Glencore ordered to pay £281m for African bribes

It has been a torrid week for Glencore which will be forced to pay £281m in fines, confiscated profits and costs as punishment for ‘sustained criminality’ in Africa. It is the largest ever payment imposed on a company in a UK court. Legalbrief reports that the mining and commodities giant pleaded guilty to numerous bribes amounting to more than £29m to government officials for access to oil rights across the continent. A judge at Southwark Crown Court in London last week said offences by a UK subsidiary of Glencore showed high culpability for the ‘highly corrosive’ offence of bribery. The Guardian reports that Glencore received a one-third discount on the fine for pleading guilty to the bribery charges, which were brought by the UK’s Serious Fraud Office (SFO). The court had heard how Glencore employees and its agents had given 'bungs' to unnamed officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan. Glencore employees flew cash bribes to Africa in private jets and used ‘sham’ documents to hide the true purposes of cash, the SFO said. Senior Glencore employees signed off on cash withdrawals used for the pay-offs. The company’s chair, Kalidas Madhavpeddi, attended last week’s hearing in person.

In a statement after the sentence, Madhavpeddi said the company was now committed to operating transparently ‘with openness and integrity at the forefront’ and has taken ‘significant action’ on improving its ethics and compliance. ‘The conduct that took place was inexcusable and has no place in Glencore,’ he said. The confiscation order, worth £93.5m, was the biggest ever in the UK, and it was the biggest ever corporate penalty won by the SFO. The fine, worth £183m, was also one of the biggest in UK history. Glencore will also pay the SFO’s costs of £4.6m. 

Prosecutors focused in on the firm’s London trading desk, saying Glencore’s traders and executives paid millions in bribes to secure access to oil cargoes between 2011 and 2016. The Daily Maverick reports that the SFO fine represents about half a week’s profit for the booming firm – Glencore made $100m-a-day in the first six months of the year. In the first-half alone its core profit hit a record $18.9bn, propelled by record coal prices and its best ever trading performance. The world’s top coal shipper, has been one of the biggest winners from the global energy crunch as demand surges for fossil fuels. Its trading business has also cashed in on dramatic price swings across markets from metals to oil following Russia’s invasion of Ukraine.

A report on the IoL site notes that the record fine is little more than slap on the wrist. Since the corruption was exposed the group has gone to the trouble of cleaning house and ousting former CEO Ivan Glasenberg, under whose watch the practice evolved. ‘I thought the fine would be a lot higher. They are hardly likely to suffer reputational damage as well. The market has been expecting this for a long time and with Ivan Glasenberg, the person who caused it long gone, there is someone a lot more acceptable to the market in Gary Nagle,’ said a market analyst who declined to be named. The analyst said Glencore would unlikely face suspension or being barred from trading in several jurisdictions, as was the case with Bain & Company, which has been suspended from trade in the UK and from South African Government business contracts. The African Energy Chamber has been calling for stronger action against Glencore and says its leadership must be held accountable for the company’s corrupt behaviour. In September, the executive chairperson of the African Energy Chamber, NJ Ayuk, said ‘the repercussions shouldn’t be limited to fines’. ‘No company has ever pleaded guilty to this much corruption. We find it extremely troubling that the executives who approved and benefited from the corruption have, as of yet, gone unscathed,’ he said.

Despite the humiliating ruling, it was business as usual for Glencore which has reportedly been in talks with South African-born Elon Musk over the possibility of Telsa buying as much as a fifth of the mining giant. Two sources familiar with the matter told the Financial Times that discussions for the electric car and battery maker buying a 10 to 20% stake in Glencore began last year and continued in March when Nagle, Glencore's CEO, visited Tesla's California factory. The electric car industry is reliant on mining companies for raw materials such as cobalt, lithium, and nickel for batteries. Fin24 reports that talks between the parties ended without a deal, as Tesla was reportedly concerned about whether Glencore's coal mining business was compatible with its environmental goals. Musk had previously tweeted that ‘Tesla might actually have to get into the mining & refining directly’, referencing rising lithium prices. Glencore is one of the world's largest cobalt suppliers, and it currently has a deal with Tesla for up to 6 000 tons of cobalt a year to build lithium-ion batteries at the company's Shanghai and Berlin Gigafactories.

Legalbrief reports that Glencore has major cobalt operations in the DRC which have been linked to human rights abuses and use of child labour. Last month, a union network meeting was held in the DRC against the backdrop of cobalt’s role in the low carbon energy transition and the DRC’s strategic role in the battery supply chain. Participants observed the difference in Glencore South Africa operations in comparison to its behaviour in the DRC, mentioning industrial relations, stakeholder engagement, tripartite dialogue, the advancement of women employment and just transition. The findings of Electric vehicles and workers’ rights abuses DRC’s industrial cobalt mines by corporate watchdog Rights and Accountability in Development and Centre d’Aide Juridico-Judiciaire, a Congolese legal aid centre specialising in labour rights, mirror IndustriALL’s report after a mission to the DRC in 2018. ‘It is unacceptable that large scale mining is involved, with almost impunity, in these large scale abuses of mineworkers’ rights. The situation has not improved since IndustriALL’s mission in 2018. There is still no local dialogue with management, even global dialogue, although not institutionalised with IndustriALL, continues unsystematically,’ said IndustriALL mining director Glen Mpufane.