The List

The World According to Glencore

"The biggest company you never heard of," as Reuters once put it, Glencore does business in dozens of countries on every continent except Antarctica. Here's a snapshot of this global empire -- and some of its murky local alliances.


Glencore owns Prodeco, a giant coal-mining operator worth an estimated $4.4 billion -- so big that it maintains its own port to speed exports to the United States and Europe. Prodeco has been accused of everything from strike-busting with military help to relying on paramilitaries to seize land and has been fined for illegal waste-dumping and other environmental violations.
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Glencore has stakes in two oil fields in Equatorial Guinea and an exploration contract in partnership with little-known Starc Limited. The Bermuda-registered Starc is a joint venture whose chief partners include Stag Energy, which for many years had an exclusive contract to market the government's share of crude oil. Stag has a simple business model, according to one well-placed source: "Keep President Obiang happy." Glencore's holdings in Equatorial Guinea were worth about $1 billion at the time of its initial public offering in May 2011. Deutsche Bank estimates that the firm's annual crude oil production there will rise from near zero today to 24 million barrels by 2015.
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Until embattled strongman Laurent Gbagbo was forced from power last year, Glencore was the "favorite trader" of Petroci, the state oil company, according to the Africa Energy Intelligence newsletter. In 2007, Glencore Energy UK provided cash-strapped Petroci with an $80 million loan to be repaid with future exports. At the time of Gbagbo's overthrow, the loan had been renewed three times and Petroci still owed Glencore around 650,000 barrels, worth about $70 million.
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A Glencore subsidiary owns a 73 percent stake in Mopani Copper Mines, Zambia's second-largest mining company. In 2000, Zambia granted Glencore and other foreign firms special development deals with royalty rates of just 0.6 percent (versus the normal rate of 3 percent) and a corporate tax rate capped at 25 percent. Glencore has been accused of colluding to artificially reduce taxable profits from Mopani; international auditors reported that Mopani sold copper to Glencore, its parent company, at as little as one-quarter the official price on the London Metal Exchange. Now Zambia's government has sought to collect roughly $160 million in back taxes it says Glencore owes. The firm denies the charges.
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In 2009, U.S. and Bahraini prosecutors investigated allegations that Glencore's employees had made $4.6 million in improper payments to executives at Aluminium Bahrain, a state-owned smelter, to secure below-market prices on aluminum products. Glencore denied the allegations; in 2009 it paid Aluminium Bahrain an out-of-court settlement of $20 million.
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Glencore's effective global tax rate for 2010 was just 9.3 percent, in large part because nearly half its 46 subsidiaries are incorporated in "secrecy jurisdictions," opaque financial havens like the Netherlands, according to a report by the NGO Publish What You Pay. Glencore's Rotterdam-registered Finges Investment is worth $18 billion, but doesn't have a single employee, according to corporate records filed in the Netherlands. Finges, a Dutch financial expert told me, is "nothing more than a piece of financial engineering."
Key business:
Tax haven


A 2008 U.S. Senate report revealed that an unidentified client of the LGT Group, a bank owned by Liechtenstein's royal family, discussed setting up a Panamanian shell corporation and bogus foundation to pay bribes on Glencore's behalf. "A small portion of the payments go … to the USA and Panama and may be classified as bribes," read an internal LGT memo. The client, a Glencore agent, had set up the account in 2002; prior to that, Glencore had made such payments directly, the memo said. An LGT executive refused to testify to the Senate about whether the bank had set up the Panamanian corporation or foundation as requested.
Key business:
Financial services


Glencore's relationship with Tehran dates to the regime of the shah, with whom founder Marc Rich enjoyed a close relationship. During the early 1970s Arab oil embargo, Rich brokered a deal to trade oil that Iran was supplying to Israel through a secret pipeline. Glencore continued to do business with Iran after the 1979 Islamic Revolution and in recent years was a regular supplier of gasoline to the country. It halted deliveries in late 2009 under pressure from Washington.
Key business:
Oil and refined products


Glencore funneled roughly $2 billion through an offshore company to the oligarch Mikhail Gutseriev, described in a WikiLeaked cable as "not known for his transparent corporate governance." Reportedly booted by the Kremlin as chief of the state-owned oil firm Slavneft for resisting the company's privatization, Gutseriev made a comeback with Glencore's help. The cash infusion allowed Gutseriev to establish RussNeft, now one of Russia's largest oil companies. Glencore owns nearly half the equity of four of RussNeft's oil production subsidiaries and has sole rights to market its oil.
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In the mid-2000s, Glencore used an Israeli agent named Yoav Stern, who also represented the Romanian interests of Yakov Goldovsky, who had previously been convicted in Russia for asset-stripping state-run enterprises. Another Glencore business partner here was Romanian businessman Marian Iancu. Glencore sold him crude oil through an offshore company he controlled, Faber Invest & Trade, for processing at the Rafo refinery in Romania. Iancu was indicted for tax evasion and money laundering in 2006 and convicted in late 2011. A WikiLeaked U.S. State Department cable described Rafo as "embroiled in a web of corruption, money laundering, fraud and criminal charges" and included Faber among its "shady entities."
Key business:
Oil and refined products






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The List

5 Secrets Anonymous Should Steal from China

Let’s get real, script kiddies: It's time to stop defacing websites and start going after the good stuff.

