Glencore Plc units agreed to plead guilty to charges including bribery and price manipulation as part of a sweeping settlement with authorities in the U.S., UK and Brazil to settle long-running corruption probes that have hung over the commodities giant for years.
Glencore expects the total penalties will be roughly in line with the $1.5 billion it set aside earlier this year, the company said in a statement, although the payment to the UK will only be finalized after a hearing next month. The misconduct spanned businesses and activities from bribery and corruption in Brazil, Venezuela and five African nations, to price manipulation in U.S. fuel-oil markets.
While the settlements will help remove a question mark that has overshadowed the company’s business for years, it also still faces investigations in Switzerland and the Netherlands. Glencore shares earlier jumped as much as 5.3% before paring gains to close 1.3% higher in London. The commodity trader and miner had indicated it expected to resolve the UK, U.S. and Brazilian investigations this year.
Glencore is the largest among a handful of companies that dominate global trading of oil, fuel, metals, minerals and food, although most of its rivals remain privately held. Over the years, the industry had been willing to do business in some of the poorest countries with the most corrupt governments, often relying on middlemen to help secure deals.
While the expected total payment is among the largest anti-corruption fines on record, it’s a relatively trifling amount for Glencore. The company is expected to earn more than $17 billion this year, according to analysts’ consensus, meaning that it would make back the $1.5 billion in less than 5 weeks.
Glencore expects to pay about $1 billion to U.S. authorities after accounting for credits and offsets payable to other jurisdictions and agencies, and about $40 million to Brazil, the company said. It said it doesn’t anticipate that the amount to be paid as part of the UK resolution will result in the total amount differing materially from the $1.5 billion previously disclosed.
“Glencore shouldn’t be allowed to gloss over what these charges reveal,” said Alexandra Gillies, an adviser at the Natural Resource Governance Institute. “These are some of the poorest countries in the world, countries where citizens have suffered the terrible costs of corruption for many years.”
For Glencore, the investigations had overshadowed the last years at the helm for former Chief Executive Officer Ivan Glasenberg, who built the company in its current form.
“It’s a good day for them to finally get this done because it’s been hanging over them for a while,” said Ben Davis, a mining analyst at Liberum Capital. “It at least allows them to start to move forward.”
Earlier Tuesday, Shaun Teichner, the general counsel for the company, told a federal judge in New York that Glencore International AG knowingly and willingly entered into a conspiracy to violate the Foreign Corrupt Practices Act by making payments to corrupt government officials. At a near-simultaneous hearing in London, a Glencore lawyer said that Glencore Energy UK Ltd. will plead guilty to seven counts of bribery and international corruption.
Glencore’s agents and employees paid more than $25 million worth of bribes for preferential access to oil, the UK’s Serious Fraud Office said in a statement. A London judge will sign off on separate penalties for Glencore at a sentencing hearing June 21. A tentative sentencing date in New York has been set for Oct. 3.
Last year, a former Glencore trader pleaded guilty in the U.S. to participating in an international scheme to bribe officials in Nigeria to win favorable treatment from the state-owned oil company.
“We acknowledge the misconduct identified in these investigations and have cooperated with the authorities,” Chief Executive Officer Gary Nagle said in the statement. “This type of behavior 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.”
