Global Outlook: Another Gertler deal threatens to drag Glencore through the mud

 

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The Independent Online

The Israeli mining billionaire Dan Gertler was mired in controversy yet again last night for his dealings in one of the world's most corrupt countries - Congo.

A close friend of the country's President, Joseph Kabila, Mr Gertler's dealings with the government have created many a furore - particularly when it comes to buying state-owned mining assets in less-then-transparent circumstances. Allegations are rife that he has been allowed to buy assets in the Congo on the cheap, with Kofi Annan's Africa Progress Panel claiming he was sold two state mining assets for $600m (£370.6m) less than they were worth - claims he subsequently denied. The International Monetary Fund last year cancelled a $532m loan accord with the Congo government in punishment for the lack of transparency on a previous Gertler deal.

Those purchases were all made by Mr Gertler from the state mining company Gecamines. Now, lo and behold, another Gertler takeover from the same organisation is running into controversy - this time in a row that risks leaving London-listed mininggiant Glencore open for question.

Gecamines is a minority partner with Glencore in a mining business worth $5.2bn called the Kamoto Copper Co. Gecamines is selling its 20 per cent stake in what it described yesterday in a press release as a "competitive bidding process". However, despite all this "competition", according to a Bloomberg report citing three sources, the only bidder to submit a final offer is Dan Gertler. The rumour mill suggests he is bidding $250m-$300m for an asset fairly valued at $400m-$500m. Those figures could prove wide of the mark in such an opaque auction, of course.

Perhaps, like Mr Gertler's London spokesman, you find none of this peculiar.

But what about this? Now, it has been alleged that the country's Ministry of Mines has not even been informed by Gecamines of the possible Gertler deal. This in a country supposedly trying to improve the transparency of its state asset sales. Global Witness says this risks Gecamines becoming "a financial black hole at the heart of the Congolese mining sector".

Glencore takes the view that the sale of a stake by a minority shareholder is nothing to do with them. Technically, this is true, but it seems to me that the see no evil, hear no evil, speak no evil stance does not sit easily with Glencore's stated intention of being a beacon of Western good governance in the region.

As the majority shareholder and controller of Kamoto, as well as one of the Congo's biggest investors, Glencore should be exerting more pressure behind the scenes to get these state asset sales more transparent.

Norwegian fund going green on investments

Sovereign wealth funds aren't all about Arab oil sheikhs buying up gold-plated Belgravia apartment blocks. One of the biggest in the world, with assets of $750bn dollars belongs to our neighbours across the North Sea - Norway.

Formed in 1990, the Norwegian fund has built itself up steadily by levying taxes on the country's oil and gas industry, ploughing the cash into big companies' shares across the world. So big has the fund become that it's now said that one in every $80 invested in global share prices is owned by Norway. As such, it's a powerful player that can move markets with little effort.

So it was with some anxiety this week that big companies with dubious records responded to news that a new government being formed in Oslo was mulling a shake up of the fund's investment portfolio. Largely, this review is due to the sluggish returns the fund's been making of late, but primarily it's reviewing the environmental and human rights ethics of its investee companies.

High on the list of companies named and shamed as possibly for the chop was our very own Royal Dutch Shell, as well as Italian oil company ENI. A bunch of Malaysian, Peruvian, Chinese and Indian mining, timber and chemical firms were also called into question.

The company was not auspicious for Shell, which was in the firing line due to its well-documented environmental disaster zone in the Nigerian Delta region. India's Zuari Agro Chemicals was cited due to concerns that it uses child labour, while timber and palm plantations giants WTK Holdings Berhad and Ta Ann, as well as Zijin Mining and Peru's Volcan Cia Minera were accused of posing severe risks to the environment.

In the end, Shell and ENI were spared the chop, to howls of indignation by eco NGOs.

But the green lobby may not be howling for long. Norway is now looking at bunging far more cash into renewable energy in developing countries from its sovereign wealth. That's got a nice circularity about it - money made from oil going into environmental energy projects.

Perhaps the most surprising aspect of this apparent shift in thinking in Norway is that it hails from a new right-leaning coalition currently being formed by Erna Solberg, to replace the outgoing centre-left administration.

Imagine that - a conservative administration putting the environment first.

Billy Index reveals true state of global economy

Forget all those tedious economic stats put out by the likes of the OECD and the Office for National Statistics.

My vote for the year's most relevant stat is Bloomberg's Billy Index.

Based on the catalogue prices for 2014 versus 2013, this takes the world's economic temperature by gauging how much Ikea charges its customers around the world for its Billy bookshelves. At 34 years old, the Billy is fast approaching middle age, yet the planet's cash-strapped bibliophiles still buy 3 million of them a year.

But they only pay what they can afford: hence, the higher the price, the healthier the economy.

As with all statistics the data should be handled with care. Other factors such as currency swings, competition and logistics can skew the findings.

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