06 Nov 2017
By Bastian Obermayer, Edouard Perrin, Frederik Obermaier, Oliver Zihlmann, Petra Blum and Will Fitzgibbon, ICIJ
The Glencore Room at Appleby’s Bermuda office wasn’t much to look at.
Across from the women’s bathroom, the room dedicated to one of the offshore law firm’s most important clients held a filing cabinet, a computer, a telephone, a fax machine and a checkbook. Once, in 2009, it was turned into a party space. “It’s my B-Day,” wrote the party giver. “Cake is on the 2nd floor in the Glencore Room.”
But, modest as it was, the room held plenty of secrets.
“Glencore” is Glencore PLC, one of the world’s largest mining and agriculture conglomerates, ranked 16th on the Fortune Global 500 list of largest corporations, with revenue last year of more than $170 billion. It is the world’s largest commodity trader, a supplier of zinc and cobalt, a trader of wheat and a merchant of chickpeas; its products touch virtually anyone who has driven a car, held a smartphone or eaten a slice of bread.
Glencore has also been a major presence inside the offices of government investigators who have probed, fined and criticized the commodity giant for years.
Now, a leak of offshore financial data from the Glencore Room and beyond has yanked back the curtain, and some of Glencore’s biggest secrets are open to scrutiny.
The data, called Paradise Papers, comes from the offices of the offshore law firm Appleby and corporate services provider Estera, which operated together under the Appleby name until 2016. Copies of 6.8 million of files documenting decades of activity inside the Bermuda main office and other offices were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and 94 media partners.
The files on Glencore contain confidential emails, board minutes, tax restructuring diagrams, billion-dollar loan contracts, sales agreements and frank conversations about what rules could and could not be bent as part of a “risk/reward debate.”
The records shed light on how a global colossus, aided by a trusted offshore law firm, uses financial havens to cloak its lucrative dealings in secrecy even as it wields vast influence in resource-rich but corruption-plagued parts of the world.
The Appleby documents show that Glencore diverted millions of dollars through Bermuda and other tax havens and fought off lawsuits and tax bills in Europe and the Caribbean.
But it is in the world’s poorest country – the Democratic Republic of the Congo, where Glencore acquired an interest in major copper mines – that Glencore’s history is revealed in greatest detail through the leaked documents. Over the years, investigators have tried to piece together the full extent of the relationship between Glencore and Daniel Gertler, an Israeli businessman with friends in high places in the DRC, who helped Glencore negotiate access to the sprawling Katanga mine.
The new revelations, unearthed in more than a thousand pages of documents, set out how Glencore provided a $45 million loan to a Gertler-controlled company while he helped Glencore strike a deal for the mine with DRC officials.
The leaked files provide the most detailed evidence yet of the behind-the-scenes lobbying and the money flows that helped Katanga, in which Glencore was just a shareholder at the time, acquire mining licenses.
The files also raise questions about how Katanga, which was later taken over by Glencore, managed to pay a price that critics have viewed as less than the licenses’ real value.
In response to questions from ICIJ, Glencore said that the price for the mining licenses was agreed to before Gertler entered the negotiations and that its loan to the company controlled by Gertler was “made on commercial terms” with standard provisions in place.
Glencore also said that it had recently moved most of its Bermuda entities to Switzerland or the United Kingdom.
Additional reporters: Katrin Langhans
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