In pursuit of transparent trading (20/10/15)
Commodity trading and the activities of trading companies influence economic and governance outcomes in developing countries. Typically privately owned with flexible business models, many trading companies work extensively in “high-risk” environments – including countries with weak institutions, conflicts or other challenges that scare away more risk-averse companies. Given the size of this footprint, and its prevalence in countries with high levels of corruption or poverty (or both), the quality of trading companies’ business practices is of serious concern.
Trading companies play several roles through which they influence public institutions and public revenues, and they frequently build close relationships with top officials and political elites. They are major buyers of raw materials sold by governments and state-owned companies worldwide, and these transactions generate significant public revenues. Traders also provide large loans to governments, sell refined products, and enter into joint ventures with state-owned entities. They are expanding their upstream and downstream operations in developing countries as well.