Glencore To Plead Guilty To Bribery Charges And Pay $1.5Bn Penalty

(MENAFN- Swissinfo) Merrick Garland, US attorney-general, called it the US Department of Justice's“largest criminal enforcement action to date for commodity price manipulation conspiracy in oil markets”. Keystone / Michael Reynolds

Swiss-based Glencore will plead guilty to multiple counts of bribery and market manipulation and pay penalties of up to $1.5 billion (CHF1.45 billion) following US, UK and Brazilian investigations that uncovered corruption at one of the world's largest commodity traders.

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

In a statement, the SFO said that its case was that“Glencore agents and employees paid bribes worth over $25 million for preferential access to oil, with approval by the company”.

In the US, Glencore pleaded guilty in two separate criminal cases and agreed to pay approximately $1.1 billion in criminal fines and forfeiture. One case involved what prosecutors described as a decade-long bribery scheme, and in the second, Glencore's US commodities trading arm pleaded guilty to engaging in an eight-year scheme to manipulate US fuel oil price benchmarks.

Merrick Garland, US attorney-general, called it the US Department of Justice's“largest criminal enforcement action to date for commodity price manipulation conspiracy in oil markets”.

Glencore said it would pay about $1.5 billion in overall penalties, including the $1.1 billion to US authorities, $40 million to Brazilian prosecutors and an amount due to the UK to be finalised at a sentencing hearing. The company made a $1.5 billion provision for the settlement in February, and said in an update on Tuesday that it does not expect the total fines to“differ materially” from what it has set aside.

The US Department of Justice will also install two independent compliance monitors at Glencore for three years to check its internal controls.

Alexandra Gillies, adviser at the Natural Resource Governance Institute, said“commodity traders including Glencore have a dismal record when it comes to corruption, so it is good to see there are consequences”.

“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 that sends an important signal to the industry.”

In 2018, the US Department of Justice launched a wide-ranging investigation and requested the company hand 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 SFO followed suit in 2019 and opened an investigation into Glencore over“suspicions of bribery” that it codenamed Operation Azoth.

A barrister for Glencore on Tuesday indicated the company would plead guilty. It faces charges including paying bribes of €10.5 million (CHF10.8 million) to induce officials of companies Société Nationale des Hydrocarbures and the Société Nationale de Raffinage to advantage Glencore's operations in Cameroon.

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While there is this deep-rooted tradition of respect of the environment in Switzerland it does not necessarily extend beyond the country's borders.

Representing the SFO, barrister Faras Baloch said the company had bribed agents to“assist them in obtaining crude oil cargoes or gain an undue favourable price for those cargos”.

Glencore is also charged with paying €4.7 million in bribes between July 2011 and April 2016 to influence officials to favour the company in oil transactions in Ivory Coast, as well as failing to prevent individuals connected to the company from bribing officials concerned with awarding crude oil cargoes in Equatorial Guinea.

The investigations have cast a long shadow over the company and drawn scrutiny to the culture of one of the world's largest commodity traders.

Long-serving chief executive Ivan Glasenberg retired last year, becoming the latest in a line of senior figures to depart the company, including the former head of its oil division, Alex Beard, who left in 2019.

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