Glencore did not treat Israeli billionaire Dan Gertler preferentially when it provided loans to Katanga Mining in 2009, the company said at its annual general meeting on May 20.
The company has faced allegations from non-governmental organisation Global Witness that it gave special treatment to Gertler, known to be a friend of Congolese president Joseph Kabila, and “protected [Gertler’s] interests” in dealings with copper-cobalt producer Katanga, located in the Democratic Republic of Congo (DRC).
Global Witness has also claimed that Glencore “sold [Gertler] shares at less than half the market rate, only to buy them back a few months later at full price”.
It has been calling for the company to commission an investigation into its deals in the DRC since the middle of 2012.
Glencore has said that it did provide loans to Katanga when it was struggling in 2009, but that its relationship with Gertler has always been at arm’s length and no money was ever given directly to him.
It added that there was nothing illicit in its dealings with Gertler and publicly invited Global Witness to examine its transactions.
“What is absolutely a fact is that we extended loans to companies associated with Dan Gertler,” Glencore chairman Tony Hayward said, following questioning at the meeting. “It’s something we do in the normal course of business – we finance mining operations around the world.
“Those loans are on a fully arm’s length basis and they are entirely consistent with normal commercial loans. They have been fully disclosed at our IPO and in numerous public documents,” he added.
Hayward also stated that the company believes there is “absolutely no basis” for any investigation to be carried out into these loans and has no intention of carrying one out.
“The money we put in was to save Katanga in 2009,” Glencore ceo Ivan Glasenberg said during the meeting. “It would have been insolvent otherwise. We ensured that Katanga stayed alive.
“Along the way, Dan Gertler wanted to participate. With every loan that took place, the money went into the company and into operations in the DRC to ensure the reserves were developed.”
Glencore ploughed a total of $2.5 billion into Katanga Mining and it is now looking at producing 250,000 tpy of copper, according to Glasenberg.
“We really added to the strength of the Congo [DRC]. Without us, those mines wouldn’t be operating today,” he said.
“A reserve is a great thing to have, but reserves without masses of money coming in to develop them aren’t worth much.”
No shareholders other than Gertler came forward to participate in any of the rights issues at the time as they did not want the exposure to risk, he added.
“We scoured the whole investment community to find shareholders ready to put the money in and no one was prepared to take the risk,” Glasenberg said.
“No one wanted to put money into the Congo in 2009. Not one other shareholder came to Glencore prepared to take a loan at the high interest rate [we were offering].”
In its release on the subject, Global Witness quoted Gertler’s spokesman, Lord Mancroft, as saying any suggestion Glencore offered Gertler preferential treatment is “wholly misconceived” and “there are legitimate commercial reasons for every transaction [they] are involved in”.
More on this story:
Glencore completes merger of Mutanda and Kansuki copper-cobalt ops
DRC mines ministry says Global Witness’ concerns misplaced
Global Witness calls for more transparency from ENRC; company lays out anti-corruption policy
Gertler: Glencore IPO not a benchmark for Mutanda value
Glencore should explain Gertler links: Global Witness
Glencore loan details surface in Gertler legal row
Claire Hack
chack@metalbulletin.com
Twitter: @clairehack_mb
