How thin is the line between a gift and bribe? Glencore CEO Ivan Glasenberg describes a $1.4bn debt write-off as a 'gift' to the Congolese government. It's the cost of doing business in a 'poor' country where governments are desperate for cash, he says.
In 2018 the government of the Democratic Republic of the Congo (DRC) held Glencore, a global commodities and mining giant, over a barrel.
The DRC's state-owned mining company, La Générale des Carrières et des Mines (Gécamines), had begun legal proceedings in that country to dissolve the Kamoto Copper Company (KCC), in which Katanga Mining held 75%, with Gécamines holding the remaining 25%.
Katanga is majority owned and controlled by Glencore. The reason for the proposed dissolution of the company was the considerable amount of debt that KCC held on its balance sheet, which was required to be recapitalised under DRC law.
However, by June 2018 an agreement was reached with Gécamines to regularise the capital deficiency by converting $5.6-billion of existing inter-company debt, owed by KCC to Katanga, into equity. To ensure Gécamines' 25% interest was not diluted, which was contractually required, $1.4-billion (25%) of the total debt converted to equity was effectively "gifted" by Katanga...