Blog News Events Publications Directory Community Industry Voices Media

Glencore to pay £281mn in “landmark” West Africa bribery case

Commodity trader Glencore has been ordered to pay £281mn for its role in bribing officials in West Africa in exchange for lucrative oil contracts, the first case of its kind brought under UK corruption law. 

Glencore Energy UK, a London-based subsidiary of the Swiss trading giant, was today ordered by a UK court to pay a fine of £183mn, plus a confiscation order totalling £93mn and legal costs of around £4.5mn incurred by the Serious Fraud Office (SFO). 

The company pleaded guilty in June to seven counts under the Bribery Act 2010, following illicit payments related to oil transactions in Nigeria, Ghana, Malawi, Cameroon and Côte d’Ivoire, as well as failing to prevent bribery in Equatorial Guinea and a then-newly independent South Sudan. The charges relate to activity undertaken between July 2011 and April 2016. 

AdvertisingBrady Technologoes
AdvertisingFendahl CTRM Technology

“The corruption is of extended duration, and took place across five separate countries in West Africa, but had its origins in the West Africa oil trading desk of the defendant in London,” Mr Justice Peter Fraser said in his sentencing remarks. 

“It was endemic amongst traders on that particular desk. Bribery is a highly corrosive offence. It quite literally corrupts people and companies, and spreads like a disease. Honest businesses miss out on legitimate opportunities, and honest employees and officials suffer, as a result of it.” 

As well as sustained criminality, Glencore staff used “sophisticated devices” to disguise their actions, including drawing large sums of cash under false pretences, Justice Fraser said. 

“It is clear that for some counts, the same techniques were used month after month, for the whole period covered by the relevant count in the indictment,” he said. “Bribery was clearly part of the culture for a number of personnel on the West Africa desk.” 

The order follows Glencore’s announcement in May it would pay US$1.1bn penalties and forfeiture to federal authorities in the US, as well as US$39.6mn to Brazilian federal prosecutors, to settle what attorneys described as bribery on a “staggering” scale. 

SFO director Lisa Osofsky says today’s sentencing concludes a “landmark case in UK anti-bribery enforcement”, noting it is the first time under current legislation that a corporate has been convicted for actively authorising bribery, rather than failing to prevent it. 

“For years and across the globe, Glencore pursued profits to the detriment of national governments in some of the poorest countries in the world,” she says. “The company’s ruthless greed and criminality have been rightfully exposed.” 

In a statement issued following the sentencing, Glencore chairman Kalidas Madhavpeddi says: “The conduct that took place was inexcusable and has no place in Glencore.” 

Clare Montgomery KC, representing Glencore in the case, said during proceedings that the company “unreservedly regrets the harm caused by these offences”, and that today, such practices “do not exist in any form in any of the Glencore companies”. 

Aggravating factors for the penalty include Glencore’s attempts to conceal its misconduct through false invoicing and fake descriptions for cash withdrawals. 

Mitigating factors include Glencore’s guilty pleas, its full co-operation with the investigation, its own launch of an internal review undertaken by external professionals, and its willingness to share documents and other information with the SFO. 

 

Service fees and private jets 

Court documents reveal that between March 2012 and April 2014, Glencore used an agent to pay bribes of around US$4.6mn to officials at the Nigeria National Petroleum Corporation (NNPC).  

Invoices for service fees were generated “to give the illusion that the bribes advanced to that agent were payments to him for legitimate services”, Justice Fraser said. 

A similar technique was used to bribe Ghanian company Ontario Trading SA, which received crude oil allocations from NNPC. 

Bribes were also paid to NNPC to secure oil allocations on behalf of another trader, Petroleos de Geneve, which would then be sold onto Glencore at the official Nigerian selling price. 

Between March 2012 to March 2015, Glencore paid bribes to officials at Cameroon’s national oil and gas company and oil refinery in order to obtain “favourable treatment in relation to the allocation of and sale of crude oil”, with payments misdescribed in internal systems to disguise their true purpose. 

And service fees to an agent were used for bribes in Côte d’Ivoire, with a loan facility set up to avoid Glencore’s internal controls on advance payments. 

The SFO’s case summary also details Glencore’s attempts to gain a foothold in South Sudan’s oil market within days of the country gaining its independence in July 2011. 

A Glencore entity had previously agreed to establish a joint venture, Petronile, with South Sudan’s state-owned oil company in order to facilitate sourcing and international marketing of the country’s oil products, it says. 

However, the newly appointed energy and mining minister instead opted to bypass Glencore. Describing this development as a “considerable setback”, with Glencore having already found a buyer and incurred shipping costs, a delegation from the company travelled to South Sudan to resolve the issue. 

In August 2011, an unnamed individual associated with Glencore requested to withdraw US$800,000 ostensibly for “opening office in South Sudan”, the SFO says. 

The same individual travelled to the country by private jet with the withdrawn cash, where it was ultimately used to pay bribes to government officials. 

“Within days of the arrival of the cash in Juba… Glencore’s fortunes changed” and Glencore was invited to bid for crude oil cargoes, the SFO says. 

In November the same year, the Petronile joint venture was informed it was excluded from the tender process for December’s oil cargoes.  

A Glencore executive requested a withdrawal of US$275,000 for South Sudan office-related costs, and the next day Petronile was offered 600,000 barrels of crude oil directly.  

“The withdrawal of the cash coincided with meetings between Glencore executives and the President of South Sudan’s assistant in Zurich and London,” the SFO says. 

The post Glencore to pay £281mn in “landmark” West Africa bribery case appeared first on Global Trade Review (GTR).

Go to the Source – Glencore to pay £281mn in “landmark” West Africa bribery case

Complexity in cocoa trading systems

Published 23 November 2022