The London-listed commodities giant got through its inaugural AGM unscathed – perhaps because it took place in a small theatre in Switzerland with questions submitted in advance
Glencore could not have chosen a more closeted venue for its stage-managed AGM on Wednesday – its first shareholders’ meeting since its flotation on the London and Hong Kong stock exchanges a year ago. The commodities firm picked a small theatre in Zug, Switzerland, for its executives’ first outing: a slick show that – remarkably for a FTSE 100 company at a time of unprecedented shareholder protest – ended with polite applause.
Glencore, however, took no risks that its executives might be blindsided by awkward investors, telling shareholders that “for good order” they should submit their questions to the company in writing at least two days before the meeting. It even took the precaution of trying to identify who was going to turn up by asking if they planned to arrive in town by train.
Only a few dozen people bothered to take in the delights of Zug, which promises “unique sunsets” and “world-famous Zug kirsch cake”. Among them were protesters publicising Global Witness’s allegations that Glencore may have had a role in the secret and possibly corrupt sale of stakes in mines in the Democratic Republic of Congo (DRC), but they were outnumbered by policemen. There were only four shareholder questions – a situation the chairmen of other FTSE companies like BP and Marks & Spencer, who annually run the gamut of organised protests, would probably relish.
Perhaps the special measures were designed to protect Glencore’s gaffe-prone chairman Simon Murray, who has shown he cannot always be relied on to make sensible off-the-cuff comments in public (his remarks about the dangers of hiring women in case they get pregnant spring to mind).
Two of the questions concerned the DRC allegations, to which Murray responded that Glencore had behaved properly and regarded bribery and corruption as totally unacceptable. But he dismissed the suggestion of an independent inquiry into the allegations.
The other two questions concerned Glencore’s opaque tax affairs and implied the company should reveal more about how much tax it actually pays. Good news there too, Murray said: Glencore fully obeys the law in all the countries in which it operates – a glib catch-all that will not have satisfied those who say Glencore is too secretive for anyone outside the company to assess whether it is avoiding tax or not, and that no company should claim credit for merely obeying the law.
The only encouraging part of Murray’s answer was his acknowledgement that there is now a debate about how much companies should reveal about their finances. Many campaigners want multinationals to be forced to disclose much more data, to help tax authorities detect if a firm is shifting profits out of the countries where they are earned and into tax havens such as Switzerland. One possible solution would be for multinationals to set out profits made and taxes paid on a country-by-country basis.
So Glencore came through its first AGM remarkably unscathed, albeit after using a few obvious strategies to exclude virtually all its critics from the first public gathering of shareholders. But such a controversial, vast business – which could get larger still if it merges with Xstrata – warrants far more scrutiny. Between now and its next AGM, shareholders should shame it into holding the meeting in London – and ensure that they are better prepared for its stage-management.
Voldemort’s bad spell makes the case for bank reform
America’s biggest bank, JP Morgan Chase, last week gave more ammunition to advocates of banking reform with a stunning admission that it had lost billions, thanks to positions taken by a trading desk on which one of the stars was nicknamed either Voldemort or the London Whale (take your pick).
It is a bittersweet tale. When the activities of the Whale – French-born, London-based Bruno Iksil – were first reported in April they were dismissed by Jamie Dimon, JP Morgan’s bulldog of a boss, as a “tempest in a teapot”. Just over a month later, he is confessing to a surprise $2bn trading loss blamed on “errors, sloppiness and bad judgment”.
An embarrassing turn of events for a man who not only derides journalists but regularly attacks anyone in favour of regulatory reform. Dimon said as much last week, admitting this “plays right into the hands of a bunch of pundits out there”. He has described some of the rules set out by international regulators in Basel, Switzerland – snappily known as Basel III and essentially requiring banks to hold more capital – as “un-American”. Not surprisingly, he is also against the Volcker rule, which would limit how much of their own money banks can use to take bets on the financial markets. But as one of the few bankers who had a good credit crunch, he gets away with his hardline stance.
A strong case for bank reform was made after the debacle at UBS, where trader Kweku Adoboli allegedly lost around $2bn. That was eight months ago, and still most of the talk about bank reform is just that: talk.
In the UK, for instance, the Treasury has admitted the white paper setting out the proposed legislative changes needed to implement the recommendations set out by Sir John Vickers will not now be published until next month. Assuming this legislation is passed, the “ring-fence” that banks will be required to erect between their high street and investment banking businesses will not be constructed until 2019, more than 10 years after the crisis that sparked the need for reform. This is too far away. Two $2bn losses in the space of eight months demonstrate that big banks need to be restrained, and quickly.
Brewers’ viral row reveals pitfalls of social media
Diageo, owner of Johnnie Walker, Guinness, Smirnoff and dozens of other tipples, is a company that takes social media very seriously. A fifth of its vast advertising and marketing budget is spent on Facebook campaigns and promotions. This week’s communications highlight, or lowlight, has been rather different – a full-on corporate grovel to address a cock-up that went viral.
For those who missed the story, somebody from Diageo arrived at a Diageo-sponsored industry awards dinner in Glasgow to discover that Brewdog, an upstart microbrewer, was due to receive an award for Innkeeper of the Year 2012. A threat was made to withdraw future sponsorship if the gong was handed over; the organisers duly gave the award to someone else.
The backdrop here seems to have been Brewdog’s non-membership of the Portman Group, the industry body that promotes responsible drinking. But the ineptitude of the bullying was breathtaking: the independent judges had made their decisions; they were bound to reveal all; and Brewdog’s name had already been engraved on the trophy, which the replacement winner might just notice.
Brewdog promptly told the world, displaying a neat line in quotableinsults: “Once you cut through the glam veneer of pseudo corporate responsibility this incident shows them [Diageo] to be a band of dishonest hammerheads and dumb ass corporate freaks. No soul and no morals, with the integrity of a rabid dog and the style of a warthog.”
To be fair, Diageo’s grovel arrived quickly in the form of an unreserved apology to Brewdog and the British Institute of Innkeeping for “a serious misjudgment … which does not reflect in any way Diageo’s corporate values and behaviour”. If the drinks giant is lucky, the damage to its corporate name will turn out to be barely noticeable. Even in the globally-connected age it’s hard to imagine many Johnnie Walker drinkers in Brazil, Japan or China will be switching drinks brands as a result. It could have been worse, in other words.
The broader moral of the tale, though, is marketing via social media cuts both ways. The internet will destroy more businesses that it creates.