Trading giant Glencore expects to pay US$1.5bn to authorities in the US, UK and Brazil, after pleading guilty to a 10-year international bribery scheme as well as a plot to manipulate commodity prices. 

The Switzerland-headquartered company has announced it will pay around US$1.1bn in penalties and forfeiture in the US, following cases brought by the Department of Justice and Commodity Futures Trading Commission (CFTC). 

The commodities regulator says the pay-out “consists of the highest civil monetary penalty and highest disgorgement amount in any CFTC case” in history. 

Glencore will pay a further US$39.6mn to Brazilian federal prosecutors, and will plead guilty to separate bribery charges brought by the UK’s Serious Fraud Office (SFO), which it expects will bring total penalties up to around US$1.5bn. 

The US Department of Justice says the bribery-related enforcement action follows a “decade-long scheme by Glencore and its subsidiaries to make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries”. 

It says that between 2007 and 2018, the trader paid around US$80mn to third-party intermediaries to secure business with state-owned or state-controlled entities. The practices took place in several African and Latin American countries, including Nigeria, Cameroon, Brazil and Venezuela. 

Officials say Glencore used inflated invoices, sham consulting agreements and intermediary companies to conceal payments to foreign officials. 

In Nigeria, for example, Glencore – along with UK-based subsidiaries – is accused of paying tens of millions of dollars in bribes to officials to secure the purchases of crude oil and petroleum products from the country’s state-owned oil company. 

“The scope of this criminal bribery scheme is staggering,” says Damian Williams, US attorney for the Southern District of New York. 

“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.” 

In the UK, the SFO’s case also alleges “profit-driven bribery and corruption across the company’s oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria, and South Sudan”, following a three-year investigation carried out jointly with Dutch and Swiss prosecutors. 

Glencore says it will plead guilty to those charges, with further penalties to be determined at a sentencing hearing in London on June 21. 

“We won’t stop fighting serious fraud, bribery and corruption, and we look forward to the next steps in this major prosecution,” says SFO director Lisa Osofsky. 

Separately, Glencore has also been fined for manipulating commodity price benchmarks at the major US ports of Los Angeles and Houston between 2012 and 2016. 

Employees would submit bids during daily trading to push prices up or down artificially, in keeping with whether the company was buying or selling fuel oil, a scheme “to unlawfully enrich themselves and Glencore Ltd itself”, the Department of Justice says. 

Bids and offers were not submitted “for any legitimate economic reason”, but solely to influence price benchmarks published by S&P Global Platts, which in turn set pricing terms for physical contracts and derivative positions. 

“Without question, manipulating oil markets can drive up the cost Americans pay at the pump or to heat their homes,” says CFTC chairman Rostin Behnam. “And today my message to the markets is clear: the CFTC will continue to pursue even the slightest hint of manipulative, corrupt, or fraudulent behaviour.” 

Glencore says it has cooperated with authorities and substantially improved its ethics and compliance programme. Total penalties are not expected to exceed provisions already set out in its 2021 financial statements. 

The company has a “refreshed board and management team” and will appoint an independent compliance monitor for three years, it adds. 

“Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred,” says chairman Kalidas Madhavpeddi, vowing that the company is “committed to… operating transparently under a well-defined set of values”. 

Chief executive Gary Nagle adds: “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.” 

Glencore adds that separate investigations into alleged corruption are ongoing in Switzerland and the Netherlands, the timing and outcome of which remain uncertain.