There is something in all this that makes me feel profoundly uneasy. I have great difficulty reconciling the high risk profile of a trading organisation, albeit with some pretty substantial assets, with a major FTSE 100 company, particularly one that has a limited track record of transparency or external scrutiny and some fairly ‘unconventional’ history!
Trading companies have succeeded under private, mainly management ownership, because the owners were actively involved in and understood the risks being undertaken. They also succeeded because they were able to do things - sorry ‘take risks’ - that public companies were either ethically or legally prohibited from doing, and public reputation wasn’t seen as an issue.
So at a time when responsible investment is growing, and sustainability and responsibility are moving up the corporate agenda, how do we find ourselves in a position where tracker and pension funds, almost by default, become investors in Glencore?
There must be cause for concern that the levels of transparency and disclosure required of a listed company might prove rather indigestible to oil and commodity traders, who are a buccaneering lot with a macho, short term, results driven culture, who have of course been extremely successful. And with that success and all that cash, what ensures their loyalty in a market where barriers to entry are access to finance and contacts, and transparency and disclosure impediments to profit?
It seems to me there will be an serious onus on Glencore to prove that it understands these wider concerns and Murray’s blithe assertion that there are no corporate governance issues at Glencore seems, how can I put it, optimistic. That of course was before he mentioned that women should not be in business, as was widely reported in the press.
Interestingly the new chairman says his role is just to ‘run the Board’; but how do you run a board who have all worked together for years and are almost all billionaires? This leaves a difficult job for the newly appointed non-executive directors to demonstrate that they are actively involved in challenging this newly floated company to behave in a way which commands the respect of both the markets and the company’s large group of fund based shareholders.
