Almost 18 months ago Glencore first featured on this blog – Glencore and others are screwing the world – a posting which highlighted the predatory nature of financial monsters like Glencore. The Financial Times had reported Glencore’s ability and willingness to fix commodity prices for their own profit and everyone else’s loss and how they were expected to increase their monopolistic stranglehold in key markets. Glencore was in the news at that time because of its imminent initial public offering of shares to the London Stock Exchange which was expected to value the company at between £60 billion and £73 billion and facilitate its further expansion through mergers and acquisitions. The FT also reported how the world’s largest commodity trader had paid “almost no corporate taxes on its trading business for years in spite of bumper profits.”
The FT’s report described how Glencore had exercised their monopolistic power to raise prices in the Russian wheat market for a quick profit, at the expense of those millions already struggling on the breadline. That was revealing of the sort of business Glencore is, and the sort of business practices it was prepared to embrace in order to make its money.
From time to time since then, Glencore has featured on these pages. A posting six months ago – Who rules the world?- reported the acquisition of Viterra, Canada’s largest grain handling company, making Glencore even more powerful in grain markets, no doubt adding starvation to the millions already struggling for survival. It also provided some assessment of the proposed merger with Xstrata which would give the combined business a stranglehold in a score or more international commodity markets, including strategic minerals such as nickel, zinc, platinum, chrome and copper as well as thermal and coking coal.
Crazy though it may seem to the man in the street, the Glencore – Xstrata combine would be enabled to print money in any or all of these markets and still avoid paying taxes.
An April posting – Free Markets Controlled by the Unaccountables – reported how powerless the UK Office of Fair Trading (OFT) had become, no longer able to refer takeovers to the Monopolies and Mergers Commission merely because a monopolistic position might be created. And unable to deal with monopolistic abuse in international markets. The posting noted that we are ruled by unaccountable monopolists such as Glencore, Goldman Sachs and their protective minions such as the big four monopolistic auditors and the quisling ratings agencies.
Glencore CEO, Ivan Glasenberg, billionaire recipient from the initial public offering, received a further £71m dividends this year from his Glencore shares which were part of his personal take from the IPO. As Glasenburg told the Melbourne Mining Club’s London dinner: “If you want a good CEO you’re going to have to pay him!” Mick Davis, the Xstrata CEO, had hoped to take a £29m “retention package”, on top of his already exorbitant salary, over the three years after he became CEO of the combined group. This suggests a simple mobster culture, where the top people take has nothing to do with talent, effort or intelligence, simply to what with impunity can be taken.
The OFT was asked if it was not possible that it might consider Glencore’s business model to have been an abuse of its monopolistic power which should be referred to the Competition Commission, especially as that abusive power was about to be substantially increased with the acquisition of the Xstrata business. The OFT’s response was that the merger/takeover was by no means assured. But then, step up Tony Blair, Middle East peace envoy, putative war criminal and J P Morgan deal fixer, to bring Qatar Holding and Ivan Glasenberg together. Presumably for a reasonable fee, Blair arranged for remaking the deal to create the biggest unaccountable, monopolistic power abuser the world has ever seen.
It really is time for some changes to be made.