Glencore Reaches Coordinated Resolutions with US, UK and Brazilian Authorities

posted: 24/05/2022

Baar, Switzerland
24 May 2022

Glencore cooperated with authorities and has made substantial investments to enhance its Ethics and Compliance Programme
Resolutions involve separate payments to resolve investigations into bribery and market manipulation
Payments for these resolutions not expected to differ materially from existing provision
Swiss and Dutch investigations remain ongoing

Glencore has resolved the previously disclosed investigations by authorities in the United States, the United Kingdom and Brazil into past activities in certain Group businesses related to bribery, and separate US investigations related to market manipulation. Glencore cooperated with these investigations.

Under the terms of the US resolutions, Glencore will pay penalties of $700,706,965 to resolve bribery investigations and $485,638,885 to resolve market manipulation investigations by the Department of Justice (“DOJ”) and the Commodity Futures Trading Commission (“CFTC”). Of this amount, up to $165,930,959 will be credited against other, parallel matters, including in the UK, so that the net amount payable to the US authorities is expected to be $1,020,414,891. Glencore has further agreed to pay $39,598,367 under a resolution signed with the Brazilian Federal Prosecutor’s Office (“MPF”) in connection with its bribery investigation into the Group.

Glencore Energy UK Limited has also today indicated that it will plead guilty to charges brought by the UK Serious Fraud Office (“SFO”) in respect of its bribery investigation. The penalty to be paid will be determined following a sentencing hearing currently scheduled for 21 June 2022.

Glencore does not currently anticipate that the amount to be paid in respect of the UK resolution will result in the aggregate amount being paid for all of the above resolutions differing materially from the $1,500 million provision recorded in the Company’s 2021 financial statements.

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 continues to cooperate with a previously disclosed and ongoing investigation by the Office of the Attorney General of Switzerland (“OAG”) into Glencore International AG for failure to have the organisational measures in place to prevent alleged corruption, and an investigation of similar scope by the Dutch Public Prosecution Service. The timing and outcome of these investigations remain uncertain (see further note 32 of Company’s 2021 financial statements).

Starting before the Company knew of the DOJ’s investigations, Glencore has invested substantial resources towards developing a best-in-class Ethics and Compliance Programme. Glencore has also taken extensive remediation actions, including through the separation or discipline of employees involved in the wrongdoing. The Company has a refreshed Board and management team, who are dedicated to fostering a culture of integrity, responsibility and transparency. The DOJ noted certain enhancements to Glencore’s compliance programme and internal controls in the resolutions.

Kalidas Madhavpeddi, Chairman of Glencore, commented: “Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred. The Board and the management team are committed to operating a company that creates value for all stakeholders by operating transparently under a well-defined set of values, with openness and integrity at the forefront. We want the Glencore of today to be an employer of choice, attracting and retaining the best talent and competing across its sectors not only in terms of the unique value proposition that Glencore has to offer, but also in its commitment to act ethically and responsibly across all aspects of its business.”

Gary Nagle, Chief Executive Officer of Glencore, commented: “We acknowledge the misconduct identified in these investigations and have cooperated with the authorities. This type of behaviour has no place in Glencore, and the Board, management team and I are very clear about the culture that we want and our commitment to be a responsible and ethical operator wherever we work. We have taken significant action towards building and implementing a world-class Ethics and Compliance Programme to ensure that our core controls are entrenched and effective in every corner of our business.”

Significant Steps taken to Enhance Ethics and Compliance Programme

The Group has bolstered its compliance structures and controls through a comprehensive programme built around risk assessment, policies, procedures, standards and guidelines based on international best practice, associated training and awareness initiatives as well as monitoring systems. This has included:

  • Strengthening the Group’s Code of Conduct and launching a comprehensive global awareness and training campaign designed to embed Glencore’s Values throughout its business, set expectations and ensure accountability for all employees;
  • Establishing a centralised, independent and empowered compliance function and, in 2020, appointing a new dedicated Head of Compliance;
  • Making a significant investment in compliance systems and resources, as well as experienced personnel;
  • Significantly enhancing and expanding the Group’s ethics and compliance training programmes;
  • Instituting a comprehensive business partner management programme, including significantly reducing the Company’s use of third-party business generating intermediaries and employing end-to-end controls to oversee their engagement;
  • Implementing extensive monitoring and testing mechanisms, including through the use of data analytics, to assess whether our controls are entrenched and effective across the Group and ensure continuous improvement; and
  • Engaging leading external advisors to review Glencore’s systems and verify that controls are working as intended.

Glencore is committed to transparency about its programme and this year published its first dedicated Ethics and Compliance report, providing a detailed overview of Glencore’s Ethics and Compliance Programme, including a summary of its approach, compliance structure and the various systems and processes that Glencore implements to support its programme and promote an ethical culture.

Further details on Glencore’s compliance initiatives can be found in the presentation and Ethics and Compliance report available here.

