Mining; Glencore’s stake alone was worth around $2.7 billion at the time of its IPO—Glencore’s fourth-largest equity holding. They both held stakes as well in Nikanor, a copper and cobalt company that Glencore provided most of the financing to purchase in exchange for exclusive rights to sell all the mineral output. (Nikanor was acquired by Katanga in January 2008 for $452 million.)
For understandable reasons, Glencore was never keen to advertise its relationship with Gertler. It did, however, offer him a series of discreet, complex, and remarkably profitable deals. In one case Glencore sold stock in Katanga Mining at roughly 60 percent of its market value to Ellesmere Global Limited, a British Virgin Islands firm whose ultimate owner was a Gertler family trust. Ellesmere quickly sold it back to Glencore at close to full market price, netting a profit of about $26 million.
In another deal a subsidiary 50 percent owned by Glencore waived its rights of first refusal to acquire an additional stake in Mutanda Mining, a copper and cobalt producer, from Gecamines, Congo’s state-owned mining company. It instead recommended that the shares be sold to one of the offshore firms owned by Gertler’s family trust. It’s not clear why Glencore’s subsidiary would have passed on the offer, because business records and documents suggest that Gertler’s trust picked up the Mutanda shares for a fraction of their value.
However much Gertler made through his firms’ deals with Glencore, Glencore has clearly profited too, given the huge portfolio it has accumulated in Congo. That is exactly the point. “Glencore has a Gertler everywhere,” a former Glencore employee told me. “That’s standard.”
Indeed, Glencore doesn’t partner with operators like Gertler by chance. On the contrary, it reflects the company’s modus operandi: gaining access to resources through gatekeepers who have intimate connections to senior-level decision makers (and remunerating them very well, directly or indirectly, for their services). Such gatekeepers, whether agents, business partners, or the heads of service companies it uses, offer a way to navigate life on the frontier, a place where—even Glencore acknowledges—business success isn’t always straightforward. As the company’s IPO prospectus noted dryly, “Some of Glencore’s industrial activities are located in countries where corruption is generally understood to exist.” Or as a former Glencore trader told me of the company’s lineup of gatekeepers, “They could do all the things I couldn’t do or didn’t want to do.”
In Russia, Glencore’s chief sponsor has been oilman Mikhail Gutseriev, who in 1995 was elected to the Duma as a member of right-wing nationalist Vladimir Zhirinovsky’s party, which he also lavishly financed. Gutseriev also owned a bank and a casino, and he was running a newly created tax-free business zone in Ingushetia, a small, violence-ridden republic bordering soon-to-be war-torn Chechnya. In her book Sale of the Century, Chrystia Freeland described his Moscow offices as decorated in gold, crystal, and floral designs that “an eight-year-old girl with a princess fantasy and a gold credit card might concoct” and the casino’s decor as “oil paintings of naked women wrapped in furs,” with private bedrooms that had mirrored ceilings and Jacuzzis. “Sometimes we have special guests, and they like to be entertained,” Gutseriev explained to her. Later Gutseriev went into the energy business—he was understatedly described in a US diplomatic cable released by WikiLeaks as “not known for his transparent corporate governance.” He did well. He regularly appears on Forbes’s list of the richest Russians, with a fortune estimated in 2012 at around $6.7 billion.
A decade earlier, though, Gutseriev was down and seemingly out. In 2002, the Kremlin fired him as the head of state-owned oil firm Slavneft for resisting the company’s privatization, according to the WikiLeaked cable. That same year, however, he sought to regain his position by arranging for three busloads of armed guards to take over its Moscow offices. They withdrew after occupying the building for several days, according to an account in the Russian press.
But Gutseriev soon staged a comeback. Within a few years he had bought a number of small energy firms and had patched them together into RussNeft, which by 2006 had become one of Russia’s biggest oil companies. Gutseriev’s meteoric rise to full-fledged oligarch status was only possible due to massive assistance from Glencore’s hidden hand. Business contracts I obtained show the company financed RussNeft’s “spectacular growth” and “aggressive acquisition strategy”—as one confidential 2005 Glencore document put it—at every step. Its total funding was around $2 billion, much of it funneled to offshore companies owned by Gutseriev through a Cypriot-registered company of Glencore’s called Interseal.
The 2005 document said that, thanks to Glencore’s financial backing, RussNeft’s assets had increased fourteen times over the previous three years. Glencore had “been working closely with M. Gutseriyev since his time at Slavneft,” the document said, and “appreciates his acquisitive nature and ability to identify good assets in a short space of time.” A well-placed source familiar with the deals put the matter in starker terms: “Glencore associated with him because he could buy physical assets in Russia and it couldn’t. The deal was sheer balls, but that’s the type of thing Glencore does.”
