Monday, April 23, 2012

Commodities - Switzerland's most dangerous business

That's the title of an important new book just published in English by the Berne Declaration. The book, which has already been available in German for some time, says on its back cover:
"‘Commodities – Switzerland’s most dangerous business’ paints a searing and detailed picture of one of globalisation’s biggest winners, a powerful industry whose dealings often take it into dangerous areas. In the last decade Switzerland has emerged as one of the world’s dominant trading hubs for commodities, handling from 15 to 25 per cent of world trade. All the world’s largest trading houses operate partly or mainly out of this seemingly peaceful and innocent country. But while these powerful companies experience an unprecedented boom, the population of many resource-rich developing countries remain mired in poverty. This book tackles the question of why?

By means of research and reportage, Berne Declaration (BD) digs down to uncover the historical roots of Switzerland‘s role as a trading hub, scrutinises scandalous business practices and their political contexts, goes down a copper mine in Zambia, and exposes the leading Swiss companies and players in this discreet industry. The book reveals how commodity deals are financed and how taxes are avoided, provides insights into the social and environmental consequences for producing countries, and suggests how greater justice can be achieved in a business which is worth billions and upon which we all depend."
A highly important piece of work. Delving into the book, there is so much to highlight. We will select just this very broad point about Switzerland:
"this amazing success story is based on something deep-rooted in the Swiss character, namely political opportunism. Consistently standing on the sidelines, looking away and claiming not to know, even refusing to join the UN until 2002, are all actions which have been defended under the cloak of ‘neutrality.’
Indeed. Read all about it in the UK chapter of Treasure Islands. And for something more current on Switzerland, see this, today: Switzerland and economic warfare.

Alongside the book, the Berne Declaration and Revenue Watch issued the following press release:
Pioneering Commodities Studies Bring Transparency to Oil Companies and Swiss Trading Hub
Zurich/New York, 23 April 2012

National oil companies and their customers should publish the price, volume, and crude grade for every cargo of oil sold, thereby bringing greater transparency to a largely hidden part of the world’s oil market, Revenue Watch (RW) reports in pioneering research released today. The study is being published simultaneously with the English edition of “Commodities: Switzerland’s Most Dangerous Business,” a groundbreaking analysis of the industry by Berne Declaration (BD) that shows why and how resource-rich developing countries remain poor while Swiss trading companies make billions.

“Since oil marketed by state companies belongs to the citizens of those countries, national oil companies and buyers share responsibility for making public all sales information,” says Alexandra Gillies, head of governance at RWI and leader of its research project. “In some oil-producing countries, these sales generate more than two-thirds of all the government’s income.” Like all other kinds of oil revenues, the buying and selling of a state’s share of production should be reported as part of the Extractive Industries Transparency Initiative (EITI), the study “Selling the Citizens’ Oil” concludes. “The money from these oil sales is supposed to benefit the public, which needs access to far more information about every stage of these transactions,” Gillies adds.

The study includes background papers on how oil sales work, oil sale governance risks and how global oil prices are identified and change over time. Based on research into how 11 countries sell their share of oil production, RWI’s recommendations include the following:
· Companies should disclose annually the price, volume, grade and date of each cargo purchased from a wholly or partially government-owned entity.
· Governments should require commodity traders and other buyers registered or listed in their country to report on payments made to producer country governments.
· National oil companies should also disclose all financial transfers to and from the government.

RWI’s analysis of good sales practices shows that selling to independent commodity traders is almost always not the best choice for developing countries. This sector is heavily concentrated in Switzerland and is the topic of “Commodities.” German and French editions of Berne Declaration’s reference book were widely reviewed and became bestsellers in Switzerland. This first ever survey of Swiss-based commodities trading industry, available as a free online download, includes portraits of the key firms, provides insight into the consequences for the producing countries, scrutinizes tax avoidance and speculation, and offers proposals for greater transparency and better deals for producing countries in this multi-billion-dollar business.

“Unnoticed by the public and politicians, Switzerland has become the world’s most important commodities hub,” the book argues. “Because of tax privileges, a strong financial industry and weak political regulation it continues to attract trading and mining corporations as a dunghill attracts flies. After the fall of Swiss bank secrecy, the commodities business is the country’s next exposed flank.” The release of the English–language edition and of RWI’s report coincide with the “Global Commodities Summit,” which opens today in Lausanne, Switzerland.

Oliver Classen, Media Director,, +41 44 270 7006 (BD/Zurich and Lausanne)
Robert Ruby, Head of Communications,, +1 917 443 2392 (RWI/New York)
To add to our country-by-country reporting page.



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