Glencore GLNCY 2.32%
The PLC said on Tuesday 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, resolving criminal investigations that have hung over mining and global trade for years.
The pleas of guilt and long-awaited fines, which cover a range of misdeeds including market manipulation and bribery, relate to Glencore’s past business conduct in developing countries where it, along with other trading powers, acquired and moved minerals and other resources around the world.
Glencore International AG will pay about $700 million to resolve the US Department of Justice’s foreign bribery investigation and $39.6 million to settle bribery claims in Brazil, according to the company. Glencore said another unit agreed to pay $485 million to settle US criminal and civil investigations into fuel oil price gouging.
Britain’s Serious Fraud Office has charged another unit, Glencore Energy UK Limited, with seven counts of bribery in connection with payments of $24 million to obtain preference for oil in Africa.
As part of its settlement of the US investigation, Glencore International has pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act, the company said.
In a separate criminal market manipulation case, another unit, Glencore Ltd., pleaded guilty to one count of conspiracy to manipulate commodity prices.
The Brazilian fine stems from Glencore’s role in a corruption investigation known as Operation Car Wash, which involved payments related to the state-controlled Petróleo Brasileiro SA, or Petrobras.
Corporate penalties over $1 billion are relatively rare but not unprecedented in cases involving foreign and law enforcement misconduct from different countries. A US investment division of Allianz SE this month agreed to pay about $6 billion in fines and damages to resolve a federal securities fraud investigation.
“Corporate greed has been driving this rampant bad behavior. Announcing the settlement, Kenneth Bullitt, head of the Justice Department’s criminal division, said Glencore had been implicated in these crimes to make hundreds of millions of dollars. “It has been bribed by foreign officials for commercial advantages around the world, and its dealers here in the United States have manipulated oil standards to make the company’s contracts more profitable.”
In an email to employees, Glencore CEO Gary Nagle said investigations have identified serious cases of past misconduct in parts of the company.
“The consequences of such behavior are devastating and costly, not only financially, but also our reputation,” he wrote, according to a copy of the email seen by The Wall Street Journal.
The Anglo-Swiss company revealed that it has set aside $1.5 billion to cover the costs of settlements in the US, UK and Brazil.
Glencore told shareholders it has faced criminal and civil investigations from the Department of Justice, the Commodity Futures Trading Commission, the UK’s Serious Fraud Office and Brazil’s Federal Prosecutor’s Office.
Glencore said on Tuesday it still expected to pay no more than $1.5 billion, including any additional fines associated with the resolution of its case in the UK.
The investigation settlement removes a distraction from Glencore as it seeks to portray itself as the best among the large mining companies to benefit from a global push to decarbonize transportation and energy. Although the company remains an important coal competitor, it also has significant business in minerals such as cobalt, copper and nickel, which are seen as vital for electric vehicle batteries and the transmission of electricity.
Under the agreements announced Tuesday, business units that have pleaded guilty to US criminal charges will have to appoint independent compliance monitors for three years. Monitors study the company’s governance and compliance systems, pointing out any weaknesses and recommending ways to improve them.
The Serious Fraud Office said it had exposed bribery and corruption in the operations of oil company Glencore in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. The Serious Fraud Office said in a statement that Glencore agents and employees paid bribes to gain a preference for crude oil with the company’s approval.
The Serious Fraud Office said a London court will sentence Glencore on June 21.
In addition to allegations of bribery, Glencore has faced a US investigation into market manipulation. A former Glencore oil trader pleaded guilty last year to conspiring to tamper with a standard linked to fuel oil used by ships.
The Department of Justice and the Commodity Futures Trading Commission investigated allegations of manipulation and found misconduct stretching from 2007 to 2018. Traders attempted to manipulate four US-based physical oil standards that could affect profits in futures trading and swaps linked to those reference prices, according to the CFTC .
Another former Glencore trader pleaded guilty last July to conspiring to launder money and pay millions of dollars in kickbacks to officials in Nigeria and elsewhere in exchange for favorable contracts with a state-owned oil company, in violation of the US Foreign Corrupt Practices Act.
Anthony Stimler, a British citizen, from 2013 to 2015 was involved in funneling hundreds of thousands of dollars into middlemen to facilitate Glencore’s access to Nigerian oil, according to court records. The authorities claimed that Mr. Stimler worked with co-conspirators including former Glencore dealers.
Several executives who were in office during the period under scrutiny by the authorities, including former Glencore CEO Ivan Glasenberg, have left the company. Mr. Glasenberg, who led the company for 19 years, declined to comment.
The investigations affected Glencore’s share price for several years and raised the company’s legal costs. For example, legal costs for the first half of 2020 were $56 million.
Glencore is still under investigation by the Swiss and Dutch authorities.
Glencore shares rose 1.3 percent in London on Tuesday.
In the past year, the company’s stock price has surged 70% amid soaring prices for the commodities it mines for, such as coal, cobalt and nickel, and with market volatility taking profits for the big trading division.
Mr. Nagle, who succeeded Mr. Glasenberg last year sought to streamline the sprawling company, selling off smaller assets.
Ben Davis, an analyst at Liberum, said the settlements are “good news for Glencore, but there is still a surplus in equities.” This includes the company’s gradual move to shut down its coal division, which is very profitable, said Mr. Davis said.
– Sadie Gorman and Ben Fuldy contributed to this article.
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