Glencore to pay $1.06bn in penalties as US, UK, Brazil wrap up corruption investigations

GLENCORE is to pay about $1.06bn in penalties following resolutions agreed with anti-graft organisations in the US, UK and Brazil, the company said on Tuesday.

Other investigations by Swiss and Dutch authorities have yet to be concluded, whilst the UK Serious Fraud Office (SFO) is running a separate investigation into Glencore Energy UK. Concering the outcome of the latter, Glencore said the penalty was unlikely to see the total sanction from the US, UK and Brazilian investigations differ from a $1.5bn provision it set down in December.

“We acknowledge the misconduct identified in these investigations and have cooperated with the authorities,” said Gary Nagle, CEO of Glencore in a statement. “This type of behaviour has no place in Glencore.”

Under terms of the US resolutions, Glencore will pay penalties of $700,706,965 to resolve bribery investigations and a further $485,638,885 to resolve market manipulation investigations by the Department of Justice (DoJ) and the Commodity Futures Trading Commission.

Of this amount up to $165,930,959 will be credited against other parallel matters, including in the UK so that the net amount payable to US authorities is expected to be $1,020,414,891, the group said. Glencore has further agreed to pay $39,598,367 under a resolution signed with the Brazilian Federal Prosecutor’s Office related to its bribery investigation into the group, it said.

Glencore Energy UK said today it would plead guilty to charges brought by the SFO in respect of its bribery investigation. The penalty to be paid is to be determined following a sentencing hearing scheduled for June 21.

“Glencore does not currently anticipate that the amount to be paid in respect of the UK resolution will result in the aggregate amount being paid from all of the above (US, UK, Brazilian) resolution differ materially from the $1.5bn provision recorded in the company’s 2021 financial statements,” it said.

Plea agreements with the DoJ provide for the appointment of an independent compliance monitor for three years that will assess the company’s compliance with the agreements as well as evaluate Glencore’s newly installed compliance programme and internal controls.

Nagle said last year that Glencore had made strides in improving its processes and controls including dispensing with third party trading parties in its trading division. Other measures included establishing a centralised, independent “compliance function” run by a compliance officer – a newly created position.

Today’s announcement will further help reduce the overhang that affected Glencore’s valuation in previous years although the provision announced in December helped address market concerns regarding potential financial sanctions.

Glencore said it continued to cooperate with “an ongoing” investigation by the Office of the Attorney General of Switzerland into Glencore International AG for failure to have systems in place to prevent alleged corruption. An investigation of a similar scope had been launched by the Dutch Public Prosecution Service.

Glencore said the timing and outcome of these investigations “remain uncertain”.