Glencore GLNCY 2.32% PLC said on Tuesday it would pay at least $ 1.2 billion and that two businesses would plead guilty to bribery in the UK and conspiracy to violate US anti-corruption laws, resolving criminal investigations that have been posted on the global mining and trade business. for years.
The long-awaited convictions and fines, which cover a range of issues, such as market manipulation and bribery, are related to Glencore’s past business conduct in developing countries where it and other malls obtain minerals and other resources. and transport them around the world.
Glencore International AG will pay about $ 700 million to resolve a U.S. Department of Justice foreign bribery investigation and $ 39.6 million to resolve bribery claims in Brazil, according to the company. Another unit has agreed to pay $ 485 million to settle U.S. criminal and civil investigations into fuel price manipulation, Glencore said.
The British Serious Fraud Office has charged another unit, Glencore Energy UK Ltd., with seven bribery charges in connection with payments of $ 24 million for preferential access to oil in Africa.
As part of the U.S. investigation resolution, Glencore International pleaded guilty to one count of conspiracy to violate the Corrupt Practices Abroad Act, the company said.
In the separate criminal market manipulation case, another unit, Glencore Ltd., pleaded guilty to a conspiracy charge to manipulate commodity prices.
Brazil’s fine stems from Glencore’s involvement in a corruption investigation known as Operation Car Wash, which involved payments related to state-controlled Petróleo Brasileiro SA, or Petrobras.
Corporate sanctions in excess of $ 1 billion are relatively rare, but unprecedented in cases involving misconduct abroad and law enforcement in different countries. One of the U.S. investment divisions in Allianz SE agreed this month to pay about $ 6 billion in penalties and restitution to solve a federal securities fraud investigation.
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“Corporate greed motivated this widespread misconduct. Glencore engaged in these crimes to earn hundreds of millions of dollars,” Kenneth Polite, head of the Justice Department’s Criminal Division, said in announcing the deal. “He bribed foreign officials to gain trade advantages around the world, and his traders here in the United States manipulated oil benchmarks to make the company’s contracts more profitable.”
In an email to staff, Glencore CEO Gary Nagle said the investigations identified serious cases of misconduct in some parts of the company.
“The consequences of this conduct are detrimental and costly, not only financially, but also to our reputation,” he wrote, according to a copy of the email seen by The Wall Street Journal.
The Anglo-Swiss company has revealed that it has set aside $ 1.5 billion to cover the costs of settlements in the US, the UK and Brazil.
Glencore told shareholders it was facing criminal and civil investigations by the Justice Department, the Commodity Futures Trading Commission, the UK Serious Fraud Office and the Brazilian Federal Prosecutor’s Office.
Glencore said on Tuesday it still expects to pay no more than $ 1.5 billion, including additional penalties linked to the resolution of its case in the UK.
The research agreement eliminates a distraction for Glencore as it tries to present itself as the best positioned among large mining companies to capitalize on a global push to decarbonize transportation and energy. While still a major competitor to coal, the company has a large business in metals such as cobalt, copper and nickel, which are considered vital for electric vehicle batteries and power transmission.
Under the agreements announced on Tuesday, business units that pleaded guilty to U.S. criminal charges will have to hire independent compliance monitors for three years. He also oversees a company’s governance and compliance systems, pointing out weaknesses and recommending ways to improve them.
The Serious Fraud Office said it had exposed bribery and corruption to Glencore’s oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. There, Glencore agents and employees paid bribes for preferential access to crude oil with the company’s approval, the Serious Fraud Office said in a statement.
The London court will convict Glencore on June 21, the Serious Fraud Office said.
In addition to the bribery allegations, Glencore faced U.S. market manipulation investigation. A former Glencore oil trader pleaded guilty last year to conspiring to manipulate a landmark linked to fuel oil used by ships.
The Department of Justice and the Commodity Futures Trading Commission investigated the manipulation claims and found misconduct that spanned from 2007 to 2018. Traders attempted to manipulate four physical oil benchmarks based on in the United States that could influence the profits of futures and swap transactions related to these reference prices, according to the CFTC.
Another former Glencore trader pleaded guilty last July to conspiring to launder money and pay millions of dollars in bribes to officials in Nigeria and elsewhere in exchange for favorable contracts with a state-owned oil company. violation of the U.S. Foreign Corrupt Practices Act.
Anthony Stimler, a UK citizen, was involved between 2013 and 2015 in channeling hundreds of thousands of dollars into intermediaries to facilitate Glencore’s access to Nigerian oil, according to court records. Authorities alleged that Mr. Stimler worked with co-conspirators, including other former Glencore merchants.
Several executives who held office during the period under review by authorities, including former Glencore CEO Ivan Glasenberg, have left the company. Mr. Glasenberg, who ran the company for 19 years, declined to comment.
The investigations affected Glencore’s share price for several years and generated legal costs for the company. For example, legal costs in the first half of 2020 reached $ 56 million.
Glencore is still under investigation by the Swiss and Dutch authorities.
Glencore’s share price rose 1.3% in London on Tuesday.
Last year, the company’s stock price rose by 70% amid a sharp rise in the price of the raw materials it unearths, such as coal, cobalt and nickel, and as volatility from the market derives profits for its great commercial division.
Mr. Nagle, who succeeded Mr. Glasenberg last year tried to simplify the expanding business by selling smaller assets.
The settlements are “good news for Glencore, but there are still exits on the stock,” said Ben Davis, a Liberum analyst. These include the company’s gradual move to end its coal division, which is extremely profitable, Davis said.
—Sadie Gurman and Ben Foldy contributed to this article.
Write to Dave Michaels at dave.michaels@wsj.com and Alistair MacDonald at alistair.macdonald@wsj.com
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