Business

Glencore settles corruption charges and bribes in US, UK, Brazil


Glencore

GLNCY 2.32%

On Tuesday, PLC said it would pay at least $1.2 billion and two business units would plead guilty to bribery in the UK and conspiracy to breach US anti-corruption laws, settling criminal investigations Criminals have dogged the mining business and global trade for many years.

Long-awaited guilty pleas and fines, covering a range of misconduct including market manipulation and bribery, in relation to Glencore’s past commercial conduct in the developing world , where Glencore and other trading powers obtained minerals and other resources and shipped them around the world.

Glencore International AG will pay about $700 million to settle a US Department of Justice foreign bribery investigation and $39.6 million to settle bribery claims in Brazil, according to the company. Another entity has agreed to pay $485 million to settle US criminal and civil investigations into fuel-oil price manipulation, Glencore said.

Britain’s Serious Fraud Office charged another entity, Glencore Energy UK Ltd., with seven counts of bribery in connection with a $24 million payment for preferential access to oil in Africa.

As part of the settlement of US investigations, Glencore International pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act, the company said.

In a separate market manipulation crime case, another entity, Glencore Ltd., pleaded guilty to one count of conspiracy to defraud commodity prices.

Brazilian fine stemming from Glencore’s share in a corruption probe called Operation Car Wash, in relation to payments involving Petróleo Brasileiro SA, or state-controlled Petrobras.

Corporate penalties greater than $1 billion are relatively rare but not unheard of in cases involving misconduct abroad and law enforcement from different countries. . One of

Allianz

SE’s investment divisions in the US agreed this month to pay about $6 billion in fines and restitution to settle Federal securities fraud investigation.

“Corporate greed fueled this pervasive 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 the settlement announcement. “It has bribed foreign officials to gain an advantage over our global business, and its traders here in the United States have manipulated oil price standards to make the company’s contracts You’re more profitable.”

In an email to employees, Glencore CEO Gary Nagle said investigations had identified past instances of serious misconduct in parts of the company.

“The consequences of such conduct are damaging 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 revealed that it spent 1.5 billion dollars to cover the cost of settling in the US, UK and Brazil.

Glencore has told shareholders it faces criminal and civil investigations from the Department of Justice, the Commodity Futures Trading Commission, the UK’s Serious Fraud Office and the Public Prosecutor’s Office. Federation of Brazil.

Glencore said on Tuesday that it still expected to pay no more than $1.5 billion, including any additional penalties associated with settling the UK case.

The settlement of the investigations removed a distraction for Glencore as it sought to present itself as the company best positioned among the major miners to capitalize on the push to globalize the industry. transport and energy. While still a significant competitor in the coal sector, the company has large businesses in metals such as cobalt, copper and nickel, which are considered important for electric vehicle batteries. and power transmission.

Under the agreements announced Tuesday, business entities that have pleaded guilty to U.S. criminal charges will have to hire independent compliance monitors for three years. Supervisors review a company’s governance and compliance systems, spot any weaknesses, and recommend ways to improve them.

The Serious Fraud Office said it exposed bribery and corruption in Glencore’s oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. There, Glencore agents and employees paid bribes to gain preferential access to crude oil with the company’s approval, the Serious Fraud Office said in a statement.

The London Court will sentence Glencore on June 21, the Serious Fraud Office said.

In addition to bribery allegations, Glencore faces a US market manipulation investigation. Last year, a former Glencore oil trader pleaded guilty to conspiracy to manipulate benchmarks attached to fuel oil used by ships.

The Department of Justice and Commodity Futures Trading Commission investigated the manipulation claims and discovered misconduct that spanned from 2007 to 2018. Traders attempted to test four physical oil benchmarks U.S. nature could affect returns on futures and swaps trades related to those reference prices, according to the CFTC.

Another former Glencore trader pleaded guilty last July to conspiracy to launder money and payments millions of dollars in bribes to officials in Nigeria and elsewhere in exchange for favorable contracts with a state-owned oil company, in violation of the United States Foreign Corrupt Practices Act.

Anthony Stimler, a UK citizen, was involved between 2013 and 2015 in spending hundreds of thousands of dollars on middlemen to give Glencore smooth access to Nigerian oil, according to court filings. . Authorities allege that Mr Stimler worked with accomplices, including other former Glencore traders.

Several executives who took up their roles during the period of scrutiny by the authorities, including former Glencore chief executive Ivan Glasenberg, have left the company. Mr. Glasenberg, who has led the company for 19 years, declined to comment.

The investigations have depressed Glencore’s share price for several years and increased legal costs for the company. For example, legal costs for the first half of 2020 reached $56 million.

Glencore is still under investigation from Swiss and Dutch authorities.

Glencore’s share price rose 1.3% in London on Tuesday.

Over the past year, the company’s stock price has risen 70% amid the price of commodities the company has dug up such as coal, cobalt and nickel, and as market volatility has been profitable for the business division. big business of the company.

Mr. Nagle, who succeeded Mr. Glasenberg last year, has sought to simplify the already strong company, selling off smaller assets.

Ben Davis, an analyst at Liberum, said: “Good news for Glencore, but inventory remains. Those include the company gradually downsizing its coal division, which is extremely profitable, Mr. Davis said.

Write letter for Dave Michaels at [email protected] and Alistair MacDonald at [email protected]

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