A London court has ordered commodity trader Glencore to pay £280.97 million in penalties as a result of its bribe paying.
The trader revealed it would plead guilty in May this year,revealed it would plead guilty in May this year, at Westminster Magistrates Court, to all seven charges against it. The London trial took place in June. Glencore says it has changed and no longer does business through middlemen.
The trader made provision to settle the charges from the UK, US and Brazil – setting aside around $1.5 billion. It said the amount paid out “do not differ materially” from its provisions.
“This is a significant overall total,” said Mr Justice Fraser. “Other companies tempted to engage in similar corruption should be aware that similar sanctions lie ahead.”
Nigeria had made a bid to receive compensation and appealed to a London court. However, the ruling in October said the state would not receive compensation.
Glencore chairman Kalidas Madhavpeddi said the conduct was “inexcusable” and had no place at the company. “The company is committed to operating a company that creates value for all stakeholders by operating transparently under a well-defined set of values, with openness and integrity at the forefront.”
The Serious Fraud Office (SFO) cited a number of witness statements from a former Glencore trader, Anthony Stimler, who has pleaded guilty to various related offences in the US.
In one of the most eye-catching revelations, the SFO reported a Glencore employee withdrew 6.34mn euros ($6.22mn) from the company’s Swiss office to pay bribes in Cameroon. On the first occasion he took 225,000 euros from the cash desk he recorded the purpose of the money as “light crude oil – Cameroon entertainment”.
Senior level
Glencore had a corporate line setting out its anti-corruption efforts. However, corruption “was condoned at a very senior level within the company generally and the [West Africa] desk specifically”, the SFO said.
The agency said two Glencore officials had authority to approve cash requirements, who it identified as the business ethics officer and the business ethics committee member in London. The SFO said these two took active steps to circumvent controls.
The SFO filing, citing internal Glencore messages, make it clear the extent to which they knew the business was being conducted illicitly. Stimler sent a message to the Nigerian agent in 2013 referring to local business partners as “the Krays”, in reference to the two brothers involved in organised crime in the 1960s.
The judge noted the Glencore culture that had allowed bribery to go ahead. The company culture accepted this as “as part of the West Africa desk’s way of doing business … The corruption is of extended duration … It was endemic amongst traders on that particular desk.”
Hunting the harm
The law enforcement agency has reported that Glencore paid $26.9mn in bribes in Nigeria, Cameroon and Côte d’Ivoire. It also paid bribes in Equatorial Guinea of $1mn and in South Sudan of $1.075mn.
The SFO has calculated that these bribes caused $127.97mn in harm.
Spotlight on Corruptions’ Dr Helen Taylor welcomed the penalty as a sign that the UK “takes corporate corruption seriously”.
The conviction is a win for the SFO, she said. “But the big test for the UK justice system will be whether senior executives at Glencore who master-minded this egregious scheme will be successfully held to account and prosecuted. It would be completely unacceptable if individuals who directed the corporate offending face no accountability.”
Taylor went on to say the proceedings should have named the government officials in the various countries. This would inform the people of those African about “who was involved in these corrupt schemes in their countries”.
Foreign ties
Glencore is based in Switzerland but has a subsidiary, Glencore International AG (GIAG) based in London. The unit focused on oil trading, with this case focused on the activities of the West Africa desk.
The FBI began investigating Glencore in July 2017, sending a first subpoena to the trader in July 2018. The SFO began its criminal investigation in June 2019.
The US and UK agencies worked together on some of the case, primarily on a Nigerian agent. The unnamed agent paid bribes, the SFO said, in Nigeria, Cameroon, Côte d’Ivoire, Equatorial Guinea and Congo Brazzaville.
The US case focused on the Nigerian agent’s payments between 2007 and February 2012. The SFO’s prosecution focused on activities from March 2012 onwards, in Nigeria and Cameroon.
There may yet be more charges to come for Glencore employeesmore charges to come for Glencore employees.
The US and UK authorities have not named all participants in the schemes. A filing from the US Department of Justice (DoJ) makes a number of links between Stimler and “Foreign Official 1”. She has been identified as former petroleum minister Diezani Alison-Madueke.
The Nigerian authorities seized two houses and two luxury cars from the former minister in October.
Updated at 2:00 pm to correct penalty imposed and add quotes from Spotlight on Corruption’s Helen Taylor.
Updated at 2:48 pm with comments from Justice Fraser.