A tribute from Trafigura

trafigura.com/claude-dauphin-obituary

Rarely has a life cut prematurely short had as great an impact as that of Claude Dauphin,
who died on 30 th September 2015 at the age of 64.

During a career spanning more than three decades in the commodities business, he
founded Trafigura and developed it from modest beginnings into one of the world’s leading
trading firms, with a 22-year record of profitable growth, investment and job creation. In the
process he built one of the engines of globalisation, driving physical trade in energy and
mineral products vital to global growth and economic integration in the past decade.

He oversaw the reshaping of his family’s century-old French waste recycling business into
Ecore, a European industry leader in the sector. He built an unparalleled network of friends,
partners and supporters in the governments and leading companies with which he did
business all over the world.

Most important of all was the impact he had on people. Colleagues, business partners,
friends and competitors alike are unanimous: what made Claude unique – always “Claude”,
only rarely “Mr Dauphin” - was the sheer force of his personality.

He had few equals in his energy, drive and capacity for hard work; his commitment to
excellence in all his endeavours; his courage and entrepreneurial appetite for risk; his
brilliant and intuitive commercial judgment; his humanity and generosity of spirit; the
ferocious loyalty and friendship he gave and drew from those around him; his charm and
impish humour.

One can think of few examples in recent times where one man’s personality has left such a
strong imprint on multiple companies and on thousands of people whose livelihoods they
affected. Moreover, the businesses he helped to create are built to last, meaning his name
will be remembered with gratitude for decades to come. Last and not least is his personal
legacy in a close-knit and loving family, of which he always spoke with pride and passion.

EARLY YEARS

Claude Dauphin was born in Houlgate in the Calvados region of Normandy on 10th June
1951; his father Guy owned and managed the family firm Guy Dauphin Environnement,
based at Rocquancourt. He attended the secondary school in Bayeux, Ecole St Laurent,
where by his own account he was a “non-conformist pupil”, leaving at the age of 16 to join
his father’s scrap and waste business. Later he would routinely describe himself as the “son
of a scrappie” and tell friends that his first task had been sorting rabbit skins, a sign of his
life-long talent for self-deprecation.

Before long, however, he decided to set out on a business career of his own and moved to
Paris to work for the commodities broker Brandeis Goldschmidt, a ring-dealing member of
the London Metal Exchange, as a specialist trader in ferro-alloys. He had found his métier.

1/8
In the same period he found a wife. He met Catherine, who was working as a receptionist
at a cancer hospital, for the first time at a winter shooting party in Normandy organised by
their fathers, who were friends. They fell instantly in love and were married six months later
in July 1976 at Vaucelles church in Caen, when Claude was 25 years old.

When they married, Claude resigned from his job in Paris and returned to Normandy to
work again for his father. But within a year, he looked for a return to the world of
commodities. He was introduced to Felix Posen, Head of Non-Ferrous Metals Trading and
a founding partner at the global commodities group Marc Rich & Co., who was impressed
by his dynamism and passion for the trade.

In 1977, Claude joined Marc Rich as Country Manager for Bolivia, based in La Paz. It was
the start of an enduring love affair with the countries of Latin America. Claude acquired
fluent, French-accented Spanish and rapidly became adept in wooing Bolivian metals
producers large and small with a view to acquiring their offtake for the Marc Rich trading
book. He was to return regularly to the region in his subsequent business career.

His success in La Paz led to promotion, initially to trade non-ferrous concentrates in New
York, then to company HQ in Zug, Switzerland as Head of Lead and Zinc. In 1988, he rose
further to join Marc Rich’s Executive Committee in the pivotal position of Head of Oil
Trading, based in London – a tribute to his fundamental grasp of trading regardless of the
materials traded.

The next few years were a turbulent period for the firm that had pioneered modern
commodities trading. Following the controversy surrounding Marc Rich in the US, the
company was under unrelenting international scrutiny and over time became consumed by
internal politics.

FOUNDING TRAFIGURA

By 1992, Claude had had enough. When his father died in June of that year, he resigned
from Marc Rich, ostensibly to run the family firm: GDE became part of a group with
international ambitions named Ecore. But it was clear that enterprise would not hold his
undivided attention for long. From the regularity of his calls to them, former colleagues
could tell that he was longing to put a team together to start a new commodities trading
business.

In March 1993, Trafigura Beheer BV was born – the name acquired from an existing
registered company in Amsterdam. Its founding partners, alongside Claude, consisted of a
large swathe of Marc Rich top brass: non-ferrous heads Danny Posen (son of Felix) and
Antonio Cometti, oil traders Graham Sharp and Mark Crandall, and Chief Financial Officer
Eric de Turckheim. It was a highly qualified team and established a financial foundation with
remarkable speed.

