Ferial Haffajee: Even Glencore’s notorious cowboys were no match for the Gupta mafia | Fin24
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Ferial Haffajee: Even Glencore’s notorious cowboys were no match for the Gupta mafia

Mar 02 2019 13:54
Ferial Haffajee

I had to keep rubbing my eyes at the sight of Glencore’s top executives, who jetted into Johannesburg from around the world this week to detail their experience of state capture at the Optimum mine before the Commission of Inquiry into state capture.

Clearly, the company took the opportunity to detail how the Gupta family had orchestrated an effective hijacking of their coal mine seriously.

Early on Wednesday morning, a series of flash cars sped into the basement of the building, where deputy chief justice Raymond Zondo presides over the unprecedented and microscopic examination of state capture.

The Glencore executives, based in Johannesburg, at the headquarters in Switzerland and also in Australia, came to support the former SA CEO Clinton Ephron who got the rifle-end of the Gupta’s tactics at Optimum. They were accompanied by leading lawyers.

For six hours, Ephron laid out chapter and verse of how they lost Optimum, a once-valuable coal mine tied to the Hendrina power station, but which is now dormant after being run into the ground in the last days of Empire Gupta.

With friends in high places, the Guptas got their men at Eskom, both former CEO Brian Molefe and former head of generation, Matshela Koko, to put the screws on Eskom and turn them so tight that Glencore eventually sold.

Ephron’s story ran all the way from 2014 to the fateful day on December 1, 2015, when South Africa’s then-Mineral Resources minister Mosebenzi Zwane met Glencore CEO Ivan Glasenberg in Zurich and forced the final sale.

By then, the global commodities trader had given up the ghost on their coal mine and recognised that even they were no match for the regulatory pressure that Zwane’s inspector’s and Eskom’s bent executives had put them under.

Read the business press and it is largely filled with exuberant copy about Glasenberg’s brilliance as a South African-born coal trader made big and good. He took Marc Rich’s Glencore and turned it into one of the world’s leading commodities brokers by going where angels fear to tread and sucking up profits so big that Glasenberg is now one of the richest people in the world. They hire the best and mine in places like the Congo, Venezuela and Nigeria. South Africa and Australia are older markets.

That’s one story. The other is that Glencore wrote the state capture playbook. Glencore plays and wins in jurisdictions where mining regulation is weak and where influence peddling is almost as important as the ability to mine a reef or transport a load out into the jaws of hungry markets like those in China. Last year, Glencore got into big trouble in the US when the Justice Department announced a huge corruption investigation related to its relationship with Dan Gertler.

Gertler, an Israeli diamond scion, is who Ajay Gupta possibly wants to be one day: fabulously rich, he mines future metals and owns fields of cobalt and other metals of tomorrow in the DRC. Africa is his playground; he works in the DRC (and other countries) in the week and then flies back to Israel for the Sabbath at the weekend.

Glencore was named in the Paradise Papers as an allegedly leading tax-dodging company which uses island tax haven status to pay as little as possible to the jurisdictions it mines in or even in the countries where it is listed.

It was quite something to see Glencore as the victims before the inquiry into state capture rather than the captors. This tells you something: South Africa’s state capture story very quickly got so sophisticated and so entrenched in the public sector that even world-class players like Glencore didn’t know how to get around it.

Imagine what it’s like, then, for other less swashbuckling companies trying to do business where there is a state intersection, either in the form of regulation or where you are trying to get in on a contract with a state-owned enterprise.

State capture has made doing business in South Africa as risky as it is in cowboy capitalist economies, and that is not a good thing for a country with low growth and devastatingly high unemployment.



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