As the Guptas and their minions squeezed Glencore out of Optimum Coal Mine, the chaps at the Swiss-based metal mining and trading group must have recognised the playbook.
At about the same time as the Guptas were encircling Optimum, Glencore was indirectly putting the final touches to its capture of the state in the Democratic Republic of Congo (DRC) to secure control of its rich copper deposits. That is why it is a pity that in its report on the Optimum shenanigans, the Zondo state capture commission ignored the context — how Glencore and other metals groups do business.
The business of extracting minerals and selling them globally is dirty, not just environmentally but in terms of turning politicians and civil servants into puppets. As the recent disclosures by the US justice department show, Glencore is one of the master puppeteers. And it turns a good profit while at it.
The commission’s narrative on Eskom’s capture by the Guptas is poorer for ignoring this context. It short-changes South Africans of a much richer understanding of the capture of the state by private business interests. In fact, it’s odd that during the testimony of Glencore SA executive Clinton Ephron the commission did not quiz him about Glencore’s culture, specifically concerning its shenanigans elsewhere.
Zondo has found that Brian Molefe and Matshela Koko “used their positions within Eskom to collude with the Guptas and Salim Essa in a scheme to pressurise Glencore” to sell Optimum to the Guptas. This was done through what Zondo described as a series of cumulative actions that made it impossible for Glencore to run Optimum sustainably while supplying coal to Eskom. The support cast included then mineral resources minister Mosebenzi Zwane, the late former Eskom chair Ben Ngubane, and officials of the department of mineral resources.
Their actions included putting pressure on Glencore via phoney safety investigations, which allowed the department to shut down mines pending safety inspections. The final act involved Zwane seeking an audience with then Glencore group CEO Ivan Glasenberg at the metals group’s headquarters in Switzerland, without telling Glasenberg why he wanted to see him.
However, based on Glencore’s way of doing business, Glasenberg would not have been surprised by Zwane’s approach. If anything, his experience in dealing with people like Zwane would have taught him that he was not coming to Switzerland to fight for his country’s interests. If Glasenberg did not already know who the puppeteer was, he would have known Zwane’s visit was a dance choreographed by his masters.
Indeed, the Guptas turned up with Zwane for the meeting. Based on Glencore’s version and Zwane’s testimony, Zondo has concluded that Zwane did not say or do much and left the Guptas to agree on the terms for the purchase of Optimum with Glasenberg. Zondo’s finding is that Zwane “used his ministerial position to essentially put pressure on Glencore in a meeting in Switzerland for sale to the Guptas”.
There is a telling statement in Ephron’s affidavit, which he also read during his testimony. He said Glencore was “satisfied with the purchase price” of R2.15bn agreed with the Guptas in Switzerland. “Therefore, while it was clear that pressure was brought to bear on Glencore to sell the mine, Glencore ultimately entered into a transaction that made commercial sense,” Ephron said.
That is a sanguine interpretation of the outcome, especially given the fact that Glencore had been keen to retain Optimum. In the end Glencore executives must have decided they had been outmanoeuvred by the Guptas using a playbook they were all too familiar with.
A few years earlier Glencore had, in partnership with Israeli-born businessman Dan Gertler, built dominance over the DRC’s mining sector. Glencore’s partnership with Gertler is documented by, among others, Javier Blas and Jack Farchy in a book, The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources. They write that on his own Gertler did not have much sway over the DRC’s mining sector and in fact “faced competition from other power brokers and businessmen”.
“But Gertler and Glencore together were a formidable combination: the commodity trader brought financial firepower and market sway; Gertler opened the doors to Congo’s corridors of power.” Gertler, they write, became Glencore’s business partner, counsellor and fixer in the DRC. So much so that Glencore did not have a representative in Kinshasa, “relying instead on Gertler and his team” to manage the relationship with the government.
Pity, then, that Zondo left out this context, in effect painting Glencore as a hapless victim of Gupta machinations. A victim yes, but not a hapless one.
• Sikhakhane, a former spokesman for the finance minister, Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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