Unconscionable oil deal with Chad: This is how Glencore robbed the world’s second poorest country

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There are 191 countries in the United Nations Human Development Index. In first place: Switzerland.

At the other end of the rankings is the Republic of Chad. With a population of 17.7 million, the country ranks second from last in the global prosperity indicator. More than 40 percent of the population lives in poverty. Only in South Sudan are people worse off.

Chad’s gross domestic product is $695 per capita annually. In Switzerland, this value is $93,657, approximately 135 times higher.

Oil prices are falling, Chad has to supply everything

The extremely poor country in the heart of Africa remains of interest to Zug-based raw materials company Glencore. Because it is rich in oil. About ten years ago, the following agreement took place: Glencore gave a US$1.45 billion loan to Chad. The country was supposed to repay this amount in the form of raw material deliveries in the coming years.

The trade proved fatal for Chad and its people. In the weeks and months after the contract was signed, the price of oil fell more than 40 percent for the year. The result: Chad was forced to hand over almost all of its national oil production to Glencore and fell into a devastating spiral of debt. The former Chadian president described the agreement as a “cheated walk”. Loose translation: stupid deal.

Documents leaked to SonntagsBlick and British research platform Source Material show: A man significantly involved in the controversial oil trade and officially representing Chad’s interests was secretly working for Glencore.

Payments made through a Caribbean tax haven

Cameroonian Etienne S.* was a senior partner at the Cameroun Audit Conseil International (CAC) consulting firm, which advised the state oil company Société des Hydrocarbures du Tchad (SHT) and had significant influence on the multibillion-dollar deal with Glencore.

However, Etienne S. not only received money for advice from SHT, he also received a large sum of money from Glencore. However, the payments were not going directly to him, but to a company called Vanir Trading. It was located in the Caribbean tax haven of the British Virgin Islands. According to documents in the possession of SonntagsBlick, the beneficial owner is Etienne S.

On September 28, 2012, Glencore signed an agreement with Vanir Trading under which the company will share Glencore’s profits from transactions with Chadian oil company SHT.

Cooperation with intermediaries is central for raw material companies

After 2012, the contract was amended several times. On 14 May 2014, it was finally recorded that Vanir Trading would receive a payment from Glencore totaling $14.5 million; that’s exactly one percent of the disputed $1.45 billion loan.

The contract suggests that Etienne S. consciously ensured that the multibillion-dollar deal was advantageous primarily for Glencore and not for Chad, whose interests he officially represented.

Mark Pieth, 70, an anti-corruption expert and professor of criminal law at the University of Basel, is unable to evaluate the specific case. But he knows from other cases that it is vital for raw materials companies to cooperate with intermediaries to obtain mining rights. “It often remains unclear who is working for whom and what interests they are pursuing.” As a rule, the money does not just stay with the middlemen, but also goes through the winding paths of corrupt ministers in the country concerned.

Glencore’s cryptic statement

In a phone interview with Source Material, Etienne S. verbally confirmed that he works for Glencore through Vanir Trading. However, Source Material and SonntagsBlick were no longer able to reach him with further questions.

Glencore also does not want to comment on contracts with Vanir Trading. The company leaves unanswered the question of what the purpose of the million payments made to Etienne S. was. It also raises the question of what is the responsibility of Ivan Glasenberg (67), who was CEO from 2002 to 2021 and remains the company’s largest individual shareholder.

Instead, the company said in a cryptic statement: “The board’s investigation committee monitored Glencore’s response to various government investigations. Glencore cooperated extensively with various authorities. “The group responded to the various investigations and to assist Glencore at the request of the investigation committee. “It has engaged external legal advisors and forensic experts to further investigate various aspects of the company’s operations.”

This probably means: Everything is processed, everything is yesterday’s news. Today, we are a completely clean and transparent company.

bribery in the past

Glencore has been spreading this message almost like a mantra since Glasenberg stepped down as CEO in 2021.

For example, when the Chairman of the Board, Kalidas Madhavpeddi (68), was forced to admit in 2022 that the group had paid bribes in the past in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan, he assured: “Glencore was not behind this abuse when unacceptable practices occurred in the company It was longer.”

New CEO Gary Nagle, 48, also promised improvement: “We have taken significant action to create and implement a world-class ethics and compliance program. This is to ensure that our control mechanisms are robust and effective across every corner of our company.”

Pressure from the President of the World Bank

But anti-corruption expert Pieth is not entirely convinced by these assurances. In his opinion, it is clear: “The future will show whether a truly deep structural change has taken place within the group.” As a rule, discrepancies regarding raw material agreements take years to emerge.

One thing is certain: Glencore, even today, is not a charity. For a long time, the company was reluctant to contribute to the cancellation of Chad’s debts, unlike many countries and international organizations that lend money to Chad.

In 2021, then-World Bank President David Malpass (67) publicly asked Glencore to finally offer assistance with a solution: “Glencore has by far the largest amount of reschedulable debt,” Malpass said at the time.

No reduction in debt

An agreement was reached with Chad about a year ago. A Glencore spokesperson writes: “The loan was successfully restructured at the end of 2022 with the support of everyone involved.”

It is not known exactly how this restructuring will occur. According to information obtained by SonntagsBlick, Glencore agreed to a longer repayment period for the debt. But debts resulting from the controversial oil deal have not been erased or reduced.

The raw materials trading and mining group could certainly afford it: Glencore this week reported net profit of $4.3 billion for 2023. A year ago, this figure was 17.3 billion dollars.

For comparison: Chad’s gross domestic product is $12 billion.

*Name changed

Source :Blick