Cross-border economic activity by multinational corporations continues to be one of the most contentious subjects of our time.
The neoliberal economic theory promotes these corporations and investments as essential for economic development, skills and technology transfer, job creation and so forth.
As a result, countries exhaust their resources and energies in attracting foreign direct investment (FDI) with the hope that these messiahs will deliver the promise of a good life.
The reality, however, is that multinational corporations create more headaches than prosperity for developing countries.
The growing story of Swiss commodities giant Glencore illustrates how these entities use their influence and deep pockets to corrupt and deliver bad economic outcomes in most countries.
Glencore is alleged to have paid bribes and plotted to manipulate commodity prices in diverse places such as South Sudan, Brazil, Nigeria and Venezuela. Though South Africa is not listed among the countries where Glencore bribed authorities and judges, many people demand that its activities be scrutinized.
For example, the UDM’s Bantu Holomisa has asked the office of the public protector to link up with the US authorities to probe Glencore’s corrupt practices.
The company’s shenanigans at Eskom were reported during the Zondo Commission, but there is no recommendation for the prosecution of anyone linked to it. Glencore is “more of a crime syndicate than a business”, looking at its chequered past alone. Nonetheless, the legacy of its founder Marc Rich continues to define its activities everywhere it operates.
As the US house committee on government reform pointed out, Glencore’s story is about “doing business without legal, ethical, or even moral constraints”.
As shown in Daniel Ammann’s book The King of Oil: The Secret Lives of Marc Rich, Glencore has been doing dirty business with just about anyone. From oil dealings with the apartheid state to stealing billions from Zambians, the company’s dealings are well documented.
Glencore and South Africa are like Siamese twins born from the devil and a prostitute – the mischief has persisted beyond apartheid. To this day, the firm has transformed to forge BEE partnerships in the mining and petroleum sectors. In 2018, the Competition Commission allowed Glencore to acquire Chevron’s assets in South Africa for $1-billion even after its controversies at Optimum Coal.
Using its associations with prominent individuals, the commodities giant with no soul misled everyone into thinking they were victims of the illusionary Gupta power under the Zuma era but still made off with a cool $136-million. Black South African capitalists were easily duped into becoming reliable partners. Fortunately, black capitalist classes are equally unconcerned with who mentors them.
Business Day columnist Peter Bruce says he once asked one of the foremost BEE beneficiaries if “he thought black capitalists would behave differently to white ones”. He responded that they would be sympathetic to the plight of the black majority.
Sadly, that is not the case today as multinationals run circles around them. Authorities in diverse jurisdictions such as the Democratic Republic of Congo, US, UK and Venezuela have highlighted its shady business model, including “corrupt and opaque deals”.
As drivers of capitalism, multinational corporations are about value extraction in the developing world and rarely bring any advantages to places such as Congo, Papa New Guinea and Guatemala.
They worsen problems of exclusion, exploitation and human rights violations. Hence, there is a growing call for these economic players to be tightly regulated. Voluntary UN guiding principles on business and human rights were introduced in 2010 and enjoy unanimous support from the developed world.
The principles are based on three pillars: protect, respect and remedy. However, they have done little or nothing to discourage business skulduggery, especially in developing countries.
Corporations have served societies in the developed world and the elites in developing countries with distinction. Therefore, there is no incentive for them to rein in the stars of the exploitation game.
The fact that Glencore has been caught in an offside position in the US and elsewhere is something to be celebrated, but there is no need to be overly excited about this. As expected, it pleaded guilty and accepted fines of $1.5-billion in the UK, Brazil and the US.
The likes of Glencore fuel the global economy that creates inequality, theft, value-destruction, and corruption worldwide.
The Swiss commodities bully is a driver behind oil, metals and minerals prices: if you want to collapse the commodities market, simply strangle Glencore.
Its partnership with South Africa is a match made in heaven: the company will never be made to account for all the wrongs it has committed. Any hope that Glencore will ever change its ways is akin to thinking that capitalism can be reformed.
South Africa and many of its victims around the world should lick their wounds because nothing will change soon.
Siya yi banga le economy!
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