Summary
Highlights
The Paradise Papers, a massive leak of internal documents, reveal billions in secret transactions by major commodity corporations like Glencore. These companies, often unknown to the public, are giants with thousands of employees and billions in revenue, trading the raw materials that fuel the world economy. These resources are often extracted from impoverished developing countries, frequently at the expense of local populations, who see little benefit while a small elite profits immensely. In 2016 alone, $69 billion disappeared illicitly from the raw materials sector in Africa.
The documentary focuses on Glencore, a company with a history rich in scandals, starting with its founder, Marc Rich. In 1981, New York prosecutor Morris Weinberg began investigating Rich, uncovering massive tax fraud and illegal oil deals with Iran despite a US economic embargo. Rich fled to Switzerland to avoid prosecution, where he founded the company that would become Glencore. Switzerland's secrecy laws and low taxes made it a haven for commodity traders. Rich was pursued by the FBI for nearly two decades, but Swiss authorities refused extradition, protecting him due to his business practices being legal in Switzerland.
Today, Glencore is a global behemoth with over 150,000 employees and $153 billion in annual revenue, operating in more than 50 countries. It supplies over 90 raw materials, often extracted from poor countries with questionable governments, such as the Democratic Republic of Congo. The DRC holds an estimated $24 trillion in minerals like copper and cobalt, essential for modern technology. Despite this wealth, two-thirds of its population lives on less than $1.90 a day, largely due to corruption and dubious business practices that prevent the country from benefiting from its own resources. President Joseph Kabila and his family are accused of controlling a vast corporate empire worth hundreds of millions.
One significant deal, the Katanga mine, holding billions in copper, raises questions. The Paradise Papers reveal details of a 2008 meeting in Zurich where Glencore managers, facing a stalled contract with the state-owned mining company Gécamines, decided to engage Dan Gertler. Gertler, an Israeli businessman and close confidant of President Kabila, has a controversial reputation, often linked to bribery. His involvement quickly resolved the negotiations, resulting in the DRC receiving significantly less money than initially demanded, a "controversial deal" according to experts. Gertler's diamond trading history during the civil war and his monopoly on exports are highlighted as examples of his powerful influence.
Over the years, the DRC sold billions worth of mining assets and shares, often at undervalued prices. An Africa Progress Panel study estimated a loss of $1.36 billion for the DRC in just five deals between 2010 and 2012, an amount equivalent to double the country's education and health budgets. Gertler was involved in every one of these deals. Glencore, like many other multi-national corporations, is accused of using complex networks of offshore companies and accounts to avoid paying taxes in the resource-rich countries where it operates. In 2011, Glencore CEO Ivan Glasenberg's massive tax contribution to the Swiss municipality of Rüschlikon, contrasted sharply with the poverty in source countries, sparking a local debate about ethical responsibility.
The documentary returns to Marc Rich's past in Switzerland. Despite being on the FBI's most wanted list, he operated freely from Zug. Swiss authorities protected him and even thwarted an FBI attempt to apprehend him. Switzerland's non-membership in the UN for a long time meant international embargoes did not apply, allowing Rich to trade with regimes like Saddam Hussein's Iraq, Muammar al-Gaddafi's Libya, and apartheid South Africa. This liberal environment and lax laws, including the exemption of commodity trading from money laundering laws, contributed to a culture where deals were made if they could be made, regardless of ethical implications. Bribery of foreign officials was not illegal and even tax-deductible in Switzerland until 1999.
The Katanga deal is re-examined. After initial progress facilitated by Gertler, the deal faced new obstacles. Gécamines demanded significantly more money. Glencore managed to reduce the price from $585 million to $140 million, an unusually low figure according to experts. When the final agreement stalled, Glencore again turned to Gertler, who swiftly resolved the issues. US judicial investigations into an American hedge fund's illicit mining dealings in the Congo revealed a key figure: an Israeli businessman (implicitly Gertler). Documents detail an instance where $800,000, including $100,000 in bribes, was paid to lawyers and judges to manipulate a court case. The investigation concluded that over $100 million in bribes was paid to Congolese officials between 2005 and 2015 via this businessman and others.
Glencore maintained a close business relationship with Gertler for nearly a decade, with hundreds of contracts and credit agreements between them. When questioned about their due diligence on Gertler, Glencore executives stated it was "comprehensive and careful." However, experts doubt this, given Gertler's well-known reputation for corruption. They suggest Swiss federal prosecutors should investigate whether Glencore knowingly provided assets to someone involved in bribery. Glencore insists Gertler was a normal business partner and that credits were provided on market terms. The Paradise Papers, however, reveal that Glencore provided Gertler with a $45 million loan, contingent on the Katanga mine negotiations being finalized within three months, suggesting a direct incentive for Gertler to secure the deal.
The documentary revisits Marc Rich's controversial pardon by President Bill Clinton in 2001. Rich's lawyers circumvented the US Justice Department, sending a direct appeal to Clinton, supported by prominent figures, including Israeli politicians. This pardon, described as a scandal, was controversially linked to significant donations made by Rich's ex-wife to Clinton's foundation and the Democratic Party. In February 2017, Glencore announced it had disengaged from its remaining businesses with Gertler, repurchasing his shares and dissolving credits for over half a billion dollars, marking an end to their lucrative partnership.
The documentary concludes by highlighting that Glencore is not unique in its controversial dealings in developing countries, nor is Gertler unique in his influential contacts. Billions are at stake in resource extraction, funds desperately needed by local populations. Experts emphasize that if Africa's wealth is not invested locally with international support, chaos will ensue. If resource wealth were genuinely used for poverty reduction and development, over a billion people could be lifted out of poverty by 2030. In wealthy Rüschlikon, Peter Cadisch continues his fight for corporate accountability, supporting an initiative demanding greater responsibility from corporations, facing strong opposition from the commodity lobby.