On May 24, 2022, Glencore International AG (Glencore), a multi-national commodity trading and mining company based in Switzerland, and Glencore Ltd., Glencore’s US commodities trading arm, entered separate guilty pleas for conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act and for conspiring to commit commodity price manipulation, respectively. The companies agreed to pay a combined total of more than $1.1 billion in fines and forfeitures as part of a coordinated resolution with criminal and civil authorities in the US (Department of Justice and Commodity Futures Trading Commission), UK, and Brazil. The resolutions come after Glencore plc, Glencore’s parent company, had previously announced investigations by the CFTC and the UK’s Serious Fraud Office, and, in February 2022, had announced it had set aside $1.5 billion in anticipation of resolving US, UK, and Brazil bribery investigations.
In the FCPA criminal case, filed in the Southern District of New York, Glencore admitted to engaging in a bribery scheme between 2007 and 2018 that involved improper payments made to foreign officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, the Democratic Republic of the Congo, Venezuela, and Brazil. The bribes were paid to obtain crude oil and refined petroleum products from state-owned entities, to obtain favorable outcomes in a government audit and in a breach of contract lawsuit with a third party, and to collect on outstanding invoices from state-owned entities. According to the DOJ’s press release, these corrupt payments were made “with the approval, and even encouragement, of [Glencore’s] top executives.” In connection with this conduct, Glencore agreed to pay over $428 million in criminal fines and forfeit over $272 million, although the DOJ credited against these amounts about $91 million paid to the CFTC, about $136 million paid to UK enforcement authorities, and about $30 million paid to Swiss enforcement authorities (assuming a resolution is reached with Swiss authorities within one year). The fine imposed by the DOJ is a 15% discount off of the bottom of the applicable Sentencing Guidelines range due to the company’s “partial cooperation and remediation.”
In the criminal commodity price manipulation case, filed in the District of Connecticut, Glencore Ltd. admitted to engaging in a scheme to manipulate price assessments issued by S&P Global Platts. Specifically, Glencore Ltd. and its co-conspirators submitted bids and offers (orders to buy and sell) solely to manipulate the Platts price assessments and not for “any legitimate economic reason.” The price assessments are commonly used as pricing terms in certain commodities contracts. As part of its guilty plea, Glencore Ltd. agreed to pay a criminal fine of over $341 million and to forfeit over $144 million, although the DOJ credited against these amounts about $242 million in payments made to the CFTC. Under both plea agreements, Glencore and Glencore Ltd. must retain an independent compliance monitor for three years.
On the same day, Glencore and Glencore Ltd. resolved an investigation by the CFTC. The CFTC found that Glencore and Glencore Ltd. had manipulated price assessments, had misappropriated confidential information from state-owned entities, and had paid bribes to obtain preferential treatment in oil and oil product transactions. The CFTC ordered Glencore and Glencore Ltd. to pay about $866 million in civil penalties and about $321 million in disgorgement, although the CFTC credited against this amount about $853 million in penalties and forfeitures made to the DOJ. The CFTC resolution also requires Glencore and Glencore Ltd. to retain an independent monitor.
The UK’s Serious Fraud Office announced that it had charged Glencore Energy (UK) Ltd, a wholly-owned subsidiary of Glencore based in the UK, with seven counts, including five counts of bribery and two counts of failure to prevent bribery under the UK Bribery Act 2010. In a press release, Glencore stated that Glencore Energy (UK) Limited had “indicated” that it would plead guilty to the charges. The penalty to be paid will be determined at a sentencing hearing currently scheduled for June 21, 2022.
Glencore also entered into an agreement with Brazilian authorities to pay more than $39 million to resolve an investigation related to bribery allegations concerning Petrobras, Brazil’s state-owned energy company. According to Glencore, these allegations arose form Brazil’s sprawling “Operation Car Wash” investigation.
DOJ Press Release | AG Garland Statement | CFTC Press Release | CFTC Order | SFO Press Release | Glencore Press Release | Glencore Intl Information | Glencore Intl Plea Agreement | Glencore Ltd Information | Glencore Ltd Plea Agreement