Claude subsequently liked to joke that in some ways, leaving secure, rewarding and well-
supported jobs at Marc Rich was the stupidest decision of their lives. The early years of
Trafigura were hard. There was no infrastructure or administrative support. Competition
was fierce and many commodity markets were depressed by over-supply. The company

2/8
had to fight for scraps of business – transactions that were too small to interest the big
guys. There were many heated arguments, with Claude in particular frequently growing
frustrated that success did not come as quickly as he had envisaged.

The founders had decided to build a diversified business trading both oil and metals, based
down the road from Zug in Lucerne. Oil trading, a relatively straightforward business to
enter, made the company profitable from year one. But building a successful non-ferrous
book was a different matter.

A UNIQUE CULTURE

It was in this formative period that Trafigura took on what was to become one of its
enduring hallmarks: a unique culture of collegiality, attention to detail and extreme hard
work. Board meetings and strategy discussions took place at weekends so as not to get in
the way of day-to-day business. Ownership was distributed – no shareholder could own
more than 20 percent of the company. There was no internal politics. Employees travelled
in their own time. The founding partners, as one put it, “took out their own trash”.

These requirements all bore the very personal imprint of Claude Dauphin. He was the
uncontested leader, but he needed a close-knit team around him and drove himself at least
as hard as everyone else. He made intuitive judgments about the macro-environment and
strategy while constantly gathering others’ views and obsessing about the tiniest micro-
detail. Nothing, ever, was allowed to escape his attention for long and he had an especially
sharp eye for errors.

It is a culture that is still fundamental to the business today, and is likely to remain so. Even
in Claude’s last year he would regularly chair board committee meetings on subjects like IT
on Saturday mornings or Sunday nights, and he continued to criss-cross the globe
bombarding employees with emails demanding rapid response no matter what the time of
day.

To many employees, he became an inspirational mentor, even a father figure. He seemed

to know everyone in the company personally – including their foibles and their personal
issues – and gave many of them affectionate nicknames. He cultivated a cosmopolitan,
multi-cultural and polyglot staff. His use of language – whether in his native French, fluent
English or Spanish – was colloquial and often hilarious, if profane.

In fact it is impossible to overstate the influence of Claude’s character in shaping every

aspect of Trafigura and its external impact. He set extraordinarily high standards for
everything from employee attire to the wine served at company events. He demanded an
extraordinary speed of decision-making and execution and an equally forthright approach
to identifying and correcting mistakes.

It was at his insistence that employees avoided any temptation to boast of success,
remaining instead focused on delivering reliable customer service. It was his in-built
iconoclasm that led him to challenge business conventions and to be viscerally and vocally
intolerant of corporate waste, bureaucracy and flim-flam.

3/8
He saw himself, quite rightly, as an upstart, a challenger, someone who insisted on doing
things his own way, or as he sometimes called it “the Trafigura way”. If he saw a company
in a relevant business sector not performing well, he would be tempted to buy a stake, turf
out the management and do it better. He was a great believer in staying focused on the
core business of trading, on the basis of comparative advantage: he was proud of the
specialist skills involved in doing the business well and was clear that they were utterly
different from those involved in, say, running a mining empire or drilling for oil.

Perhaps even more remarkable was his almost complete lack of ego. He was allergic to
personal publicity of any kind – even in the internal staff magazine. He preferred interaction
in person or by cell-phone to written memos. The only public speech he ever made was at
the ceremony where he received the Chevalier de la Légion d’Honneur as a French
entrepreneur in 2001 – naturally without telling the world. His passion was for the business,
not personal glory.

Above all, it was his charm, charisma and commitment that created the network of business
relationships and partnerships that have made Trafigura what it is today, whether in Africa,
Russia, the Middle East or Latin America or in the executive suites of Europe, the US and
Asia. Claude possessed highly developed skills of persuasion and negotiation, coupled
with an infectious humour and a love of the finer things of life. Potential partners often found
these qualities, combined with a legendary persistence in pursuing them, irresistible. He
was well known as a man of his word, someone who always delivered on his commitments.

SOUND BUSINESS STRATEGY

His approach to business strategy was more intuitive than analytical. He had a rare
combination of a “big picture” vision for the business and attention to micro-detail. His
attention span was as vast as his peripheral awareness of everything from geopolitics to
gossip.

But the strategy was built on some very sound principles that have stood the test of time.
They included diversification, or not putting all your eggs in one basket; long-term
investment in logistics; and smart and unsentimental use of capital. He was certain that
private company status and employee ownership constituted the right model for a trading
company, as it ensured a perfect alignment between the interests of managers and
owners, a prudent focus on risk management and proper attention to the long-term
sustainability of the company.

