Trading giant Glencore has struck agreements that could lead it to pay $1.1bn in settlement agreements with officials in three countries on charges of bribery and bunker fuel market manipulation.
In addition to closing the book on bribery charges in the US, UK and Brazil, the deals see Glencore pay US fines related to market manipulation in fuel oil transactions at the ports of Long Beach and Los Angeles.
Assistant attorney general Kenneth Polite, who runs the US Department of Justice’s criminal division, said Glencore has agreed to pay far more than the estimated profits that it earned from the crimes.
“Today our message is clear: crime does not pay,” he said at a Tuesday press conference.
Glencore, which said it cooperated with the investigations, said it agreed with the justice department and Commodity Futures Trading Commission to $700m in penalties on the bribery charges and nearly $486m in the market manipulation cases.
With $166m credited against “other, parallel matters” that include the UK charges, the net payment to the US will be $1.02bn, Glencore said.
“We acknowledge the misconduct identified in these investigations and have cooperated with the authorities,” said Glencore chief executive Gary Nagle.
“This type of behaviour has no place in Glencore, and the board, management team and I are very clear about the culture that we want and our commitment to be a responsible and ethical operator wherever we work.”
The agreements come more than a year after former Glencore trader Emilio Jose Heredia Collado pleaded guilty to charges of market manipulation for bunker fuel deals at the ports of Los Angeles and Long Beach between 2012 and 2016, according to federal records.
Merrick Garland, the US attorney general, said the scheme to manipulate price benchmarks lasted eight years.
Biggest oil case
“This represents the justice department’s largest criminal enforcement action to date for a commodity price manipulation conspiracy in oil markets,” he said, adding that two Glencore traders have pleaded guilty.
In the bribery cases, US officials said in a press conference that the plea covers allegations that the company bribed public officials in seven countries.
“Glencore engaged in these crimes to make hundreds of millions of dollars. It bribed public officials for business advantages across our globe,” said Polite.
In Brazil, the company has struck a leniency agreement with the Federal Public Ministry (MPF), the country’s prosecution office, to pay fines of nearly $40m in connection with bribery investigations.
The company was accused of paying $39.6m in bribes to Petrobras, Brazil’s government-controlled oil company, in connection with bunker fuel sales.
The MPF said on Tuesday that in addition to paying a fine, Glencore agreed to provide information about participants in the bribery scheme and to adopt transparency and ethics measures.
In London, Glencore Energy UK indicated at a hearing in Westminster Magistrates’ Court that it will plead guilty to charges brought by the Serious Fraud Office (SFO) after an investigation that started in 2019.
The agency said it charged the Glencore unit with seven counts of bribery in connection to its oil trading operations.
“SFO investigators exposed profit-driven bribery and corruption across the company’s oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan,” the office said.
“The SFO’s case is that Glencore agents and employees paid bribes worth over $25m for preferential access to oil, with approval by the company.”
Although UK fines have not been set, Glencore said the total payout in the three countries is not likely to differ materially from the $1.5bn provision for the cases that it recorded in its 2021 financial statements.
Glencore still faces investigations in Switzerland and the Netherlands, and it said it is continuing to cooperate with officials there.
Glencore said that well before it knew of the US investigations, it invested resources to develop a “best-in-class” ethics and compliance programme.
“Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred,” said Glencore chairman Kalidas Madhavpeddi.
“The board and the management team are 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.”
