Glencore International, the commodities behemoth heading for a £40bn flotation next month, finds itself plunged into controversy this week.
Glencore is having to deal with "unbelievably primitive" remarks about "ladies" made by its chairman, and the revelation that it bet on the rising price of wheat in the aftermath of the Russian drought last year – and encouraged Moscow to impose an export ban which pushed the cost of the staple up further. The claim on food speculation is especially sensitive as the French presidency of the G20 has pledged to clamp down on speculators distorting the price of basic foodstuffs.
The World Bank president, Robert Zoellick, said that since last summer an additional 44 million people fell below the $1.25 (76p a day) poverty line as a result of higher food prices. He also called for countries to end food export bans. As part of its progress towards becoming publicly listed, Glencore has had to make a succession of disclosures that have led to scrutiny of its powerful position in world commodity markets.
Now, however, the contrast between the riches enjoyed by its senior management and the effects of rising food prices on the starving or malnourished could not be starker. Some directors will reputedly make £120m each on the flotation. According to some estimates, Glencore's chief executive Ivan Glasenberg is worth $9bn.
On this occasion Glencore has told UBS, one of the banks underwriting its flotation, about its activities in the grain markets. "[Glencore's] agricultural team received very timely reports from Russia farm assets that growing conditions were deteriorating aggressively in the spring and summer of 2010, as the Russian drought set in... This put it in a position to make proprietary trades going long on wheat and corn," UBS said in a pre-flotation report circulated to potential investors and disclosed by the Financial Times.
On 3 August last year, Yury Ognev, head of Glencore's Russian grain unit, reportedly encouraged Moscow to ban wheat exports, saying: "From our point of view the government has all the reasons to stop all exports." His deputy made similar comments.
At the time, Glencore distanced itself from the comments, saying they represented Mr Ognev's personal views. Russia imposed the ban on 5 August, sending the price of the cereal more than 15 per cent higher in two days.
Glencore said its overall positions in grains had mixed "outcomes" in 2010. The export ban trapped Russian wheat that the trading house had bought in advance to supply a Middle Eastern country. "So we had to buy more expensive wheat from elsewhere to meet that obligation," it said. "The export ban did not particularly help our business."
More colourfully, company chairman Simon Murray's remarks that women aren't as ambitious as men because they prefer to rear children brought a swift rebuke from the Business Secretary, Vince Cable. Mr Cable called Mr Murray's views "unbelievably primitive ... His views are so bad they almost sound like a wind-up. It is simply indefensible and belongs in a bygone era."
Mr Murray is quoted as saying: "Women are quite as intelligent as men. They have a tendency not to be so involved quite often and they're not so ambitious in business as men because they've got better things to do. Quite often they like bringing up their children and all sorts of other things. All these things have unintended consequences. Pregnant ladies have nine months off."
Mr Murray has since apologised for his remarks. "I'm 100 per cent committed to equal opportunities in the boardroom and across a company's structure, be they private or public," he said.