Glencore hit with $314-million in penalties for elaborate Africa bribery scheme

A British judge has ordered a subsidiary of commodities giant Glencore GLNCY to pay US$314-million in financial penalties for its “significant criminality” in an elaborate bribery scheme to gain access to oil from five African countries.

Corruption was “endemic” in the culture at the company’s West Africa trading desk, bribery was accepted as a way of doing business and the sophisticated scheme was sustained for a prolonged period, Justice Peter Fraser said in his ruling on Thursday at the Southwark Crown Court in London.

The court heard evidence that Glencore used private jets to deliver huge amounts of cash to agents who bribed key officials in African governments. One of the jet deliveries sent bribery cash to South Sudan just weeks after the country became independent in 2011.

Glencore employees used private jets to transfer cash to pay bribes, prosecutors tell London court

The total financial penalty imposed on Glencore – including a massive fine, an order to confiscate profits that it obtained from bribery and legal costs – is the largest ever awarded in a corporate criminal conviction in Britain, according to the government’s Serious Fraud Office (SFO), which launched the Glencore investigation in 2019.

The company’s London-based West Africa desk, which bought and traded crude oil from countries across Africa, paid a total of US$29-million in bribes to secure preferential access to oil from Nigeria, Cameroon, South Sudan, Equatorial Guinea and Ivory Coast, the court heard.

The bribes allowed the Swiss-based multinational company to reap about US$104-million in profits, the SFO said.

“Glencore pursued profits to the detriment of national governments in some of the poorest countries in the world,” SFO director Lisa Osofsky said in a statement after the court ruling.

“The company’s ruthless greed and criminality have been rightfully exposed,” she said.

In June, Glencore’s British subsidiary pleaded guilty to seven counts of bribery in connection with the Africa case, but the amount of the fine and penalty was not disclosed until the court ruling on Thursday.

The SFO said its investigation of the Glencore traders found “a trail of text messages, large cash withdrawals and deliberately concealed payments.”

In the company’s financial reports, the bribes were often disguised as “service fees,” “signing bonuses,” “success fees” or “office expenses.”

In a statement on Thursday, Glencore said it had “engaged in an extensive program of corporate reform” after the British investigation.

“The conduct that took place was inexcusable and has no place in Glencore,” company chairman Kalidas Madhavpeddi said in the statement.

The SFO said it is still pursuing an investigation of unnamed individuals at Glencore. Two of the individuals in the bribery scheme were Business Ethics Officers at Glencore’s London office, it said.

Glencore said in May that it expects to pay a total of about US$1.5-billion in connection with corruption and market manipulation cases in Britain, Brazil and the United States. After the British fine was announced on Thursday, the company said its estimate is still substantially the same. It had earlier agreed to pay more than US$1.1-billion in penalties in the United States.

In his ruling, Justice Fraser warned that other companies tempted to engage in similar corruption could face “similar sanctions” to what he imposed on Glencore.

“Bribery is a highly corrosive offence,” he said. “It quite literally corrupts people and companies, and spreads like a disease.”

Akere Muna, a lawyer and anti-corruption campaigner in Cameroon, told The Globe and Mail that he is pushing to uncover the names of the government officials in Africa who accepted bribes from Glencore.

“Naming and shaming is the best way to fight against corruption,” he said.

“I’m going to do my best to make sure that the African countries in which bribes were paid do all they need to do for the disclosure of the names. It is very important that names are released.”

An anti-corruption group, Transparency International UK, said the penalties imposed on Glencore are “a marked achievement” for the Serious Fraud Office, but must now be followed by prosecutions of the executives who were allegedly involved in the bribery scheme.

As many as 17 people, including 11 former Glencore employees, are reportedly under investigation by the SFO in the case, it noted.

Another issue is that the victims of corruption cases have no way to seek compensation under British law, the group said.

“Despite the penalties imposed, the people suffering the consequences of this criminal activity will have little access to genuine redress,” said Duncan Hames, policy director at Transparency International UK, in a statement after Thursday’s court ruling.

“The law needs to be expanded to establish the rights of victims in international corruption cases and ensure they can be compensated and pursue the recovery of assets.”

Lawyers for the Nigerian government sought permission to address the London court this week to seek compensation for Glencore’s corrupt actions, but the court refused to allow it.

With a report from Ndi Eugene Ndi in Yaoundé, Cameroon