A federal judge in New York this week fined Swiss-based commodity trading and mining giant Glencore $700m for corrupt practices while once again failing to name the guilty parties.
Judge Loma Schofield on 28 February imposed a $428.5m fine on the company and another $272.2m in criminal forfeiture – the seizure of money connected to the illegal activity – after Glencore pleaded guilty last May to violating the Foreign Corrupt Practices Act.
The fine will be split three ways with US authorities getting $262.6m, UK authorities receiving $136.2m and Swiss authorities the remaining $29.7m.
Federal prosecutors allege that between 2007 and 2018, Glencore paid more than $100m in bribes to obtain business in Nigeria, the Democratic Republic of Congo, Cameroon, Côte d’Ivoire and Equatorial Guinea as well as Brazil and Venezuela.
Bribery probe
The latest penalties are part of a $1.5bn payout stemming from bribery and market-manipulation probes in the United States, the United Kingdom and Brazil. The latest fine is based on “the nature, seriousness, and pervasiveness of the offense conduct,” Schofield wrote, “including a scheme to pay over $100m to intermediaries with the intent that a significant portion of the payments is used for bribes to government officials in numerous countries for over a 10-year period carried out by high-level employees and agents of the company.”
The company will also be required to employ an independent compliance monitor for the next three years to ensure it complies with the terms of its agreement with the US government.
Skeptics point out that, while sizable, the penalties are dwarfed by Glencore’s profits, which amounted to $21.3bn in 2021.
In addition, the new ruling — just like a $300m penalty imposed in London in November – fails to name any of the perpetrators other than Glencore trader Anthony Stimler, who confessed in 2021 to distributing bribes on the company’s behalf. The New York filing says three other unnamed Glencore executives, two traders and employees from Glencore Brazil, Glencore Mexico and Glencore Mining Company were all in on the scheme, along with a high-ranking official in the Nigerian Ministry of Petroleum Resources and a senior official with Nigeria’s Pipelines and Product Marketing Company.
“This is the proverbial case of whether the glass is half full or half empty,” says J. Peter Pham, a former US special envoy for the Great Lakes region of Africa who is currently advising the DRC on some of its mining contracts.
“While it is significant for the company to plead guilty and acknowledge its responsibility, the reality is that the penalty it is paying is easily dwarfed by the value it gained through its prior bad conduct,” Pham tells The Africa Report.
“Moreover, none of the individuals who engaged in the corrupt behaviour on its behalf have had to personally suffer the legal consequences of their criminal conduct; in fact, they may continue to benefit from it due to their vested holdings in Glencore.”
Pham adds that while the company “has accepted an outside monitor to ensure it has indeed put the prior corrupt culture behind it, it remains to be seen how rigorous this proves to be.”
Retaliation
Separately, the same judge on 27 February ordered the Swiss multinational to pay $29.7m to a DRC medical services company, Crusader Health, that provided medical care to mining communities until it was forced to shut down by an indirect subsidiary of Glencore.
Crusader signed contracts with two DRC mining companies, Kamoto Operating Limited and DRC Copper and Cobalt Project SARL, in 2007 and 2008. Its troubles began in 2009 when Kamoto Copper Company (KCC), in which Glencore had a majority stake, took over the contracts and promptly hired a new medical manager.
According to the judge’s ruling, in late 2009 a KCC executive called Crusader’s co-founder, South African doctor Ian Hagen, and told him that the issue should be “swept under the carpet” or the executive would make sure Crusader “will never operate in the DRC again.” The executive also allegedly threatened the physical safety of Hagen and his family.
New allegations
The latest US action comes as Glencore continues to collect unflattering headlines over how it operates in Africa.
Last week The Sentry, an investigative nonprofit that tracks corruption on the continent, issued a report detailing how a 2018 loan deal between a South Sudanese company and a regional bank, backed by the government in Juba, created fertile ground for “illicit business practices including bribery, tax evasion, and trade-based money laundering.” A Glencore subsidiary, Glencore Singapore Pte Ltd, bought and shipped oil cargo awarded to South Sudan’s Trinity Energy, shipping $376m worth of South Sudanese crude in 2019, according to The Sentry.
“The absence of checks to government power in South Sudan opens the door to commercial dealings that are based on personal relationships and the exchange of benefits and favours,” the report states.
“The result is that companies and the executive branch can conduct business in the absence of oversight or transparency and with scant regard to the rule of law, economic sustainability, and the wellbeing of the nation and its citizens. State officials and businesspeople operate in an environment of impunity that incentivises rather than deters negligence, rent-seeking, and illegal activity.”
Debra LaPrevotte, a senior investigator at The Sentry, called the latest fine “a good outcome and hopefully one more step on the road to cleaning up bribery and corruption in the oil industry.”
“Actions have consequences,” she says. “By robbing South Sudan, Nigeria, Venezuela, and the DRC of millions in revenue, Glencore’s corrupt actions have devastated the people of these countries by stripping them of basic necessities and undermining their legitimate aspirations.”
The Africa Report
