(Corrects third paragraph to show Timchenko's stake sold before
not after sanctions)
By Dmitry Zhdannikov and Jonathan Leff
NEW YORK, March 24 Abrupt leadership changes at
commodity traders Trafigura and Gunvor over the past week have
put a sharp light on an industry-wide challenge: shifting
oversight from a legion of legendary, aging leaders to a new
Trafigura's co-founder and chief executive Claude Dauphin,
63, who owns less than a fifth of the firm, stepped down this
week to receive medical treatment. Jeremy Weir, who ran the
mining and risk management divisions, will take over the firm,
putting a 50-year-old Australian geologist in charge of the
enterprise with a turnover of $133 billion.
At Gunvor, Russian founder Gennady Timchenko sold his 43.5
percent share to Swedish co-founder Torbjorn Tornqvist a day
before the United States slapped sanctions on him to pressure
President Vladimir Putin over Crimea. Tornqvist, 60, who has
long been CEO, now has full control.
Both changes were generally unexpected, and are prompting
wider questions of succession in an industry historically known
for both its secrecy and its powerful, charismatic leaders whose
trading skills and global contacts built the foundation of
today's global titans, which also include Vitol, Glencore
While most remain reluctant to talk openly about their plans
for one day relinquishing control, some say they are grooming
future leaders as a generation of traders who were instrumental
in the creation of the modern day commodity markets enter their
60s with paper fortunes and a rapidly changing landscape.
"Succession planning is definitely an issue for the banks
that finance commodity traders, they're interested in
understanding it," a high level source at a trading house said.
Yet while chief executives have in recent years thrown off
the cloak of secrecy and become prominent industry figures, the
names of those next in line remain, in many cases, largely
unknown. Weir had not been on most rivals' radar before this
week even though he was a rare executive at Trafigura who gave
several public interviews.
Investors and bankers know that the show at the world's
largest oil trader Vitol is run by CEO Ian Taylor, 58; at Gunvor
by Tornqvist, 60; at Mercuria by CEO Marco Dunand, 51, and
Daniel Jaeggi, 52; and at Glencore by Ivan Glasenberg, 57.
The second layer of management is often much less visible.
Vitol's Chief Financial Officer Jeff Dellapina is due to
speak at a major industry conference next month - his first
major public appearance. Vitol's chief oil trader Mark Couling
and chief Trafigura oil trader Jose Larocca have not been
interviewed in the business press.
"I have never in over two decades seen much in the way of
succession planning. Frankly, trading floors and their
management run more like animal farm than General Motors. There
is an implicit hierarchy, and that matters," said Chip Register,
a long time commodity executive, currently at Sapient Global
Vitol, one of the best paying firms in the industry which
has repeatedly attracted top talent, is owned by its employees
none of whom has more than 5 percent, which suggests a
collegiate approach to decision-making could be likely.
The firm has been around for 49 years and has had leadership
changes in the past, although only under Taylor's leadership
since 1995 has it grown into the world's biggest trader.
In the past, other commodity companies that were indelibly
linked to founders have faced transitions with mixed results.
One of the industry's oldest firms, agricultural giant
Cargill, was run by the founders' extended family for a century
until 1960, when Erwin Kelm became the first president not
descended from the Cargill-MacMillan families.
More recently, upstart Singapore-listed trading firm Noble
Group has struggled to maintain its momentum since
founder Richard Elman, 74, handed over the reins in 2010.
Several senior leadership departures have followed.
Oil traders have come a long way since the 1970-1980s era of
Marc Rich, the godfather of contemporary oil trading, when they
disclosed absolutely nothing about what they do. Some still
operate that way, such as Westport, Connecticut-based Phibro, a
once-mighty oil trading firm that some say would be hard to
imagine without its chief Andrew Hall, 62, whose $100 million
payday in 2009 caused a furor for then-owner Citigroup.
Dauphin, who started his career with Marc Rich and is not
known to have ever given a single interview, introduced annual
reports at Trafigura for bondholders which described performance
of individual divisions in great detail including volumes,
profitability and outlook - something not even many listed firms
Listed Glencore also publishes detailed reports and unlisted
Mercuria, Vitol and Gunvor have also increased the information
they disclose in recent years.
Trafigura introduced the next generation of leaders a couple
of years ago when the company also disclosed it was buying out
When Glencore went public in 2011, investors got a glimpse
into the company's bench strength and newly minted billionaires:
Alex Beard for oil, Daniel Mate for zinc trading, Tor Peterson
for coal trading and Telis Mistakidis as head of copper. Since
then they have made investor presentations and occasionally
spoken at media conferences.
"Everyone among our long-standing division heads is a
potential CEO," said a source close to Glencore.
Glasenberg, a former coal trader, has run the company for
over a decade.
For Gunvor, the most visible executive beyond its CEO is
chief investment and operating officer Jerome Schurink, 44, who
oversees the firm's expansion strategy and accompanies Tornqvist
to meetings such as in Davos.
"We have a succession plan established, consisting of
existing management and traders. We review it annually. We also
have risk management policies in place regarding such things as
how many and which executives are allowed to travel together," a
Gunvor source said.
Mercuria benefits to a certain extent by having two
founders, rather than one, both of whom are as much as 10 years
younger than most of their rivals.
Mercuria has also beefed up its top executive ranks with
commodity veterans including Roger Jones, formerly head of
commodities at Barclays's, and chief investment officer
Shameek Konar from Goldman Sachs.
"At the end of the day the bench strength of the trading
industry - commodities included - should not be underestimated,"
said Register. "Significant income opportunities have been
driving talent into these markets for decades and there are a
lot of great middle managers waiting for their shot at the
(Additional reporting by Anna Sussman, Peg Mackey, Alex Lawler,
Silvia Antonioli; Editing by Peter Graff)