Glencore pleads guilty to bribery charges and pays a $1.5 billion fine

Glencore will plead guilty to multiple counts of bribery and market manipulation and pay fines of up to $1.5 billion after investigations by the United States, United Kingdom and Brazil that exposed corruption at one of the world’s largest commodity traders.

The UK’s Serious Fraud Office on Tuesday charged the group’s subsidiary Glencore Energy UK with seven cases of profit-motivated bribery and corruption in connection with oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.

In a statement, the SFO said its case was that “Glencore agents and employees paid more than $25 million in bribes to gain preference for oil, with the company’s consent.”

In the United States, Glencore has pleaded guilty in two separate criminal cases and agreed to pay approximately $1.1 billion in criminal and forfeiture fines. One case involved what prosecutors called a decade-long bribery scheme, and in the second, Glencore’s US commodity trading arm pleaded guilty to engaging in an eight-year plan to manipulate US fuel oil price standards.

Merrick Garland, US Attorney General, on Tuesday called it “the largest criminal enforcement action by the US Department of Justice to date of a conspiracy to manipulate commodity prices in the oil markets.”

Glencore said it will pay about $1.5 billion in total fines, including $1.1 billion to US authorities, $40 million to Brazilian prosecutors and an amount owed to the UK to be finalized at the sentencing hearing. The company set aside $1.5 billion for the settlement in February, and said in an update Tuesday that it did not expect the total fines to differ “materially” from what it set aside.

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The US Department of Justice will also install two independent compliance monitors at Glencore for a three-year period to verify its internal controls.

“Commodity traders including Glencore have a dismal record when it comes to corruption, so it is good to see that there are consequences,” said Alexandra Gillis, a consultant at the Institute for Natural Resources Management, a nongovernmental organization.

Glencore’s financial performance won’t suffer much from this fine, especially given the current state of commodity prices. But it is large by anti-bribery standards and this sends an important signal to the industry.”

In 2018, the US Department of Justice launched a large-scale investigation and asked the company to turn over records related to its compliance with the country’s money laundering laws and the Foreign Corrupt Practices Act in Nigeria, the Democratic Republic of Congo and Venezuela.

The UK’s Serious Fraud Office followed suit in 2019 and opened an investigation into Glencore over “suspicions of bribery” dubbed Operation Azoth.

Glencore’s attorney indicated on Tuesday that the company would plead guilty. She faces charges including paying 10.5 million euros in bribes to urge officials of Société Nationale des Hydrocarbures and Société Nationale de Raffinage to take advantage of Glencore’s operations in Cameroon.

Attorney Firas Baloch, a representative of the Financial Crimes Control Bureau, said the company had bribed clients to “help them obtain shipments of crude oil or obtain an unjustified favorable price for those shipments.”

Glencore was also charged with paying bribes worth €4.7 million between July 2011 and April 2016 to influence officials on behalf of the company in oil transactions in Côte d’Ivoire, as well as failing to prevent individuals associated with the company from bribing officials involved in awarding crude oil. Shipments in Equatorial Guinea.

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Investigations cast a long shadow over the company and drew attention to the culture of one of the world’s largest commodity traders.

Longtime CEO Evan Glasenberg retired last year to become the latest in a string of VIPs to leave the company, including the former head of the oil division, Alex Bird, who left in 2019.

Lisa Osofsky, Director of the Serious Fraud Office, said: “This important investigation, which the Office of Organized Crime has brought to court in less than three years, is the result of our experience, perseverance, and the strength of our partnership with the United States and other jurisdictions.”

The company, which transports millions of tons of minerals, minerals and oil around the world, is also facing investigations by Swiss and Dutch authorities, the timing and outcome of which remain uncertain.

Last July, a former Glencore oil trader pleaded guilty in New York to his role in a scheme to bribe government officials in Nigeria in exchange for lucrative oil contracts.

The allegations in the original US Department of Justice investigation, which dates back to 2007, occurred during Glasenberg’s 19-year tenure at the helm of the company.

Glasenberg and his top lieutenants went public in 2011 in what was then one of London’s largest ever floats. The money was used in part to transform the company from a pure-goods dealer into a mining company through a merger with Xstrata in 2013 and a series of acquisitions.

But the company has struggled to shake off the sometimes questionable reputation of its business that many investors saw as embedded in its DNA, dating back to its time as a privately owned business.

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Resolving the charges would be a step forward for new CEO Gary Nagel, who took over Glencore last year after more than two decades with the company, analysts said.

“Glencore today is not the company it was in when the unacceptable practices behind this misconduct occurred,” said Kalidas Madhavpidi, President of Glencore.

Glencore shares are soaring this year near their highest level since their initial public offering 11 years ago, buoyed by higher oil and metal prices and strong trading results.

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