Notes for Editors

Terms of the Resolutions

The coordinated resolutions announced today comprise five separate resolutions:

  • In an agreement with the DOJ, subject to final approval by the Court, Glencore International AG has agreed to pay $428,521,173 in fines and $272,185,792 in forfeiture and disgorgement and has pleaded guilty to one count of conspiracy to violate the US Foreign Corrupt Practices Act related to the Group’s past actions in certain overseas jurisdictions. The Company will pay $262,590,214 to the United States, with up to $136,236,140 to be credited against the resolution with UK authorities and up to $29,694,819 to be credited against any potential resolution with Swiss authorities, both in connection with investigations into related conduct. The DOJ resolution provides for forfeiture of $181,457,195 and credits Glencore for $90,728,597 in disgorgement to the CFTC. The DOJ agreement provides for the appointment of an independent compliance monitor for a period of three years to assess and monitor the Company’s compliance with the terms of the agreement and evaluate the effectiveness of its compliance programme and internal controls.
  • In a separate agreement with the DOJ, Glencore Ltd. has agreed to pay a fine of $341,221,682 and forfeiture of $144,417,203 and has pleaded guilty to one count of conspiracy to commit commodity price manipulation related to past market conduct in certain US fuel oil markets. Of this amount, $242,819,443 will be credited against the resolution with the CFTC. The DOJ agreement provides for the appointment of an independent compliance monitor for a period of three years to assess and monitor the Company’s compliance with the agreement and evaluate the effectiveness of its compliance programme and internal controls. 
  • Glencore International AG, Glencore Ltd. and Chemoil Corporation (a Glencore subsidiary) have reached a separate agreement to resolve an investigation by the CFTC in relation to civil violations of the Commodity Exchange Act and CFTC regulations, in connection with past market conduct in certain US fuel oil markets as well as past corrupt practices in certain overseas jurisdictions. The companies have agreed to pay $333,548,040 in civil penalties and disgorgement to the CFTC, with the $852,797,810 balance of the penalty to the CFTC being offset against penalties imposed by other authorities.
  • Glencore Energy UK Limited has been charged with five counts of bribery and two counts of failure to prevent bribery under the UK Bribery Act 2010. Glencore Energy UK Limited appeared today before the Westminster Magistrates’ Court and indicated that it will plead guilty to the SFO’s charges. Glencore Energy UK will now be transferred to the Crown Court for sentencing and determination of the financial penalty.
  • Glencore International AG has separately agreed to pay $39,598,367 under a resolution signed with the MPF in connection with the investigation by the MPF into certain Glencore affiliates in relation to bribery allegations concerning the Brazilian state-owned energy company Petrobras arising from the “Operation Car Wash” global probe.

The aggregate penalties and amounts payable to the US and Brazilian authorities are as follows:

Authority

Aggregate penalty

Credits and offsets

Amount payable by Glencore

DOJ—FCPA

$700,706,965(1)

(up to $136,236,140 credit for payments to the SFO)(2)
(up to $29,694,819 credit for payments to the Swiss)(3)
($90,728,597 credit for disgorgement to the CFTC)

$444,047,409

DOJ—market manipulation

$485,638,885

($242,819,443 credit for payments to the CFTC)

$242,819,442

CFTC

$1,186,345,850

($852,797,810 offset against the DOJ and SFO)

$333,548,040

MPF

$39,598,367

N/A

$39,598,367

Total (excluding SFO and any Swiss/Dutch resolution)

$1,060,013,258

 

(1) This amount includes $181,457,195 in forfeiture to the DOJ and $90,728,597 in disgorgement to the CFTC, which is also included in the CFTC aggregate penalty.
(2) The credit assumes resolution within six months. As noted above, the SFO penalty will only be determined following sentencing.
(3) The credit assumes resolution within twelve months. The Swiss/Dutch investigations remain ongoing with their timing and outcome being uncertain.

For further information please contact:

Investors

Martin Fewings
t: +41 41 709 2880
m: +41 79 737 56 42
martin.fewings@ouramazinggrace.com

Media

Charles Watenphul
t: +41 41 709 2462
m: +41 79 904 33 20
Charles.watenphul@ouramazinggrace.com

Glencore LEI: 2138002658CPO9NBH955

This announcement contains inside information.

Notes for Editors

Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 60 responsibly - sourced commodities that advance everyday life. Through a network of assets, customers and suppliers that spans the globe, we produce, process, recycle, source, market and distribute the commodities that enable decarbonisation while meeting the energy needs of today.

Glencore companies employ around 135,000 people, including contractors. With a strong footprint in over 35 countries in both established and emerging regions for natural resources, our marketing and industrial activities are supported by a global network of more than 40 offices.

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers and consumers of commodities.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.
Glencore recognises our responsibility to contribute to the global effort to achieve the goals of the Paris Agreement. Our ambition is to be a net zero total emissions company by 2050. In August 2021, we increased our medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels.

Disclaimer
The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, “Glencore”, “Glencore group” and “Group” are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies.  Likewise, the words “we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.