Take diversification first. If oil trading carried the business for the first seven or eight years,
it was never likely that Trafigura would abandon non-ferrous metals, the side of the
business where three of the partners had started their careers, even if they occasionally
discussed calling it a day. The decision to keep going was richly vindicated after the turn of
the millennium with the growth in emerging markets and the take-off in demand for
industrial minerals. The existence of two trading divisions made for a more diversified and
stable business and remains a cornerstone of Trafigura’s strategy.

What also became apparent from early on was Claude’s focus on investment for the long
term. Trafigura reinvested profits in building a network of logistical assets such as
warehouses and oil storage facilities to support the trading business. Targeted
4/8
infrastructure investments could help the company gain access to trading volumes,
especially at a time of significant structural change in international trade flows.

The company’s first industrial investment took place in its very first year with the purchase
of Cormin, a small company that operated warehouse facilities in Peru. With Cormin as a
base, Trafigura was able to develop a substantial metals trading operation in Peru,
subsequently expanding into Bolivia and Chile. Opportunistic investments followed in
warehouses and oil storage farms in Latin America, Africa and ultimately all over the world.

ACCELERATED GROWTH

Three things happened in 2001 that set Claude and the team on a path of accelerated
growth. First, the collapse of Enron signalled the advent of a period of greater commodity
market volatility. It was a low-price environment in which miners went bust, oil majors were
required to transform their business models, and there was profitable business for traders
in managing inventories and balancing supply and demand.

For Trafigura, it was the moment when its logistical investments really started to pay off.
The growth in emerging economies from China to Africa and Latin America created new
imbalances in the market, and new global opportunities to trade for those with the
necessary systems and infrastructure.

Second, there was an acceleration in demand for energy and industrial raw materials as
the emerging economies embarked on a new path of growth, led by China. This was a
wave which Trafigura and a small number of other trading houses were well positioned to
surf in the ensuing years. The numbers tell the story: Trafigura’s revenues rose from less
than USD 10bn in 2001 to well over 12 times that a decade later, with net profits and
shareholder equity growing by similar leaps and bounds.

Third, Claude bolstered his team by hiring a number of individuals with new skill-sets,
including a financial and derivatives specialist named Jeremy Weir. Following his
recruitment, the company restructured its non-ferrous book splitting physical trading from
the use of derivatives to hedge physical transactions.

Finally, Trafigura had found the formula to succeed in the metals markets. At the same
time, as if to emphasise the increased sophistication of its approach, the company
established an investment subsidiary, Galena Asset Management, providing third-party
investors with a platform to invest in commodity derivatives markets alongside Trafigura.
Jeremy was later appointed Claude’s successor in the role of Trafigura CEO in March
2014.

The pace of growth Trafigura established in these years was phenomenal, and while price
and general demand growth offered a partial explanation for the numbers, they also
reflected the relentless drive of Claude Dauphin.

AN UNHAPPY CHAIN OF EVENTS

Handling such growth also posed new management challenges for a private, shareholder-
owned company with a preference for discretion. So when something went very publicly
wrong with one of its operations – in the 2006 waste-dumping incident in Ivory Coast –
5/8
Trafigura was woefully ill-prepared.

Enough has been written about this extremely unhappy chain of events, in which a
contractor working for Trafigura illegally dumped residual waste from a time-chartered
tanker, the Probo Koala, at a series of landfill sites around the port of Abidjan, causing
residents to complain of flu-like symptoms and others to allege more harmful effects. The
resulting international outcry and legal cases continued for years.

This was undoubtedly the darkest period of Claude’s career. Anyone who knew him also
knew that he was an individual who cared deeply about people. The suggestion that
Trafigura was indirectly responsible for harm to poor residents of an African city pained him
deeply, and he decided to lead a company delegation including medical experts and
equipment to the Ivory Coast to see what could be done to help.

Unfortunately in the political circumstances, the arrival of the Trafigura delegation attracted
unwelcome attention: Claude and two colleagues were seized and placed under house
arrest, then transferred to a prison where they spent the next five months in a cell with locks
on the inside to protect them from attack. It took protracted negotiations and the payment of
a substantial sum in settlement to secure their release.

Perhaps it was inevitable that the main media focus during this affair was on the allegations
of harm from the waste. For the company’s management, though, it was a struggle for
survival, and one that it came through. Trafigura had continued support throughout from its
extensive network of banks. In February 2007 the company was reunited with its Chairman
and CEO who had all the while valiantly helped to run the company by mobile phone from
his cell.

For Claude the lessons learned as a result of the Probo Koala affair were profound. He
realised that Trafigura was now of a scale and scope that required an improved approach
to managing its impacts on the environment and society. To assist this change he initiated
a shake-up in the company’s governance by establishing a Supervisory Board comprising
senior non-executives and ex-employees with relevant experience, and ordered a new
focus on health, safety, the environment and communities across the trading and asset
divisions.

