What inspired you to jump into the murky waters of commodities trading, Jack?
Javier and I were both journalists covering natural resources for the Financial Times, and we kept finding ourselves gobsmacked by the importance of a very small group of commodity trading companies, and equally surprised by how little anyone seemed to know about them. We wanted to learn more, but realised that almost no books had been written about them. That’s when we realised we’d have to go out there and get the story ourselves.
Tell us more about the importance of those companies…
Within those companies, there are a few individuals who have played a huge role in shaping our modern world. The story we discovered was one of how money and power interact in ways that most people don’t understand. Commodity traders have been growing in importance from the end of the Second World War through to the present day. They have shaped history along the way, playing a role in everything from the collapse of the Soviet Union to the rise of China.
How much of this was uncharted territory?
So much of the world of commodity traders is secretive, so a lot of what we found hasn’t been reported before. We spoke to more than 100 traders, many of whom have rarely if ever spoken in public before. Among other things, we discovered how American teachers’ pension savings went to fund an oil war in Iraq, with a little help from the world’s largest commodity trader; and we also found that the three largest commodity traders (which, because they are private companies, don’t have to publish accounts) made more money in the first decade of the 2000s than either Apple or Coca-Cola.
What was the discovery that surprised you the most?
It was a surprise to hear people talking quite openly about bribery as if it was just another business expense. This is not just something that happened many years ago – the world’s largest oil trading company, Vitol, admitted to paying bribes in Latin America as recently as July 2020. And we were genuinely shocked to discover that in Switzerland, paying bribes to foreign companies was not only legal but also tax deductible until as recently as 2016.
What gives commodity traders their influence?
Commodities mean money, and money means power – it’s as simple as that. As the companies who can turn commodities into cash for resource-rich governments or individuals, the traders get very close to power. And sometimes they influence it. Take the example of Vitol in the Libyan civil war of 2011. The Arab Spring was sweeping through the Middle East, and in Libya there was an uprising against the dictatorship of Colonel Muammar Gaddafi. But the rebels had a problem – they didn’t have enough fuel. Gaddafi controlled all the refineries. Then Ian Taylor, the boss of Vitol, flew in to Benghazi and agreed to supply the rebels with $1bn of fuel – and it wouldn’t need to be paid for until after the war had been won. There’s little doubt that Vitol’s intervention altered the course of the conflict.
How did the traders become so influential?
A couple of big trends have benefited them massively over the past three-quarters of a century. One is the freeing up of global markets: the oil market, for example, used to be tightly controlled by the big oil companies known as the ‘Seven Sisters’. Then as governments in the Middle East, Africa and Latin America seized control of their resources, they needed someone to help them sell them – to turn them into cash – and the commodity traders stepped in.
The other big trend that worked in their favour was globalisation and the growth of global trade. More trade means more commodities that need to be traded, and so more money to be made for the traders. The most important development here was the growth of China, which triggered an enormous commodities boom in the 2000s.