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GLENCORE MUST BE INVESTIGATED FOR ITS ACTIVITIES IN SOUTH AFRICA

In yet another illustration of how big corporates bend rules to make conditions favourable for their expansion and dominance, with the goal of extracting profits; Glencore Xstrata has admitted guilt of bribing foreign administrations and manipulating markets.

The acts of bribery and market manipulation hurts the public and other business enterprises. In countries where bribes were paid, domestic business in such industries may have been disadvantaged by such acts of bribery which gave Glencore a
competitive/dominant edge at the expense of others. This, in part, is illustrious of the neocolonial character of capitalism in the former colonies.

The price manipulation is but the constant feature of the commodities market, in which commodity traders such as Glencore, hoard commodities and create impression of shortage so that demand could exceed supply, pushing prices higher.

Thus, the impact of these manipulations by commodity traders has been soaring prices of goods even when there is no scarcity of goods. This means, in the recent periods, people across the world have paid higher prices for goods not because there is scarcity, but most likely because commodity traders have manipulated the markets to drive prices high and score massive profits.

Contradiction of capitalism and market manipulations

The manipulations that come in the commodities market cannot be easily averted, if ever they may be. This is because capitalism as a mode of production of commodities, is concerned with selling these commodities to make more money than they invested in such production.

So, whilst it may appear at face value that capitalists operate to make profit, their commodities cannot bring profitable returns if they do not reach the customers who will buy them. For most producers in the primary sector of the economy ¾ mining, gas and oil extraction, and farming ¾ huge risks exist in ensuring that such commodities reach customers, and such risks must be circumvented in all possible ways. These primary producers circumvent/avert these risks by hedging them in the commodities market, where commodity traders buy the contracts of these goods or the actual goods at a fixed price.

Once the commodity traders have bought the contracts for future deliveries at a fixed price or the actual goods, they are also confronted with the necessity to make profitable returns. To make higher profits, these commodity traders may hoard such goods, creating superficial scarcity to drive-up prices in the process, or, they may collude between themselves to fix prices.

This contradiction of hedging market risks is one of the crucial features of capitalism precisely because each producer and trader enters business to make profit. In other words, the possibility of manipulating markets may be a constant feature of capitalism as producers try to hedge risks, and commodity traders carry such a risk on behalf of primary producers with the hope of doubling profits.

Fines must be paid in the countries of crime

The $1.5 billion fine that Glencore was slapped with involves bribing in African and LatinAmerican countries.

Unfortunately, just like the case of Hitachi corruption at Eskom, monetary fines have been paid to United States of America (USA) and not to the countries that have been direct victims of such corrupt activities. Hitachi paid $19 million (R250 million) in fines to the Securities and Exchange Commission in USA. Us, who remain indebted to World Bank for the loan that was looted in the corrupt scheme between Hitachi and Chancellor House, have not received a penny from this fine.

To avoid a repetition of this, the South African Federation of Trade Unions (SAFTU) supports calls from civil rights groups in countries where bribes took place to conduct further investigations into the conduct and operations of Glencore in their country, claim losses in monetary value, and impose fines against the company for breaking their laws and regulations.

In South Africa, we call on government to initiate investigations into all Glencore operations. We have a reason to believe, because of Glencore’s notoriety in dealing with commodities across the world over the years, that it may have been involved in
bribery.

Mining communities

The problem with the angle of this outrage is that, it is being driven by Glencore’s capitalist counterparts ¾ competing traders, producers and capitalist markets’ regulatory bodies. It is an outrage that Glencore’s market manipulations and bribery has given it dominant edge over them, and that Glencore has breached their regulations. It has nothing to do with caring for the people.

But the problems of Glencore do not end with manipulations of markets and bribing of officials. In fact, it is arguable that the greatest injustice and unfairness is committed against communities where Glencore and other extractive companies operate, here in South Africa and elsewhere in the neocolonial world.

In a struggle that has been sharply picked up and championed by Mining Affected Communities United in Action (MACUA) in South Africa, and exposed by research and lobby groups such as Benchmarks Foundation and Action Aid, the environmental
destruction of the mining operations of these extractive corporations is insurmountable.
These companies have bribed national, provincial and local government officials including chiefs and kings to breach laws and regulations governing the mining sector. They have abandoned unrehabilitated mines, which are now causing deadly sink holes.

SAFTU calls on government to initiate an investigation not only to look at acts of bribery and market manipulations of Glencore in South Africa, but also to investigate the breach of regulations and bribing of government officials to attain mining licenses and bribing local chiefs to attain community consent for their operations. This type of investigation must also be done with all mining corporations operating in South Africa.