Glencore GLNCY 2.32%
The PLC said on Tuesday that it would pay at least $ 1.2 billion and that two business entities would plead guilty to bribery in the UK and conspiracy to break US anti-corruption laws, and solve criminal investigations that have hung over the global mining and trading industry for years. .
The long-awaited fines and penalties, which cover a range of atrocities, including market manipulation and bribery, are related to Glencore’s past commercial behavior in developing countries where the company and other trading power plants procure minerals and other resources and transport them around the world.
Glencore International AG will pay around $ 700 million to solve a foreign bribery investigation by the US Department of Justice and $ 39.6 million to settle bribery claims in Brazil, according to the company. Another unit has agreed to pay $ 485 million to decide US criminal and civilian investigations into the manipulation of fuel oil prices, Glencore said.
The UK̵[ads1]7;s Serious Fraud Office charged another entity, Glencore Energy UK Ltd., with seven cases of bribery in connection with $ 24 million payments for preferential access to oil in Africa.
As part of the settlement of the US investigations, Glencore International pleaded guilty in one case of conspiracy to violate the Foreign Corrupt Practices Act, the company said.
In the separate criminal market manipulation case, another entity, Glencore Ltd., pleaded guilty in one case of conspiracy to rig commodity prices.
The Brazil fine comes from Glencore’s part of a corruption investigation known as Operation Car Wash, which involved payments related to state-controlled Petróleo Brasileiro SA, or Petrobras.
Corporate penalties over $ 1 billion are relatively rare, but not unique to cases involving overseas misconduct and law enforcement from various countries. One of Allianz SE’s US investment divisions agreed this month to pay around $ 6 billion in fines and redress to solve a federal securities investigation.
“Corporate greed motivated this pervasive abuse. Glencore committed these crimes to earn hundreds of millions of dollars,” said Kenneth Polite, head of the Justice Department’s criminal department, when announcing the settlement. here in the United States manipulated oil references to make the company’s contracts more profitable. “
In an email to employees, Glencore CEO Gary Nagle said investigations identified serious cases of past abuse in parts of the company.
“The consequences of such behavior are harmful 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 has revealed that it has set aside 1.5 billion dollars to cover the costs of settlement in the USA, Great Britain and Brazil.
Glencore has told shareholders that they are facing criminal and civil investigations by the Department of Justice, the Commodity Futures Trading Commission, the UK Serious Fraud Office and the Brazilian Federal Prosecutor’s Office.
Glencore said on Tuesday that they still expect to pay no more than $ 1.5 billion, including any additional penalties associated with resolving the case in the UK.
The settlement of the investigations removes a distraction for Glencore as it tries to present itself as the best positioned among large mining companies to exploit a global pressure to reduce carbonization of transportation and energy. Although the company is still a significant competitor in coal, the company has a large business in metals such as cobalt, copper and nickel, which are seen as essential for batteries for electric vehicles and the transmission of electricity.
According to the agreements announced on Tuesday, the business units that pleaded guilty to US criminal charges will have to hire independent monitors for three years. Supervisors look into a company’s management and compliance systems, point out any weaknesses and recommend ways to improve them.
The Serious Fraud Office said it had uncovered bribery and corruption across Glencore’s oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. There, Glencore’s agents and employees paid bribes for preferential rights to crude oil with approval from the company, the Serious Fraud Office said in a statement.
The London court is set to rule Glencore on June 21, the Serious Fraud Office said.
In addition to the allegations of bribery, Glencore faced the US market manipulation investigation. A former Glencore oil trader last year pleaded guilty to conspiracy to manipulate a benchmark related to fuel oil used by ships.
The Department of Justice and the Commodity Futures Trading Commission investigated the manipulation allegations and found fraud that ranged from 2007 to 2018. Traders tried to rig four U.S.-based physical oil references that could affect futures and barter profits related to these reference prices, according to the CFTC.
Another former Glencore trader pleaded guilty in July last year to conspiracy to launder money and pay 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 US Foreign Corrupt Practices Act.
Anthony Stimler, a British citizen, was involved from 2013 to 2015 in sending hundreds of thousands of dollars to intermediaries to smooth out Glencore’s access to Nigerian oil, according to court documents. Authorities claimed Stimler was working with accomplices, including other former Glencore dealers.
Several executives who were in their roles during the period investigated by the authorities, including Glencore’s former CEO Ivan Glasenberg, have left the company. Mr. Glasenberg, who led the company for 19 years, declined to comment.
The investigations weighed on Glencore’s share price for several years and incurred legal costs for the company. For example, legal fees for the first half of 2020 reached $ 56 million.
Glencore is still under investigation by the Swiss and Dutch authorities.
Glencore’s share price rose 1.3% in London on Tuesday.
Over the past year, the company’s share price has climbed 70% amid a significant rise in the price of the raw materials it digs up, such as coal, cobalt and nickel, and as market volatility reaps profits for its large trading department.
Mr. Nagle, who succeeded Mr. Glasenberg last year, has tried to simplify the diversified company by selling smaller assets.
The settlements are “good news for Glencore, but there is still an overhang on the stock,” said Ben Davis, an analyst at Liberum. These include the company’s gradual move to liquidate its coal division, which is extremely profitable, Mr Davis said.
—Sadie Gurman and Ben Foldy contributed to this article.
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