{"id":4946,"date":"2017-11-13T00:00:00","date_gmt":"2017-11-13T00:00:00","guid":{"rendered":"https:\/\/amabhungane.org\/amabhungane\/stories\/the-ships-glencore-wanted-to-keep-hush-hush\/"},"modified":"2024-10-24T15:04:24","modified_gmt":"2024-10-24T15:04:24","slug":"the-ships-glencore-wanted-to-keep-hush-hush","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/the-ships-glencore-wanted-to-keep-hush-hush\/","title":{"rendered":"The ships Glencore wanted to keep \u2018hush hush\u2019"},"content":{"rendered":"

SwissMarine\u2019s fleet of giant freighters crisscrosses the seas from Southern Africa and South America laden with coal destined for power stations in Europe and other continents.<\/p>\n

On any given day in major ports, SwissMarine<\/a> can be difficult to miss. The hulking vessels linger in Brazil, Panama and India for hours, unloading cargo.<\/p>\n

The closely held shipper, formed in 2001 and headquartered in Geneva, Switzerland, is a $1-billion to $2-billion operation that gives no public information on its owners.<\/p>\n

But through leaked files from Appleby, one of the world\u2019s largest offshore law firms, it emerges that since its inception, SwissMarine\u2019s most important co-owner has been Glencore<\/a>, the world\u2019s largest commodity trader.<\/p>\n

Glencore was one Appleby\u2019s top clients.<\/p>\n

The organization, at one stage, even had a dedicated room in Appleby\u2019s Bermuda office<\/a>.<\/p>\n

Via its fully owned Swiss subsidiary Sidhalu S.A., Glencore owned 47.09 percent of SwissMarine<\/a> in 2015, according to documents shared with Appleby and SwissMarine\u2019s bank.<\/p>\n

Other owners include SwissMarine\u2019s chief executive, Peter Weernink; a Greek ship owner, Victor Restis, and Macsteel International Holdings BV, a steel trader based in the Netherlands that is a joint venture between units of MacSteel Holdings Luxembourg S.a.r.l., a shipping and trading concern, and steel and mining giant ArcelorMittal South Africa.<\/p>\n

An email from the Paradise Papers highlighting the importance of keeping Glencore\u2019s role \u2018hush hush\u2019.<\/em><\/p>\n

Appleby\u2019s files reveal that its employees worked for years with the belief that Glencore wanted its links to SwissMarine hidden. The employees in Bermuda took heed.<\/p>\n

\u201cWe represent an entity by the name of Sidhalu which is ultimately connected with Glencore,\u201d wrote an Appleby lawyer<\/a> in January 2009.<\/p>\n

\u201cBut the fact of and nature of this connection is extremely hush hush and we must never disclose this in any communications\u2026in any way which may become public.\u201d<\/p>\n

Years before, Glencore was so unwilling to disclose its relationship with SwissMarine that it decided against using the Bermuda branch of banking giant HSBC to avoid that bank\u2019s questions about SwissMarine\u2019s true ownership.<\/p>\n

SwissMarine opened an account with the Bank of N.T. Butterfield, according to Appleby emails, because it would be \u201cbetter and easier\u201d given that Butterfield\u2019s disclosure requirements were \u201cmore reasonable.\u201d<\/p>\n

A reason for the secrecy is not stated in the leaked records, and in response to ICIJ questions Glencore said that it did not \u201cwidely disclose\u201d its ownership in SwissMarine \u201cfor commercial reasons.\u201d<\/p>\n

The shipping company was a big borrower from Glencore-related units \u2013 sometimes at high rates. In November 2008, Glencore\u2019s subsidiary Sidhalu lent SwissMarine $22.9-million as part of a $60-million loan from SwissMarine\u2019s four owners. The loan was unsecured and accrued 18 percent interest per year.<\/p>\n

On Oct. 24, 2014, Sidhalu gave an additional loan of $9.6-million to SwissMarineat an interest rate of 2 percent.<\/p>\n

<\/p>\n

SwissMarine is looking for a bank in Bermuda \u2013 with Glencore\u2019s help. (A UBO is Ultimate Beneficial Owner and GIAG is Glencore).<\/em><\/p>\n

Glencore told ICIJ that the \u201chigh interest rate\u201d on the 2008 loan to SwissMarine was made during the 2008 global financial crisis.<\/p>\n

The high rate on the earlier loan is notable even given the crisis, when borrowing rates spiked. But experts said the arrangement may have provided SwissMarine with an uncommon cash injection through unusual, if legal, means at a time when the shipping industry was suffering.<\/p>\n

\u201cIt would be difficult to justify the 18% rate in any context, including the November 2008 financial crisis,\u201d said Nikos Nomikos, professor of shipping risk management at Cass Business School.<\/p>\n

In its public reports and in disclosures to the London Stock Exchange, where it is listed, Glencore has never listed its connection to SwissMarine, despite the shipping company\u2019s sizeable revenue, which, according to a confidential SwissMarine annual report shared with Appleby, was $1.9-billion in 2014.<\/p>\n

Glencore\u2019s significant shareholding of SwissMarine and its control over operational matters such as opening a bank account suggest that SwissMarine should have been specified by name in Glencore\u2019s recent financial statements, said Prem Sikka, Emeritus Professor of Accounting at the University of Essex.<\/p>\n

\u201cAnything worth $2-billion seems material to me.\u201d<\/p>\n

But SwissMarine \u201cis not a significant investment for Glencore,\u201d the company told ICIJ, adding that any profit that goes to Glencore is included in Glencore\u2019s consolidated financial statements.<\/p>\n

Glencore discloses its beneficial ownership in SwissMarine \u201cwhere necessary\u201d to banks and tax authorities, the company said.<\/p>\n

SwissMarine\u2019s website simply says it is \u201cprivately held<\/a>\u201d and mentions Glencore as a customer among many others.<\/p>\n

Glencore\u2019s offshore lawyers, too, appeared somewhat in the dark.<\/p>\n

\u201cNow you\u2019ve mentioned Glencore,\u201d wrote in 2004 an Appleby employee who was asked to sign documents in Bermuda on behalf of SwissMarine, \u201cI remember\u2026 an element of confidentiality attaching to this structure \u2013 I can\u2019t remember exactly what it is, but I know it\u2019s there.\u201d<\/p>\n