In return for its funding Glencore got an exclusive deal to market RussNeft’s oil, won the right to appoint senior personnel, and ended up with about half the equity in four oil production subsidiaries. But even financial analysts have trouble figuring out RussNeft’s “opaque” accounting, making it difficult to calculate Glencore’s stake in the company and its subsidiaries.
Keeping oligarchs happy has been a Glencore specialty fully on display in Kazakhstan, another of those “challenging political jurisdictions” with vast energy and mineral resources. There it owns slightly more than half of Kazzinc, a huge gold, lead, and zinc producer worth up to $7.6 billion to Glencore at the time of its IPO. Glencore owns several other assets in Kazakhstan, and its gold production in the country is expected to soar, according to Deutsche Bank.
Still, Kazakhstan can be treacherous terrain for foreign investors. A US Commerce Department report warns of “burdensome regulations that often reflect a way of doing business that is reminiscent of the Soviet Union.” The Heritage Foundation think tank noted similar problems in Kazakhstan: “Corruption remains endemic, eroding the rule of law.”
For these reasons—and especially because major mineral deals in Kazakhstan often need President Nazarbayev’s personal approval—investors require a powerful local sponsor with close contacts to him. Glencore’s is one of the best: oligarch Bulat Utemuratov, a major investor in Verny Capital, Kazzinc’s second-largest shareholder (after Glencore), with a 42 percent stake.
Glencore’s Kazakh partner founded ATF Bank early in the postcommunist era and became a billionaire when he sold out in 2007 to Italy’s UniCredit. An old-school ex-Soviet power broker, he owns through Verny the Ritz-Carlton properties in Moscow and Vienna. Thanks to Glencore, Utemuratov, who is now Nazarbayev’s special envoy to neighboring Kyrgyzstan, became far richer: Following the IPO it paid Verny $3.2 billion for its holding in Kazzinc.
Utemuratov is a former head of Kazakhstan’s powerful National Security Committee who once held a top position in the ruling party and served as chief of staff to Nazarbayev between 2006 and 2008. He is known among insiders as the president’s “consigliere.” He is one of the few people in the country who can dependably get a meeting or phone call with Nazarbayev at any time, a Western expert on Kazakhstan told me. “You can’t do any large-scale business in Kazakhstan without the president’s approval, and you can’t get that without direct access to the president, which Utemuratov gets for you. If you need something, you can have your CEO go over a number of times to meet with the president, and that might work, and you might get help if you can get the head of state from your home country to exert influence on him. But the most efficient and surest way to get what you need is to have support from someone local who is extremely close to Nazarbayev, and Utemuratov is one of very few people on that list.”
In May 2011, a group of opposition politicians issued a public letter complaining that Kazzinc and other former state firms had been privatized under murky conditions that allowed Utemuratov and other insiders to pick up vast stakes thanks to their ties to the ruling family. Glencore could be stripped of its assets in the country, said the letter, adding, “Upon any change of regime in Kazakhstan to a democratic one, any acquisition of any shares in Kazzinc … will be subject to review.”
So why did Glencore decide to go public, trading away some of that precious Swiss secrecy and opening itself to so much more scrutiny? Various theories have been floated, in addition to the obvious explanation that the move made dozens of its senior executives unimaginably rich—among them that the firm needed more capital from the markets to fuel its global growth plans, money it put to use in deals to take over giant companies, such as Xstrata.
Patrick Smith of Africa Confidential, who has tracked Glencore and other traders for years, thinks the move reflects a profound transition, as the old model in oil and other commodities—whereby companies and individuals built empires by leveraging relationships with top government officials—is slowly giving way to a rule-based system. Then again, Smith told me, “You can be damn sure that Glencore wouldn’t have gone public if it didn’t have structures in place to keep making money. It must have calculated that it can still come out ahead despite having very ambitious targets.”
Even if Smith is right about the slow emergence of a more rule-based global business system, commodities trading remains as one of the world’s most opaque, secretive, corrupt—and globally consequential—industries. While outright bribery has become largely passé as a business practice—due to banking restrictions on large cash movements and tighter enforcement of the US Foreign Corrupt Practices Act and similar legislation passed in Europe—traders told me that there are ever more sophisticated forms of payoffs that may skirt the spirit of antibribery laws but are often technically legal.
And will going public change Glencore notably? The company’s culture goes totally against it, the former Glencore trader I interviewed in Montreux told me, especially given the strict rules and accounting practices on the London exchange. “That’s just not the way traders work,” he said.
Still, like all good businesses, Glencore has to keep up with the times, as even founder Marc Rich came to agree. “Discretion is an important factor of success in the commodity business,” he told an interviewer when Glencore announced it would go public. “They probably don’t have a choice. Transparency is requested today. It limits your activity, to be sure, but it’s just a new strategy to which they have to adapt.”