Glencore ‘should explain potentially corrupt deals in Congo`
Further information about Global Witness's investigation into Glencore’s investments in Congo and the company’s links to Dan Gertler, as well as written responses by Glencore and Mr Gertler’s representatives to questions from Global Witness can be found at www.globalwitness.org/secretsales
Global Witness is today calling on Glencore to explain potentially corrupt deals in the Democratic Republic of Congo, and is calling on the company to provide more details about its relationship with an Israeli businessman who is key to its substantial mining investments in the country. The concerns, detailed in a briefing for Glencore’s shareholders, are being published on the day of the company’s first AGM as a publicly listed company.
Since 2010 a number of offshore companies associated with Dan Gertler – a businessman and friend of Congolese President Joseph Kabila - have secretly bought stakes in several mines from the state, paying only a small fraction of their commercially estimated values. The mines were sold without public tenders and limited details were only released long after the assets were sold off. After buying the assets, at least two of the offshore companies made huge profits by selling on shares in them soon afterwards. Others are positioned to profit by collecting the mining revenues.
Some of the proceeds of mining sales in 2011 were used by the Congolese government to cover costs related to the 2011 election, which returned incumbent president Joseph Kabila to power. The polls were condemned as flawed by international diplomats and election observers and were marred by killings committed by government security forces.
Mr Gertler and Glencore have challenged Global Witness’s facts as laid out in the briefing, and their views are reflected in the note. A spokesman for Mr Gertler has questioned the commercial valuations for some of the mines concerned, while both Glencore and Mr Gertler’s representatives categorically deny any involvement in corruption in Congo.
“Glencore’s business in Congo is intimately tied up with a controversial friend of the president,” said Daniel Balint Kurti, Campaign Leader for the Democratic Republic of Congo at Global Witness. “In a country endowed with vast mineral wealth and yet ranked by the UN as the least developed nation in the world, the company owes its shareholders and, more importantly, the people of Congo, an explanation of exactly who now owns their natural resources.”
Mr Gertler is a key intermediary through whom Glencore has acquired stakes in Congolese mining assets. He is also a partner in all three mining ventures in Congo in which Glencore has acquired stakes that have been collectively valued at an estimated $4.6 billion. Two of those ventures, the Kansuki and Mutanda mines, together are expected to add at least 40% to the world’s cobalt output and increase Congo’s copper production by about 40% (compared to 2011 production figures) once they are fully developed.
Global Witness is asking Glencore and Mr Gertler to release the full list of shareholders of all the offshore companies involved - information which is currently secret. Global Witness believes there is a risk that the shareholders could include corrupt Congolese government officials or their proxies. “Congo’s natural resource wealth should benefit the country as a whole,” said Balint-Kurti. “Yet hugely profitable deals are being struck in Congo by secretive offshore companies and multinationals; the Congolese state is getting peanuts and we are extremely concerned that the Congolese people are being deprived of billions of dollars.”
As the world’s largest commodity-trading firm, Glencore’s behaviour helps set the standard for how commodities companies operate across the world. It boasts that it “will not assist any third party in violating the law in any country, nor pay or receive bribes, nor participate in any other criminal, fraudulent or corrupt practice”. “It is now incumbent upon Glencore to show that it is living up to its rhetoric and that it is ready to make public the details of its previously secret business deals,” concluded Balint-Kurti.
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