The company had long been skilled at managing key commercial and financial risks; it
needed to pay greater and more systematic attention to potential operational and
reputational risks. It was a theme that became a leitmotif for the rest of Claude’s career. He
took a keen personal interest, for example, in the philanthropic work of the Trafigura
Foundation, which supports sustainable development, education and health projects
around the world supported by charity committees established in key company offices. On
his last day of active service in Colombia, he was at pains to enquire about the business’s
efforts to build relations with local communities.

INFRASTRUCTURE INVESTMENT

After this affair, Trafigura continued on its growth trajectory as the commodities “super-
cycle” continued. Claude was instinctively sceptical of this phrase, but he could see that
industrial growth and urbanisation were spreading across the globe and could sense the
6/8
further increases in demand that were likely to result. He continued to invest in
infrastructure to take advantage of the changing market and acquired a number of mining
assets – one of which, the MATSA mine in Spain, was to become the springboard in the
final months of Claude’s life for a new mining investment joint venture with the Mubadala
investment and development company of Abu Dhabi.

There was also a new focus on the down-stream segment of the oil industry. His chosen
vehicle for this was a subsidiary with the name of Puma Energy. Trafigura had completed
the acquisition of this company in 2000, with the initial intent of building a network of mid-
stream assets such as storage facilities. But from 2010 on, as the oil majors restructured to
focus their activities on exploration and production and started shedding their distribution
networks, Claude saw the opportunity to expand down-stream by acquiring retail and
wholesale distribution assets. It was a whole new chapter for the Group that would
eventually lead to Puma Energy becoming a substantial company in its own right, with
significant external shareholders and Trafigura – while still the largest investor – falling just
below 50 percent.

The Puma story exemplified another characteristic of Claude’s leadership: the endless
search for new sources of value that would complement Trafigura’s core business of
trading, underpinned by a disciplined approach to capital investment.

In his eyes it was a delicate balancing act. He did not want to turn Trafigura into a major
owner of producing assets such as mines or oil wells – they were fundamentally different
businesses requiring different ownership models and financial structures. But he did want
the firepower to take advantage of asset opportunities in support of trading, and he wanted
to do so in a way that did not prejudice Trafigura’s private shareholding structure or over-
stretch its financing base.

The approach he and his colleagues came up with was unique. It involved buying and
developing assets but also taking opportunities to sell assets in whole or in part to other
investors and recycling the capital. Focus is all, he told his traders. By all means buy an
asset and make money out of it, but don’t fall in love with it. Stay nimble, stay liquid, stay
hungry. It remained his motto to the end, as the cycle of asset investment and realisation
continued.

Where Puma Energy led, Impala Terminals followed as Trafigura’s subsidiary investing in
infrastructure to support trade in metals and minerals, including warehouse and port
facilities mainly in Latin America and Africa. It was no accident that Claude was in Bogota,
Colombia when he passed away: he was visiting a major Impala project there which has the
potential to transform that country’s commercial transport infrastructure.

THE BATTLE WITH ILLNESS

Tragically, the last 18 months of Claude’s life were increasingly dominated by his hard-
fought battle with illness – though never, until the very end, with any substantial impact on
his appetite and capacity for work. He was diagnosed in March 2014 with lung cancer, and
his response was typically vigorous, decisive and unsentimental. He summoned a meeting
of the Trafigura Management Board and proposed to appoint Jeremy Weir as CEO while
he would move up to Executive Chairman while receiving treatment.
7/8
Claude fought cancer with the same courage and indomitable spirit he applied to all his
endeavours. He was determined to remain focused on his work; adamant, too, that he
would do it his own way rather than follow medical advice to take a rest; if anything his
travel schedule became more gruelling than ever.

Even in great pain or discomfort, never once did he complain. On the contrary: he retained
his mordant sense of humour and redoubled his campaign against complacency or laziness
in any part of the company. All the while, with typical attention to the minutest detail, he
spent much time sharing the knowledge acquired during the course of an extraordinary
working life to those whose job it would be to take the business forward after he was gone.

The end, when it came, was sudden, but also in a curious way fitting. Claude died on the
last day of what, when annual results are published in December, should turn out to be a
highly successful financial year for the company he created; at a time of fresh upheaval in
commodity markets from which Trafigura was well positioned to benefit; and in a country
which had become a showcase for his passionate approach to investment in infrastructure
that advances trade.

He is mourned by his widow Catherine; his children Aurélie, Guillaume and Charlotte; and
by his five young grandchildren Maya, Alexander, Farah, Sebastian and Victoria and other
members of his family. He will be sorely missed by colleagues present and past, business
partners, and by his extraordinary network of friends and admirers around the world.

8/8