Glencore will plead guilty to multiple bribery charges and pay fines of about $ 1.5 billion following U.S. and U.S. investigations that uncovered corruption in one of the world’s largest commodity traders.
The UK Office of Serious Fraud on Tuesday accused the Glencore Energy UK Group subsidiary of seven cases of bribery and corruption for profit in connection with oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and Sudan of the South.
In a statement, the SFO said its case was that “Glencore agents and employees paid bribes worth more than $ 25 million for preferential access to oil, with the company’s approval.”
Glencore said it would pay about $ 1.5 billion in global penalties: $ 1 billion to U.S. authorities, $ 40 million to Brazilian prosecutors and the amount owed to the United Kingdom that will materialize in a sentencing hearing. The company made a $ 1.5 billion provision for the deal in February and said in an update Tuesday that it does not expect the total fines to “differ materially” from what it has reserved.
The U.S. Department of Justice will also install an independent compliance monitor at Glencore for three years to verify its internal controls.
Alexandra Gillies, an adviser to the Natural Resource Governance Institute, an NGO, said that “commodity traders, including Glencore, have a sad track record of corruption, so it’s good to see the consequences.”
“Glencore’s financial performance won’t suffer much from this fine, especially given the current state of commodity prices. But it’s big for anti-bribery standards and that sends an important signal to the industry.”
In 2018, the U.S. Department of Justice launched a comprehensive investigation and asked the company to file records related to its compliance with the country’s money laundering laws and the Corrupt Practices Act. in Nigeria, the Democratic Republic of the Congo and Venezuela.
The UK SFO followed suit in 2019 and opened an investigation into Glencore for “suspected bribery” which it called Operation Azoth.
A Glencore attorney said Tuesday that the company would plead guilty. He faces charges that include the payment of bribes of 10.5 million euros to induce officials of the companies Société Nationale des Hydrocarbures and the Société Nationale de Raffinage to take advantage of Glencore’s operations in Cameroon.
On behalf of the SFO, lawyer Faras Baloch said the company had bribed agents to “help them get crude charges or get an unfair favorable price for those charges”.
Glencore is also accused of paying 4.7 million euros in bribes between July 2011 and April 2016 to influence officials to favor the company in oil transactions in Côte d’Ivoire. He is also accused of failing to prevent people related to the company from bribing officials interested in awarding crude oil loads to Equatorial Guinea.
Investigations have cast a long shadow over the company and called for the scrutiny of the culture of one of the world’s largest commodity traders.
Longtime CEO Ivan Glasenberg retired last year and became the latest in a series of senior personalities to leave the company, including the former head of its oil division, Alex Beard, who left in 2019.
Lisa Osofsky, director of the SFO, said: “This important investigation, which the SFO has taken to court in less than three years, is the result of our experience, our tenacity and the strength of our association with United States and other jurisdictions. ”
The company, which transports millions of tonnes of metals, minerals and oil worldwide, is also facing probes from the 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 plan to bribe government officials in Nigeria in exchange for lucrative oil contracts.
Complaints of the original U.S. DoJ investigation, which date back to 2007, came during Glasenberg’s 19-year tenure at the helm of the company.
Glasenberg and his top lieutenants made the company public in 2011 in what was then one of the largest floats in London. It used part of the funds to transform the company from a pure commodity trader to a mining giant through a merger with Xstrata in 2013 and a series of acquisitions.
But the company has struggled to shake up the reputation of a sometimes questionable business that many investors considered embedded in its DNA, which dates back to its time as a private trading house.
Analysts said the resignation would be a step forward for new CEO Gary Nagle, who took over as head of Glencore last year after more than two decades in the company.
Kalidas Madhavpeddi, president of Glencore, said: “Glencore today is not the company that was when the unacceptable practices behind this misconduct occurred.”
Glencore shares have risen near the highest level since its initial public offering 11 years ago, driven by a rise in oil and metal prices and good trading results.