GlencoreXstrata, the world's largest commodities trader, enriched a friend of the Democratic Republic of the Congo's president by tens of millions of dollars while also giving him loans in excess of $500m (£298m), a report has claimed.
Dan Gertler, a friend of the DRC president Joseph Kabila, made $67m in deals conducted with Glencore in the impoverished African country, when the Israeli billionaire and the London-listed commodity trader took over one of Congo's biggest copper producers. He also borrowed $568m from Glencore in order to participate in a series of deals between 2007 and 2010.
The report, produced by the campaign group Global Witness, says Gertler's profits in cash and shares were channelled through offshore firms.
The claims about the scale of Gertler's business dealings in Congo come as Glencore prepares to host its annual general meeting in Zug, Switzerland, on Tuesday, when campaigners are expected to raise questions about the Gertler links.
Glencore is already preparing for a rough ride at the meeting over its decision to appoint the former BP boss Tony Hayward as its new chairman, promoting him from the role of interim chairman, instead of a figure from outside the business.
Leigh Baldwin of Global Witness, said: "Glencore appears to have knowingly entered loss-making deals with the president's friend, a man who is central to all its investments in Congo. The corruption risks here are obvious. Glencore should face up to them and commission an independent and detailed investigation into its Congo deals."
Last year, Kofi Annan's Africa Progress Panel singled out Glencore and the then London-listed Eurasian Natural Resources Corporation when it claimed the DRC had incurred losses of $1.36bn between 2010 and 2012 as a result of the alleged undervaluation of state assets.
But despite numerous reports into Gertler's DRC business dealings, no evidence of wrongdoing has been published. Both Glencore and Gertler deny any corruption risk, or that Gertler received preferential terms in his dealings with Glencore, which centred around two companies called Nikanor and Katanga Mining that owned substantial copper concessions in the country.
A spokesman for Glencore said: "All the transactions Glencore has concluded with companies associated with Mr Gertler have been conducted on arm's length terms and all public disclosure requirements applicable to us have been complied with.
"Glencore has not afforded companies associated with Mr Gertler preference over other shareholders in Nikanor or Katanga Mining. These transactions were entirely proper".
A spokesman for Gertler's Fleurette Group added: "Fleurette has a long track record of investing in the DRC and has worked with a number of commercial partners … Loans made to Fleurette by Glencore to purchase shares in Katanga over five years ago have been fully disclosed … Our investment in Katanga shares has not resulted in any profit for Fleurette.
"Based on our average investment share price, our shares are today worth about $400m less than what we paid for them. We are long term investors and remain committed to the project, which we hope in time will deliver jobs and revenue for the people of the DRC."
Global Witness says that in October 2009 and February 2010, Glencore sold Gertler 157m shares in Katanga Mining for $52m – via share options at a previously agreed price.
In March 2010, Gertler sold 100m Katanga Mining shares back to Glencore for $76m, implying he immediately banked a cash profit of $24m, while keeping 57m shares that were worth $43m. Katanga shares have almost halved in value since.
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