Paradise Papers: FTSE100 company Glencore’s secret offshore dealings exposed in revelations

The Paradise Papers reveal damning details of Glencore’s business deals in the Democratic Republic of Congo, where it owns two huge copper and cobalt mines. Confidential board minutes show that Dan Gertler, a notorious middleman in Congo, personally negotiated mining licences in favour of Katanga Mining – a company Glencore was in the process of taking over. Glencore pushed for Gertler to take on this role, and provided him with tens of millions of dollars in loans and options as a reward.

Billionaire Gertler has been central to all Glencore’s operations in Congo. He is a close friend of the Congolese President and linked to numerous mining bribery scandals. The latest revelations will add weight to calls for Glencore to face a bribery and corruption investigation into its business relationship with Gertler in Congo. Glencore and Gertler have denied any wrongdoing.

“Glencore is described as the biggest company you’ve never heard of - now it’s making headlines precisely because of the tools it uses to cover its tracks. It must explain to the world why it used a secret offshore company to pump millions of dollars to a controversial friend of the Congolese President linked to bribery scandals. The UK’s Serious Fraud Office must investigate,” said Daniel Balint-Kurti, Head of Investigations at Global Witness.

Global Witness has published reports on Glencore’s ties to Gertler since 2012, expressing concern over potential corruption. We have shown how Glencore funnelled more than half a billion dollars to offshore companies owned by Gertler, which allowed him to make at least US$67 million in risk-free profit. We also revealed how an opaque Glencore company in Bermuda loaned an equally secretive Gertler entity in the British Virgin Islands US$45 million, without revealing the loan publicly. 

Now, leaked documents in the Paradise Papers show that Glencore provided this secret loan to Gertler in return for his handling mining negotiations with the Congolese government. The relationship with Gertler goes much further than Glencore has acknowledged in the past, and raises concerns over possible bribery. Last year a New York hedge fund settled with US authorities to the tune of US$412 million over bribery allegations, admitting that its partner in Congo, widely identified as Gertler, had bribed Congolese officials on its behalf. 

Secret deals for valuable state-owned mines using offshore companies are a massive problem in Congo. Kofi Annan’s Africa Progress Panel has shown that the country lost out on an estimated US$1.4 billion through the secret sale of under-priced state-owned mines to BVI companies – that’s equivalent to twice Congo’s annual health and education budgets combined.

Glencore has consistently defended its partnership with Gertler, telling Global Witness that its deals with him have been “conducted on arm’s length terms” and are “entirely proper”. It said that its background checks on Gertler were “extensive and thorough”. Gertler’s lawyers said that allegations of bribery are “false and without any basis whatsoever” and rejected any suggestion of wrongdoing.