Glencore Androids to Out-Goldman Goldman?

by Paul Springer

The impending initial public offering of humongous Swiss commodity trading and production firm Glencore International has people wondering if there’s a new Goldman Sachs in town – or perhaps something even scarier.

Glencore is worth almost $70 billion, according to Dow Jones, which says the company is preparing to raise billions of dollars more in a double-barreled listing in London and Hong Kong.

The trading culture at Glencore resembles the pressure cooker atmosphere at Goldman Sachs and other top-tier trading behemoths. But MoneyControl says Glencore may be even more competitive.

Glencore traders are practically superhuman, according to a Money Control sources, who say they are “like androids.” Staff are essentially on call even on vacation, when they haul around laptops and crackberries to answer 400 to 500 emails daily:

An outsider who has worked closely with senior Glencore officials said the group’s hard-working, “up-or-out culture” can be ruthless and even cult-like.

“There is an element of the Moonies about Glencore,” the person added, referring to the term used by critics to describe followers of the Unification Church.

“To say they’ve all drunk from the same Kool-Aid is an understatement,” said another outsider who has worked closely with top company officials.

Glencore says it does not hire senior staff from outside, but promotes insiders to maintain a “very strong corporate culture”.

While Glencore may be tough on the inside, it’s not warm and fluffy on the outside either. Coverage in The Telegraph notes billions of dollars in litigation and some concerns in the U.K. over corporate governance.

And like many other international operations, Glencore has its share of issues with the locals. Most recently, The Guardian reports that a charity group accused the company of a tax avoidance scheme in Zambia:

“Based on the Grant Thornton analysis, we estimate that the company’s practices potentially cost the Zambian government up to £76m a year in lost corporation tax,” said Anna Thomas, head of tax policy at ActionAid. She pointed out the amount was significantly more than the £59m the UK government gives Zambia each year in aid.

One thing is certain, Glencore’s huge presence in many commodity markets will only become larger with additional capital from the public offering.

It’s dangerous for a small number of players to control huge asset markets, and ETF Daily News says the looming IPO leaves some alarming questions on the table:

If it’s considered to be dangerous to the global financial system to have a couple of dozen ‘too big to fail’ banks controlling so much of the financial industry, isn’t it even more dangerous to have one giant firm having so much control of commodity trading?

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