Australia: Glencore involved in Paradise Papers

Glencore, the FTSE 100 mining giant, is facing fresh questions about the way it conducts its business following a massive data leak called the ‘Paradise Papers’.

More than 120,000 people and companies have been named in 13.4 million files, many of them leaked from offshore law firm Appleby. The documents have been reviewed by the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists (ICIJ).

Glencore was one of the top clients of Appleby, which even had a “Glencore Room” at its Bermuda office that kept information on the trader’s 107 offshore companies, according to ICIJ.

While hardly a household name, Glencore is one of the biggest miners in the world, with a turnover of $152bn (£116bn). It mines copper, zinc and coal and trades commodities such as oil and wheat all around the globe.

Based in Switzerland, the firm has a reputation for secrecy. But it has had to adapt to greater public scrutiny since listing on the London Stock Exchange in 2011. The float raised $10bn and generated a massive windfall for senior management, including chief executive Ivan Glasenberg, who now owns 8% of the stock.

The Paradise Papers reveal Glencore Australia was involved in huge cross-currency interest rate swaps – complex financial instruments previously targeted by the Australian Taxation Office for investigation, under suspicion they are being used to avoid paying Australian tax.

The swaps, which are lawful, are used to transform interest payments in one currency into another currency. But tax authorities around the world are concerned by their being used between arms of multinational companies to enter into deals at unrealistic, non-commercial rates, then using the swaps as a way to shift profits from high-tax to low-tax jurisdictions.

Appleby issued a press release saying, “we are an offshore law firm who advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behaviour.”

“Appleby has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients,” the company said.