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(Bloomberg) -- The activities of Glencore Plc, the world’s biggest commodity trader, are under scrutiny after a massive leak of confidential information from offshore law firm Appleby Global Group Services Ltd.
Glencore was one of the top clients of Appleby, which even had a "Glencore Room" at its Bermuda office that kept information on the trader’s 107 offshore companies, according to an investigation led by the International Consortium of Investigative Journalists.
Appleby suffered an alleged hack in 2016 and confidential data on the firm’s work for multinational corporations and high net-worth individuals was obtained by the ICIJ. The group and its partner media organizations are publishing a series of stories based on millions of pages of Appleby corporate records, meeting minutes and emails.
The so-called Paradise Papers include information relating to Glencore’s operations in the Democratic Republic of Congo and Australia, and involvement in a shipping business. Here’s what has been reported so far:
Congo: In 2009, Glencore made a $45 million loan to a company owned by Israeli billionaire Dan Gertler, the Guardian reported. While the details of the loan have been previously reported, the Appleby documents show that in return Gertler was required to secure certain approvals from the government, according to the U.K. newspaper.
"By providing Gertler with the loan and the mandate to get the contract finalized, Glencore disregarded the red flags raised by Gertler’s connections and track record," Elisabeth Caesens, an expert in Congolese mining deals who reviewed the leaked documents, told Bloomberg News. In doing so, Glencore "exposed itself to the risk of non-compliance with anti-corruption rules,” she said in response to questions.
Glencore has dismissed any allegations of impropriety concerning the loan. The loan was made on commercial terms and "negotiated at arm’s length," it said in an emailed statement.
Gertler, a friend of Congolese president Joseph Kabila, has a controversial reputation. Last year, he was implicated in a scheme to bribe Congolese officials on behalf of U.S. hedge fund manager Och-Ziff Capital Management, according to a person familiar with the details of that case. Gertler was not referenced by name in the judgement against Och-Ziff and has not been charged with any crime. He has refuted all allegations of wrongdoing related to his dealings in the Congo.
Currency Swaps: Glencore’s Australian business was involved in cross-currency swaps of up to $25 billion in 2013, the Guardian reported. This type of swap is legal, but has been previously investigated by the Australian tax office on suspicion they’re used to avoid tax payments, the newspaper said. The cross-border transactions took place on an arm’s-length basis and were used to hedge currency volatility, Glencore said.
SwissMarine: Glencore is the largest shareholder of SwissMarine, a freight operator that the Australian Financial Review said made “material mis-statements and omissions in bank applications and financial agreements” in 2013. At the time, SwissMarine’s second-biggest shareholder was Greek shipowner Victor Restis, who was in jail awaiting trial for fraud and embezzlement, the newspaper said. Glencore said its investment in SwissMarine is not "significant" and wasn’t widely disclosed for “commercial reasons."
Glencore shares were little changed at 379.15 pence as of 10:22 a.m. in London.
Appleby did not reply to emailed questions from Bloomberg News. The firm issued a press release saying, “we are an offshore law firm who advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behaviour.”
"Appleby has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients," the company said.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.
(Adds background on Gertler in sixth paragraph.)
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