Over the last few weeks, the hacker collective Anonymous has shifted its attention to China. On March 30, Anonymous China defaced the first five of what would soon be hundreds of business and a few minor official websites, warning the Chinese government that it is "not infallible, today websites are hacked, tomorrow it will be your vile regime that will fall." The Who's "Baba O'Riley" (commonly known as "Teenage Wasteland") played on many of the sites, and Chinese netizens were directed to a link that explained how to get around Internet controls. Another hacker associated with the group LulzSec told Reuters that he breached the China National Import & Export Corporation, a defense contractor, and downloaded company documents to several file-sharing websites.

The group is apparently not based in China, and appears to rely on translation tools to work through Chinese networks. So far Anonymous China hasn't exposed anything particularly damaging. But China is a great country in which to dig: lacking a free press and ruled by the intensely paranoid Communist Party since 1949, it holds many secrets stored in fusty computer files across the Web.

Knocking down the Chinese regime is a tall order, but Anonymous China could certainly damage the Communist Party's reputation. Here are five websites the group could hack for real secrets, Chinese-style:

1. China's Central Organization Department and the Party History Research Center

The Chinese Communist Party, via its Central Organization Department (COD), reportedly keeps personal dossiers on every current or past official of the party above a certain rank.

The COD, the HR lobe of the party brain, is so secretive it doesn't even have a public website, but Anonymous China could hack the websites of local Party History Research Centers, party clearinghouses that should contain the records of important officials at earlier stages of their career.

Want to know what Bo Xilai, the now-deposed party secretary of Chongqing and the center of China's biggest political scandal in a generation did in Dalian? Hack the provincial party history website.

2.The Ministry of Defense

After announcing an 11 percent increase in defense spending this year, pushing the military budget over $100 billion, Chinese officials and defense analysts moved quickly to reassure the world that the spending was "reasonable" and in "accordance with Chinese economic development."

The Stockholm International Peace Research Institute, however, estimates that China's real defense spending is as much as 50 percent higher since the official number does not include the space program and foreign weapons purchases.

The higher the number, the greater the diplomatic challenge China faces in convincing its neighbors that its long-term intentions are peaceful. The Central Military Commission lacks a public website, and the site of the Ministry of Defense, an outward-facing portal probably not connected to sensitive military networks, is unlikely to provide any real nuggets. Anonymous may be able to piece together some figures by going after defense universities, military academies, research institutes and universities tied to the space program, and domestic and Russian arms dealers.

3. Xinhua  

Over the last decade, China has witnessed an almost predictable cycle of crisis, cover-up, exposure, and eventually limited, but government approved, discussion of the event. SARS, Tibetan riots, and the crash of a high-speed train provoked a knee-jerk effort to control information followed by a relatively greater degree of transparency. Reporters from Xinhua, China's official press agency, play two roles in covering events like these: They package the approved story for public consumption and send detailed investigative reports to high-level officials about what actually happened.

Like everyone else with an email inbox, these journalists are susceptible to spear-phishing attacks. Using information gathered on Weibo and other social media accounts, Anonymous could spoof emails with infected attachments or links to malware, like those that were sent to pro-Tibet activists. With access to everything on the journalists' computers, they could release emails revealing clearer pictures of government cover-up and corruption.

4. The Foreign Ministry

Some of the more explosive revelations from the WikiLeaks State Department cable dump were the descriptions of foreign leaders by U.S. diplomats. Embassy staff called British Prime Minister Gordon Brown volatile and unpredictable, mocked Russian President Dmitry Medvedev as playing "Robin to Putin's Batman," described Afghan President Hamid Karzai as "driven by paranoia," and ripped German Chancellor Angela Merkel as "not very creative."

A breach in the Ministry of Foreign Affairs' servers would likely reveal Chinese diplomats as equally petty and human in their descriptions of their counterparts, and one could only hope that interactions with quasi-allies like North Korean leader Kim Jong Un, Iranian President Mahmoud Ahmadinejad, and Sudanese President Omar Hassan al-Bashir would inspire them to new heights of literary creativity. To get the goods, Anonymous could target Chinese embassy and consulate employees for spear phishing. As a series of hacks of Indian embassies and government agencies showed, diplomats are just as likely to click on the link of the funny cat playing the piano as the rest of us.

5. Recovering China's Stolen Secrets

At the end of Raiders of the Lost Ark, the Ark of the Last Covenant, which Indiana Jones has been desperately fighting to find and keep from the Nazis, is crated up, stamped "top secret" and stored deep in a government warehouse. Somewhere in China probably exists the data center equivalent, and on its servers could be sitting the booty of China's alleged hacking of the rest of the world: the secrets of the F-35 fighter, Google's source code, reports on top athletes from the World Anti Doping Agency, and the personal emails and musings of the Dalai Lama. By hacking those servers, Anonymous China could give a sense of the scope and scale of what many have called "the greatest transfer of wealth in history."

The Chinese Communist Party insists that it is the only force that can guide China to economic and national strength and preserve stability. Its legitimacy is tied up in an image of efficacy and efficiency, of existing above political scrutiny. Praising China's leaders as pragmatic realists that they can do business with, many in the West have bought into this image. The brand has been badly damaged recently with the removal of Bo Xilai, the exposure of his wife Gu Kailai's corruption, and the reported murder of British businessman Neil Heywood. So far, Anonymous website defacements have been weapons of mass distraction -- annoyances, but no real threat. If Anonymous really wants to further taint the regime's reputation, it needs to go after the secrets.


Lintao Zhang/Getty Images