Swiss ‘tradition of looking the other way’ could be about to end amid calls for tighter regulation on traders such as Glencore
There are no oil rigs on Lake Geneva but each year enough oil to meet Swiss needs 75 times over is traded electronically in the nondescript offices that hug the shore of the largest lake in the Alps.
There aren’t any coffee plantations in Switzerland either, but more than 60% of the world’s coffee beans pass – electronically – through the country. And it has some of the finest pastures in western Europe, but only enough to grow a tiny fraction of the 80m tonnes of grains and oil seeds that are bought and sold by its traders every year.
The traders behind these deals make the country SFr20bn (£13bn) a year – more than the GDP of Zambia – but the locals are beginning to ask if the easy money is really worth it.
Switzerland’s famously low taxes and light regulation have transformed the country into the world’s leading wheeler-dealer in everything from oil, copper and zinc to coffee, sugar, wheat and the other staples of daily life.
Now, concerned at the country’s global reputation for tax avoidance and speculation in basic commodities, Swiss public and politicians are considering action against the secretive trading companies that have given it a starring role at the heart of scandals stretching from the Congo to Colombia.
Carlo Sommaruga, a Swiss MP and member of the national council, the lower house of the federal assembly, says a series of controversies – Trafigura’s dumping of toxic waste in Ivory Coast, Swiss traders’ role in the Iraq oil-for-food scandal and, most recently, a boss at the world’s biggest commodity trader, Glencore, telling investors that droughts were good for business – are dragging Switzerland’s reputation through the mud. “Resource-trading companies’ activities will not only result in a bad reputation for them,” he said. “We are afraid the whole of Switzerland will suffer from a loss of reputation.”
Sommaruga says the Swiss government needs urgently to introduce laws to tighten regulation on traders or there is a “great risk” that the country will be branded as “the new haven for vultures”, extracting the world’s resources and “propagating hunger”.
He wants the Swiss government, which is preparing to report the findings of a six-month inquiry into the secretive industry, to legislate to make Swiss parent companies “civilly and criminally liable” for human rights violations and environmental crimes abroad.
The investigation, which is being carried out jointly by the finance, economy and foreign ministries, was launched after Josef Zisyadis, a former MP for the Alternative Left party, stood before parliament to deliver a blistering attack on the industry. “These companies are characterised by a complete lack of transparency, human rights infringements and damage to the environment,” he said last year. “They are masters of tax evasion that inflicts massive damage on resource-rich countries.”
Special tax breaks for traders and companies that operate largely offshore have helped make Switzerland the perfect home for the commodity groups, and have helped them grow tenfold over the past decade. They now represent more than 3.5% of the country’s GDP.
Sommaruga’s focus is on companies that trade in food and “rejoice in drought”. His demands come after a Glencore boss said the worst drought to hit the US since the 1930s would be “good for Glencore”.
“In terms of the outlook for the balance of the year, the environment is a good one,” Chris Mahoney, head of Glencore’s agricultural division, told investors this summer. “High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities [exploiting price differences in different markets].”
Sommaruga said Mahoney’s frank comments during the company’s results presentation this summer showed that Glencore, and other trading and mining companies, were “totally dehumanised”. “Profit maximisation comes before the life and health of the poorest people on our planet,” he said. “That they can rejoice in a drought and the profits generated illustrates the monstrosity of the company.”
Mahoney, who won a silver medal rowing for Great Britain at the 1980 Moscow Olympics, denied the company’s trading drove up prices, and claims he meant the company made more from the extra logistics of moving grain to the right places during droughts.
“What we do does not drive prices higher. In fact, our agricultural products business alleviates supply shortages,” he said. “We have invested billions of dollars in farms, storage and transport infrastructure to increase the global supply of agricultural products and physically get them to where they are needed in the most efficient way.”
However, the latest management statement from Glencore, which is one of the biggest companies in the FTSE 100 (meaning most pension funds are automatically required to buy its shares), show the company has benefited from a 26% rise in the wheat price over the last three months.
Ivan Glasenberg, Glencore’s multi-billionaire chief executive, said the company’s $6bn (£3.7bn) takeover of the Canadian grain company Viterra “transforms our already strong agricultural business at a time when industry fundamentals are the most positive they have been for some time”.
Glencore, which already controls about 8% of the world’s traded wheat market, made $146m of profit before interest and charges on $9.4bn of revenue from its agricultural business in the first six months of this year.
