Free The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders by Kate Kelly Page A

an outlaw carried with it great personal costs. His marriage crumbled, he drank heavily, and in 1996, one of histhree grown daughters died of cancer in aSeattle hospital. Her mother and sisters were by her side, but her father was only able to be there by telephone, where he listened, sobbing, in her final hours. Had he flown there, he would surely have been arrested before even making it to the hospital.
    In January 2001, after an intense lobbying campaign handled partly by his former wife Denise, Rich received a presidential pardon on the last day Bill Clinton was in office. He never revisited the United States. His reputation remained stained evenupon his death from a stroke, in 2013, as did those of Clinton and the lobbyists who had helped secure his pardon.

    The commodity rout of 2008 was probably Glencore’s toughest period since Rich’s ill-fated zinc gamble in 1992. The company’s credit default swap, or insurance-against-default, prices had retreated from their stratospheric levels, and Glencore was bringing in nearly $5 billion in net income, an amount just shy of 2007’s. But its publicly traded bonds were still only barely above investment grade.
    The landscape had also changed. Commodity prices were still at their lows, credit to help finance transactions was much harder to secure as banks grew more parsimonious about sharing their resources, and the troubles with BP and other companies had left the company more vulnerable to rivals.
    All this was occurring at a time when Glencore’s need for extra cash was most pressing. Trading vast quantities of both physical and virtual commodities was a cash-intensive endeavor. Raw materials in some markets could only be bought for hard currency, and in the derivatives markets, cash was often required as collateral on trades.
    Glencore was also trying to enlarge its empire. In the years following the management buyout, the company had purchased a string of new assets around the world, deepening its commitment to commodities like coal, copper, and gold. As recently as Christmas Eve of 2008—the same day Brent hit its $37 low point—the company had spent close to $300 million to purchasea controlling interest in a distressed Congolese mining company. A couple of months later, it wasforced to sell a highly profitable coal property in Colombia to Xstrata, another mining company for which it shipped certain commodities, simply to raise enough cash to maintain its one-third investment in Xstrata, which was holding a special shareholder rights offering at the time to raise some cash of its own. The distressed deal destroyed some of the goodwill between Glencore and Xstrata, which had been closely connected for years and would attempt a merger a couple of years later.

    Ivan Glasenberg, by then Glencore’s head, had taken over from Willy Strothotte in 2002. A gregarious South African, Glasenberg was a profane, fiery character whose championship race-walking skills had nearly taken him to the Olympics as a younger man. He was also a natural-born trader.
    Opportunism had always been one of his strengths. In 1980, as part of a course in business finance at the University of the Witwatersrand in Johannesburg, Glasenberg had been assigned a commodities project. He was paging through some books in a Johannesburg corporate library when he heard two men doing, of all things, an internationalcandle-wax trade around the corner. “I’ve got them at this price!” one of the men yelled. “What have you got?” As the second man shouted back an answer,Glasenberg was rapt. Holy shit, he thought, the one guy sold in Brazil and the other bought in Japan. A huge international deal negotiated across three continents in a matter of seconds. He couldn’t believe it.
    After graduating from Wits, Glasenberg worked as an accountant. But he couldn’t get the trading idea out of his mind. He went back to school, earned a master’s degree in international business administration from the