Glencore and Appleby: plundering in Africa, apathy in Switzerland

The Paradise Papers, the latest leak from the International Consortium of Investigative Journalistse (ICIJ), confirms what Public Eye has been saying for years: Commodity trading is Switzerland’s most dangerous business. The serious allegations against Glencore – of aggressive tax optimisation, corruption, and conflicts of interest – once again bear witness to Switzerland's hand in the resource curse, as well as the federal authorities’ unacceptable passivity.

Glencore –a stalwart of the Swiss commodities sector and one of the main companies to have enlisted the services of the international law firm was well known to Appleby for pushing the law to the limit. The Zug-based giant set up 107 offshore companies there and its name appears more than 34,000 times in the data reviewed by the ICIJ. The Paradise Papers specifically show how Glencore has concocted strategies to reduce its tax bill in Australia and Burkina Faso.

Most importantly, the new data tell the story of how Glencore has gained a stranglehold on highly profitable license deals to extract copper and cobalt in the Democratic Republic of Congo (DRC), one of the poorest countries in the world. To achieve this, the company enlisted the services of Dan Gertler, a notorious businessman whose corrupt actions in connection with the awarding of mining concessions in the DRC have been well documented by the US justice department. Glencore has always claimed it had performed extensive compliance checks before entering into a partnership with Gertler. However, his bad reputation was already well known in 2007, when the Zug-based company began its partnership with the businessman, whose role in the mining licensing and his proximity to President Kabila – whom he had delivered arms to in 2001 in exchange for full control over the DRC's diamond business – had already been identified by the UN, the World Bank and the Congolese parliament. The offshore schemes revealed by the Paradise Papers leak had enabled Glencore to grant loans to Gertler, at the time when the latter was making suspicious payments to President Joseph Kabila and his right-hand man Augustin Katumba Mwanke, both of whom the American justice department had in its sights. Significantly, for every ton of copper in the mine, the Zug-based giant has paid the government four times less than the other groups, amounting to a substantial loss for the Congolese population.

The Swiss authorities have long been observant of the murky affair between Glencore and Gertler, exposed by UK-based NGO Global Witness in 2012. When questioned, the Federal Council stated that it expected such companies to comply with "particularly strict requirements of due diligence". It added that "the potential harm to Switzerland's reputation also depends to a large extent on our country's efforts to combat this type of wrongdoing.” So far, the Swiss authorities have never investigated these cases. Quite the opposite: the Federal Council continues to trust such companies, hoping that they will behave in an "honest and responsible manner". According to Swiss television, at least three trading companies headquartered in Switzerland are among the multinationals whose nasty secrets will be unveiled over the coming days. How many scandals will it take before the Swiss authorities finally decide to take action?

We will publish a more in-depth analysis during the week. For more information in the meantime please contact:

Olivier Longchamp
Finance and Tax Expert, Public Eye
+41 21 620 03 09  

Oliver Classen
Media Director
+41 44 277 79 06