Glencore is one of the world’s top 10 most valuable companies and the largest commodities trader. But for such a large company, very few people know about. It is almost certain that every person on earth has encountered a product they produce from coal and oil to metals or grains.
One thing Glencore generally doesn’t involve itself with is private education. So, how did the world’s largest commodities trader end up investing into a prestigious private school and hand over $23 million to a Kazakhstan president in a deal their shareholders weren’t told about?
Glencore is very bold. They have created an empire worth over £42 billion that wins deals in places others are scared to enter, like the Democratic Republic of Congo, Colombia or even the disputed territory of Western Sahara. These risks are part of the reason they have found such success and become the biggest commodity trader in the world.
However, this boldness carries a huge risk. Getting access to frontier markets means interacting with unusual and shady characters. In the past, the company has been accused of feeding cash to Dan Gertler, a diamond tycoon and close confidant of Joseph Kabila, who was Congo’s president for 18 years.
Bulat Utemuratov and Glencore
Bulat Utemuratov is Kazakhstan’s richest man and one of the companies closets friends in the country. He was previously “Manager of the President’s Affairs” to Nursultan Nazarbayev, the dictator who has ruled Kazakhstan since its independence in 1991. After profiting heavily from Glencore’s 2011 IPO, he funneled $600 million on the Moscow’s Ritz-Carlton hotel, known for allegations in an intelligence dossier about Donald Trump in 2016.
A former Glencore employee told reporter Ken Silverstein in 2012 that “Glencore has a Gertler everywhere. Having relationships with influential, politically connected figures who can make deals happen at the highest level is Glencore’s approach. That’s standard.”
Over the years Glencore and Bulat Utemuratov have had a number of shady dealings that have resulted in a number of questions being asked about the company’s involvement in Kazakhstan.
Glencore’s foray into private education
In 2012, the mining group’s local subsidiary Kazzinc invested $23 million in Haileybury Astana, a Kazakh satellite school of the Hertfordshire private school that account for notable alumni like Clement Attlee Sir Stirling Moss, and Rudyard Kipling.
Haileybury’s Astana school is the second franchise in Kazakhstan alongside the Almaty school based in the old capital. Interestingly, Haileybury doesn’t own any of the two schools although, it still receives £500,000 a year in royalty fees for the use of its name.
Glencore’s unreported investment into the school was revealed by Russian-language corporate fillings examined by SourceMaterial. They reveal that the company immediately wrote-off its Haileybury investment and later, gave the entire holding to Utemuratov’s company Verny Capital, for free. However, the Glencore shareholders were never informed about this suspicious transaction that was made.
The accounts note “The management of the group does not expect to recoup the costs of the acquisitions from profits derived from the investments, therefore the company provided for the loss from the investments.”
Glencore have questions to answer
When asked about the reason for the transaction, a Glencore spokesman said: “The investments were disclosed in Kazzinc’s financial statements. The investments were not material for Glencore and therefore were not separately disclosed by Glencore in its financial statements.”
He continued that Glencore, through Kazzinc, “has supported the country’s development over the past 20 years, including through occasional strategic investments in the development of Astana as a modern capital of Kazakhstan.”
When Verny Capital, Utemuratov’s investment firm were questioned, a spokeswoman said, “The reason for Haileybury shares transferred to Utemuratov’s foundation, and not him personally, was because under Kazakh law it wasn’t allowed … it is a non-commercial entity, did not and does not generate any income for its shareholders (including the Foundation), and therefore, does not incorporate anything of values.”
Glencore’s other deals with Utemuratov
Glencore has used Kazzinc as an intermediary on multiple occasions to invest money into Verny Capitals projects in Kazakhstan. Recently they were loaned $13 million to fund a luxury real estate development- Talan Towers, a complex including a 30-floor skyscraper, Astana Ritz-Carlton and a shopping mall, all just minutes away from Nazarbayev’s presidential palace. This is another unlikely investment for the world’s largest mining company.
In 2013 Verny capital joined with Kazzinc to fund the purchase of a goldmine in the country in a deal worth over $200 million. Are Kazzinc using Utemuratov’s power in Kazakhstan as a way to access its raw materials?
With no clear benefit in Glencore’s Haileybury investment, coupled with other dealings, it is clear that suspicions have been aroused regarding the relationship between Glencore and Bulat Utemuratov.