Glencore pleads guilty to bribery
The mining giant’s success masked deep-rooted corruption, write Rachel Millard and Matt Oliver
BRITISH prosecutors are considering charges against senior individuals involved in the Glencore bribery scandal after the mining giant pleaded guilty in court to paying $28m (£23m) in kickbacks.
The company admitted to seven counts of bribery yesterday following a years-long investigation by the Serious Fraud Office (SFO).
Through middlemen, Glencore employees paid tens of millions of pounds to corrupt foreign government officials to gain preferential access to oil cargoes.
The bribes were sanctioned at a high-level in the company and involved its oil operations in Nigeria, Cameroon, the Ivory Coast, Equatorial Guinea and South Sudan.
But while Glencore itself has pleaded guilty in the UK and US, the SFO faces calls to charge former executives alleged to have sanctioned the kickbacks. The white collar crime agency’s investigation is still ongoing.
Only Anthony Stimler, a former trader and a UK citizen, has been charged by US prosecutors. He pleaded guilty to bribery and has been cooperating with authorities.
Glencore will be sentenced in November.
Glencore’s float in London was the largest ever in the City. Valuing the company at £40bn in May 2011, it turned chief executive Ivan Glasenberg and his top lieutenants into billionaires and threw off millions in fees for its investment bankers – while also opening a window into the secretive, powerful world of global commodity trading.
Investors inclined to look beyond the excitement and study the company’s 600-page float prospectus would have found a more sobering message, however. “Glencore is exposed to the risks of fraud and corruption both internally and externally,” it noted.
“Glencore seeks to fully comply with legislation. However, there can be no assurance that such procedures and established internal controls will adequately protect it against fraudulent and/or corrupt activity.”
At Glencore’s west African oil desk in London, trader Anthony Stimler was among those who knew how true that was. In 2007-2009, he was involved in talks with another trader about sending money to Nigeria to bribe government officials, he told a court in 2021.
From “around 2011 to 2018”, Stimler said he had approved bribe payments by Glencore intermediaries to help the company buy oil cargoes from the Nigerian government.
Stimler, who reportedly took a break from Glencore between 2009 and 2011 to care for his sick child, was among a generation of traders lured to the company under the hard-driving leadership of
Ivan Glasenberg, chief executive at the time. Glasenberg, a former champion race walker averse to work-life balance, took the company from scrappy commodities trader into global mining and trading giant with revenues north of $200bn (£163bn).
He led it into the lucrative copper and cobalt belt of the Democratic Republic of the Congo and, shortly after the London float, launched a £50bn takeover of rival Xstrata, turning Glencore into one of the largest companies on the FTSE 100.
Yet its success masked deep-rooted corruption, according to the evidence from Stimler and prosecutors on both sides of the Atlantic.
Glencore has now pleaded guilty to multiple charges of corruption by both the UK’S Serious Fraud Office and the US Department of Justice (DOJ), involving bribery of officials to help its businesses in Nigeria, Equatorial Guinea, the Democratic Republic of the Congo and elsewhere.
The behaviour spanned more than a decade up to 2018 and, according to US prosecutors, involved “top executives” who remain unnamed. The total bill in fines and forfeitures is expected to reach $1.5bn.
Announcing convictions in the US in May, attorney Damian Williams said the scope of the bribery was “staggering”.
He added: “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives.”
Details in court documents filed by prosecutors in the US in May spell out the finer details. From 2007 until 2018, the papers claim, Glencore paid more than $52m
through intermediaries to be used “at least in part” to pay bribes in Nigeria.
It helped Glencore to profits of $124m. Senior executives at Glencore subsidiaries “approved most of the illicit bribe payments”, prosecutors added.
Workers tried to conceal the bribery in communications by referring to payments as “newspapers, journals, or pages”. Glencore paid more than $1.5m to an intermediary company intended, at least in part, to bribe government officials in Equatorial Guinea.
“Some of these corrupt payments were paid in cash that was dispensed from Glencore’s offices in Baar, Switzerland, or from the Glencore UK subsidiaries’ offices in London,” prosecutors said.
“Glencore maintained a ‘cash desk’ in London until in or about 2011 and maintained a ‘cash desk’ in Baar until 2016.” When it came to Brazil, bribes were concealed under an “inflated service fee” of $0.50 per barrel of oil.
In the Democratic Republic of Congo (DRC), Glencore used an agent to pay a tax consultant who created fraudulent invoices used to disguise bribes to government officials, to help its government audits.
Meanwhile, in 2010, a medical services company in the DRC sued a Glencore subsidiary for breach of contract. Glencore employees “approved a $500,000 invoice that was used as a bribe payment to have the lawsuit dismissed”, according to US court papers.
Prosecutors in Stimler’s case referred to a high-ranking Nigerian government figure known as “Foreign Official 1”, who had demanded bribes. According to Bloomberg, the official is Diezani Alison-madueke: Nigeria’s former oil minister.
In a separate case unconnected to Glencore, US prosecutors have claimed she received kickbacks including London and New York properties between 2010 and 2015 in exchange for handing business cronies lucrative oil deals. She is previously said to have denied accusations of wrongdoing.
Announcing Glencore’s guilty pleas and fines in May, the DOJ said the company “did not receive full credit for co-operation and remediation, because it did not consistently demonstrate a commitment to full co-operation”. Glencore has agreed to keep on an independent compliance monitor for three years. Since the US
‘Glencore paid bribes to make money. And it did so with the approval of its top executives’
investigation started in 2018, Glasenberg and other top executives have left the company.
“We built the fourth-largest mining company in the world in 20 years,” he proudly told the Financial Times as he departed in 2021. His successor, former head of coal Gary Nagle, is trying to start a new era consigning the corruption to the past. “This type of behaviour has no place in Glencore,” he said in May.
The company has “taken significant action towards building and implementing a world-class ethics and compliance programme,” Nagle added.
Kalidas Madhavpeddi, chairman since July 2021, added: “Glencore today is not the company it was.”
Yet while the company is resolving the cases against it in the US and the UK, others loom. British prosecutors are still mulling whether to bring charges against individuals, including unnamed executives said to have sanctioned the bribes.
The investors who bought in at the listing, meanwhile, may have reason to feel aggrieved.
Shares finally traded above the 530p offer price for the first time in April, helped by a rally in commodities following Russia’s invasion of Ukraine, yet have languished from the outset. True to form, they have dipped again since – closing at 482p yesterday.