The perceived profiteering from food trading has helped spark protests against the country’s commodity firms. They had previously been able to brush off scandals such as Trafigura’s toxic waste dumping, which led to 17 deaths in 2006 (Trafigura denies any wrongdoing).
“About the worst thing you can speculate with is hunger,” said David Roth, president of Switzerland’s Young Socialists. “If people lose their houses, it’s bad; if they speculate with food and people starve, it’s the worst thing you can do.
“We’re not playing any more. They crossed the line: something has to be done,” he said as he peeled through sheets of the 45,000 signatures collected for his petition calling for Switzerland to ban all speculation in food prices.
Roth, 27, claims to have won broad political support for the petition. If he can get 100,000 signatures within 18 months, the government will be forced to hold a referendum on the issue.
“When we are collecting signatures on the street, people say ‘oh you’re from Juso [the Young Socialists party] – I don’t like you, but it is a good issue’,” he said. “People who are absolutely not on our side [politically] have signed our petition. It is a moral issue.”
Roth said Switzerland’s “long tradition of looking the other way” could be about to end. “We have tried to crack down on the banks and hedge funds [which have been forced to comply with international money-laundering regulations], now it is time for the traders,” he said.
“The bad-guy image isn’t good for the rest of the country – we don’t want Swatch shops to be boycotted.”
Aids doctors joined with activists to lead the fight for treatment in the developing world. At a meeting in Switzerland, cancer doctors took the first tentative steps towards adopting their mantle
Doctors were at the forefront of the Aids treatment revolution a decade ago, denouncing stigmatisation and inequality from conference platforms and lobbying politicians alongside the activists. Could we see the cancer doctors take up the banners and the slogans on behalf of the poorest in the same way?
Until last weekend, I personally did not think so. But in a lakeside hotel in Lugano in Switzerland, at a meeting of the World Oncology Forum, I watched what looked like a process of radicalisation take place. Nearly 100 of the world’s leading cancer doctors were there – extremely emininent clinicians and scientists. The question for discussion over a day and a half was “Are we winning the war on cancer?” Broadly speaking, the answer seemed to be no, on two fronts. The first was that scientific progress had not delivered hoped for cures, even for countries with substantial amounts of money to spend on drugs. The second was that people in low and middle-income countries are dying of cancers that are preventable and curable in the richer world. And it was that second front that the Forum agreed to tackle in an unprecedented way.
Some of the oncologists present, who spend their time in high-tech labs and well-equipped wards in Europe and the USA, did not anticipate the way the meeting would develop, I suspect. There was much very interesting discussion about the failures of the much-hyped and hoped-for targeted therapies, which I wrote about here. There was also a lot of anger at the tobacco industry, which doctors held directly responsible for millions of deaths past and to come.
But tobacco control is now most needed in poorer countries where cigarettes are dirt cheap and the companies look to expand their sales. Cancer is a global issue and growing fastest in low and middle-income countries. Professors Rifat Atun of the London Business School and Felicia Knaul, director of the Harvard Global Equity Initative powerfully put the case for doctors to fight for better care and prevention in the developing world. Knaul spoke of the unnecessary deaths of children from leukaemia and women from breast and cervical cancer.
Children with leukaemia divide, such that in Canada almost 90% can hope to survive where in the poorest countries of the world, 90% can expect to die.
Atun and Knaul are joint authors of a new book, called Closing the Cancer Divide: a blueprint to expand access in low and middle income countries. It aims to show what can be done and stamp out four pernicious myths:
1. Cancer treatment is unnecessary because the burden of disease is not great in the developing world – untrue. Over half of all new cancer cases and two-thirds of deaths occur in low and middle-income countries.
2. It is unaffordable for most poor countries – untrue. The economic burden of cancer on those countries is high, the costs of lost productivity outstrip the costs involved in care and only 5% of global cancer spending currently takes place in low and middle-income countries.
3. Cancer prevention and treatment is unattainable because of inadequate human and physical resouces – untrue. Screening for breast and cervical cancer, for instance, can be integrated into other programmes such as maternal and child health and HIV care.
4. It is inappropriate because the resources are needed for high-burden infectious diseases – untrue. Expanding cancer care can strengthen whole health systems, many cancers are associated with poverty just like infectious diseases and at least half of all deaths from cancers in developing countries are preventable.
Atun told the meeting that what the Aids community did, they could and should do too. By the end of it, goaded as much as guided by Lancet editor Richard Horton, they drew up a list of ten principles for a declaration to be published in the New Year. While some were about better drug development, most were about ending the shameful neglect of cancer in the developing world.
Next stop – the barricades.