Swiss group accuses Glencore of buying child labour copper

Story filmed by RTS and BBC airs in UK on “Panorama” tonight

Switzerland’s largest company in lengthy rebuttal says not so

DRC copper mining at Kamatanda, near Likasi in Katanga province (mine NOT owned by Glencore), 17 January 2011 - Photo: Carême/Meinrad Schade

ZURICH, SWITZERLAND – Glencore, Switzerland’s largest company in terms of turnover and reportedly the supplier of 50 percent of the world’s copper, is accused of indirectly buying material from an “artisanal mine” in the Democratic Republic of  Congo (DRC) that uses freelance miners as young as 10 years old. The company reacted with a lengthy refutation, not of the Glencore report (pdf) by two Swiss groups, but to a show based on that information, to be aired tonight by the BBC.

Glencore and XStrata are presenting their proposed merger to shareholders in May, prompting closer scrutiny of the Glencore’s reputation in the area of ethical business practices.

The merger would make the new $90 billion company the world’s third largest mining and raw materials group.

Both are based in Zug. Xstrata’s roots lie in a firm called Südelektra, founded in 1926. The name was changed in 2002 and the company went public 10 years ago.

The accusations of child labour and other illegal or at best dubious practices on the part of Glencore are made in a lengthy report issued 16 April by two politically active Swiss charities who are noted for their research “into the causes of poverty that affects large sections of the population”, says Zewo-certified Swiss Catholic Lenten Fund (Carême in French and Fastenopfer in German), which issued the report with Bread for All.

The report is the result of six months of investigation into the company’s work in the DRC, a followup to an earlier report when Glencore was listed on the stock market in 2011. Among its findings:

  • copper from a mine where one-third of the miners are children, working in unsafe conditions, is making its way into Glencore’s supply lines; Glencore owns the mine, which is dormant, and the company says it has been overrun by artisanal miners, industry lingo for freelancers who mine and sell as best they can
  • ” In one of Glencore’s processing plants in Luilu, sulphuric acid is discharged untreated into the river of the same name, with devastating consequences for the environment and the people living in the surrounding villages, who have lost an important water source.” The company says the problem pre-dates its ownership and has now been dealt with but film footage reportedly shows otherwise
  • Glencore is accused of not respecting labour laws and of using fiscal practices that deprive the country of income that could replace aid money: “Glencore lawfully pays duties in the DRC in the form of licence fees and import/export tax. However, with the company shifting its profits made in the Congo through transfer pricing between its subsidiaries and into tax havens, the Congolese state’s according to calculations of the Swiss Catholic Lenten Fund and Bread for all loss in dividends and tax on profits amounted to around196 million US dollars in the last two years.”

Swiss legal loopholes for overseas subsidiaries targeted

The report notes that

“the example of Glencore clearly shows once again that Swiss legislation relating to the activities of international corporations has serious loopholes. There is an urgent need for legal provisions to ensure that companies domiciled in Switzerland take responsibility for the activities of their subsidiaries abroad.

“Moreover, people who have suffered harm should be able to institute legal proceedings in Swiss courts against Swiss companies whose foreign subsidiaries commit human rights violations and cause environmental pollution.”

DRC copper mining at Kamatanda, near Likasi in Katanga province (mine NOT owned by Glencore), 17 January 2011 - Photo: Carême/Meinrad Schade

The two groups specifically call on Glencore to acknowledge the problems and initiate dialogue with people in the DRC to resolve the problems. In particular, they want Glencore to be more transparent on tax issues. “Multinational companies like Glencore must open up their accounts by country, so it becomes transparent which taxes are paid and which aren’t,” says François Mercier, co-author of the study. This information is also needed by the Congolese state, which is working on a reform of its mining legislation, he says. “If the mining sector in Congo was taxed properly, the tax revenue would more than exceed the development aid for the country.”

The BBC with RTS, Swiss public television, sent a team to the DRC based on the work of the two Swiss groups. The BBC’s “Panorama” programme airs Monday evening 16 April.

Glencore published a point-by-point refutation, but of the BBC show before the show’s airing and in the wake of media articles based on it, before the report was published Friday morning.

Glencore says pointedly that it had invited Panorama to tour its facilities and see firsthand its side of the story while the British broadcaster was in the DRC, but the offer was turned down.

Glencore gained notoriety several years ago when Marc Rich led the company that carried his name and which had a reputation for operating behind a veil of secrecy.

Rich landed on the US FBI’s Most Wanted list for selling to Iran despite a US embargo and for tax evasion. He was later given a presidential pardon in 2001 by Bill Clinton. The company changed its name in 1994 after a management buyout, but the company’s name was linked to other scandals, including the Iraq food for oil scandal and environmental and human rights complaints against it in Colombia.

Ed. note: photos by Meinrad Schade were taken during a tour of the region for Swiss Catholic Lenten Fund and Bread for All. They show mining in the area, but not at mines owned by Glencore.

 

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