Glencore Energy (UK) Ltd has today been sentenced to a fine of £182m and ordered to pay a confiscation order of £93m relating to charges of bribery brought against it by the Serious Fraud Office (SFO). The company admitted to seven counts of paying bribes and failure to prevent bribery of over $27 million to secure access to oil, including increased cargoes, valuable grades of oil and preferable dates of delivery. Glencore has also been ordered to pay the SFO's costs of £4.5m. The total financial penalty of £281m is to be paid within 30 days.
The bribes were paid in connection with Glencore's oil operations in Africa, notably Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.
The Court heard that in Nigeria, Glencore’s middlemen paid bribes to officials at NNPC, Nigeria’s state-controlled oil firm, to win their pick of the most profitable shipments of crude oil.
Glencore executives paid money to a South Sudanese firm, whose owners had access to the president of the newly-independent country. That money was later used by the firm to pay government ministers to influence political decisions.
The payments were made after South Sudan’s energy minister threatened to scupper Glencore’s plans to launch a joint-venture with the country’s national oil company, Nile Petroleum Corporation.
Funds paid as bribes to officials were described as “commission fees” or “loan repayments” when recording the payments on Glencore’s internal accounting system.
The SFO told Southwark Crown Court that Glencore played "a leading role in organised, planned , illegal activity" that was "authorised at a senior level".
Seventeen individuals, including some former Glencore executives, remain under investigation by the SFO. Charging decisions have not yet been made and as a consequence, reporting restrictions are in place protecting their identities.
The SFO launched an investigation in June 2019, working in parallel with the US authorities and collaboratively with Dutch and Swiss prosecutors.
Glencore has also reached a resolution with the US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).The plea agreements entered into by Glencore International AG and Glencore Ltd with the DOJ each provide for the appointment of an independent compliance monitor for a period of three years to assess and monitor the Company’s compliance with the agreements and evaluate the effectiveness of its compliance programme and internal controls.
Glencore has further agreed a resolution signed with the Brazilian Federal Prosecutor’s Office (MPF) in connection with its bribery investigation into the Group.
The aggregate penalties and amounts payable to the US and Brazilian authorities amounts to $1billion.
The investigation can be seen as a successful example of international regulatory cooperation and for the SFO, a swift and welcome resolution at a crucial time for the agency. However, there will be pressure on the SFO to hold implicated individuals to account.
The Judge's sentencing remarks can be read here.
Other companies tempted to engage in similar corruption should be aware that similar sanctions lie ahead.