THE mining and commodities giant Glencore will be forced to pay £281 million in fines, confiscated profits and costs as punishment for ‘sustained criminality,’ the largest ever payment imposed on a company in a UK court.
A judge at Southwark crown court in London on Thursday said offences by a UK subsidiary of Glencore showed high culpability for the ‘highly corrosive’ offence of bribery, The Guardian newspaper reported.
Glencore received a one-third discount on the fine for pleading guilty to the bribery charges, which were brought by the UK’s Serious Fraud Office (SFO).
The court had heard how Glencore employees and its agents had given bungs worth $27m to unnamed officials in Nigeria, Cameroon, Cote d’Ivoire, Equatorial Guinea and South Sudan, causing harms worth $128 million – £81 million at the time of the offences.
Glencore employees flew cash bribes to Africa in private jets and used ‘sham’ documents to hide the true purposes of cash, the SFO said. Senior Glencore employees signed off on cash withdrawals used for the pay-offs, according to The Guardian.
The company’s chair, Kalidas Madhavpeddi, attended the hearing in person for the second day, wearing a facemask in court.
In a statement after the sentence, Madhavpeddi said the company was now committed to operating transparently ‘with openness and integrity at the forefront’ and has taken ‘significant action’ on improving its ethics and compliance. ‘The conduct that took place was inexcusable and has no place in Glencore,’ he said.
Mr Justice Fraser said corruption was “endemic” within the African oil trading desk of Glencore Energy UK Ltd, which is wholly owned by the FTSE 100 company Glencore.
The SFO asked for anonymity for the employees who allegedly carried out the bribery while it considers whether to bring charges against individuals. The judge said he made no findings about individuals.
It was a landmark case for the SFO, as it was the first conviction of a company on charges of authorising bribery. Glencore also pleaded guilty on two charges of the related offence of failing to prevent bribery.
The confiscation order, worth £93.5 million, was the biggest ever in the UK, and it was the biggest ever corporate penalty won by the SFO. The fine, worth £183 million, was also one of the biggest in UK history. Glencore will also pay the SFO’s costs of £4.6 million.
Glencore’s total payments will be larger than the record £264 million fine levied by the UK’s Financial Conduct Authority on NatWest Group last December.
Lisa Osofsky, the SFO director, said she was proud of its Glencore investigation team after a ‘complicated and important case’.
‘Companies that operate in the UK have to play by the rules,’ she said, in a statement outside the court. ‘It’s important to offer a level playing field for all.’
However, the penalties Glencore will pay in the UK are still far below those levied by US authorities, despite the fact that it is listed in London and that much of the corruption involved its west Africa desk based in the British capital.
Glencore has already set aside $1.5bn to cover costs related to the bribery charges. The company agreed in May to pay $1.1bn to US authorities for violations of bribery laws and commodity price manipulation, and had said before that it did not anticipate further costs.
Helen Taylor, senior legal researcher at Spotlight on Corruption, a campaign group, welcomed the fine, but said that ‘the big test for the UK justice system will be whether senior executives at Glencore who masterminded this egregious scheme will be successfully held to account and prosecuted.’
She added that leaving allegedly corrupt officials unnamed deprives people in five countries knowledge of who has received bribes.
Beyond the financial penalty and any further reputational harm, the consequences for Glencore may be limited.
Iskander Fernandez, a partner at the law firm Kennedys, said the primary concern would be that a bribery conviction prevents companies from bidding for some public contracts.
Shareholders including Abu Dhabi’s Mubadala and the Kuwait Investment Authority are also reportedly taking action against the company for damages to the value of its investments in the company.
‘Bar the above, there is nothing else that would prevent a company from moving forward and carrying on with its business – albeit under the watchful eye of the public and/or regulators – following a conviction for bribery,’ Fernandez said.
