The Swiss multinational, Glencore Plc – dedicated to the exploitation and commercialization of raw materials and foodstuffs, in addition to owning copper and coal mines – reported that it reached an agreement with the United States, United Kingdom and Brazil, pleading guilty to charges of bribery of foreign officials in Africa and South America, in addition to manipulation of oil markets.
The company agreed to pay US$1.02 billion to the United States and US$40 million to Brazil. The amount of penalties to be transferred to the United Kingdom has yet to be determined, which will be decided after a sentencing hearing scheduled for June 21.
The company expects total penalties not to exceed US$ 1.5 billion, which it set aside in February to settle ongoing investigations. Glencore was investigated in 2018 by the U.S. Department of Justice (DOJ) for corruption related to its activities in Nigeria, Venezuela and the Democratic Republic of Congo.
These settlements put an end to the complaints filed by these countries, but there are still ongoing proceedings against it in Switzerland and the Netherlands.
Facts in Brazil
The US$ 40 million payment to Brazil is made pursuant to a resolution signed with the Brazilian Federal Prosecutor’s Office for a bribery investigation.
The acts of corruption committed in the South American country, are related to the Lava Jato case, one of the most relevant episodes of corruption in that country, which became known in 2014. It is about “various acts related to schemes for the payment of undue amounts, through intermediaries, to Petrobras employees in exchange for illicit favors in commercial operations”, which allowed giving advantage to Glencore, in the purchase and sale of fuels carried out by the Brazilian state-owned company abroad.
According to the Prosecutor’s Office, the company committed to present information and evidence on the illicit acts, identifying the participants, in addition to adopting special integrity and transparency measures, and effectively applying codes of ethics and conduct.
U.S. and England
Under the terms of the U.S. resolutions, Glencore will pay fines of US$ 700 million to resolve bribery investigations and US$ 485 million for the allegation of market manipulation by the DOJ and the Commodity Futures Trading Commission (CFTC).
Of that amount, up to $165 million will be to address other parallel matters, including in the UK, so the net amount to be paid to the authorities is expected to be $1.02 billion.
The UK’s Serious Fraud Office (SFO), which opened the 2019 corruption investigation codenamed Operation Azoth, said last Tuesday, May 24, that Glencore agents and employees paid bribes worth more than US$25 million for preferential access to oil, with the company’s approval, in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and Sudan.
The SFO, which said it is working in parallel with the U.S. Department of Justice and Dutch and Swiss prosecutors, alleged that Glencore agents and employees paid bribes of more than $25 million for preferential access to oil with the company’s approval.
In addition to the financial penalties, the company was required to have an independent compliance monitor in place for three years to monitor the company’s compliance with the agreements and to evaluate the effectiveness of its compliance program and internal controls.
In addition, Glencore continues to cooperate with an ongoing and previously disclosed investigation against it by the Swiss Office of the Attorney General (“OAG”) for failing to have corruption prevention measures in place, and a similar investigation by the Dutch Public Prosecutor’s Office.
CEO Gary Nagle said that they recognize the misconduct and have cooperated with the authorities, and stressed that this is not tolerable at Glencore. He said they have taken significant steps to build and implement a “world-class” Ethics and Compliance Program.
These facts reinforce the importance for companies to have compliance programs that go beyond paper and legal compliance to protect the company and its board of directors in the event of corruption. It is also essential that these programs are governed not only by local regulations, but also by global ones, in order to prevent the risks to which they are exposed in each subsidiary in time, and not ex-post.
Image: America Economía