Glencore Reaches Coordinated Resolutions with US, UK and Brazilian Authorities
On 24 May 2022, Glencore announced resolutions with authorities in the United States, the United Kingdom and Brazil to resolve investigations into past practices at certain Group businesses.
The following FAQ provides further information about these resolutions.
1. Who are these agreements with and what are their respective terms?
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, $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. 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 Energy UK Limited has also 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 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 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 the US, UK and Brazilian resolutions differing materially from the $1,500 million provision recorded in the Company’s FY2021 results.
2. What specific claims does this settlement resolve?
The coordinated resolutions 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 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.
3. Who will be Glencore’s independent compliance monitors?
Under the terms of the DOJ resolutions, Glencore has agreed to the appointment of independent compliance monitors 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 is in the process of identifying monitor candidates for submission to US authorities in accordance with the terms of the agreements. The Company looks forward to working with the monitors to evaluate the effectiveness of its compliance programme and internal controls, including enhancements that it has already made in its compliance programme.
4. What action has Glencore taken to address past misconduct?
Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred. 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. It 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.
5. What has Glencore done to help prevent something like this from happening again?
Glencore has taken significant action towards building and implementing a best-in-class Ethics and Compliance Programme. We are committed to continuously improving this programme, and these efforts have included:
- Strengthening our 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 our 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 our systems and verify that controls are working as intended.
You can find more information about our compliance initiatives in our presentation and.
6. Will Glencore continue to do business in the countries where the misconduct took place?
Yes. Glencore has taken significant action and invested substantial resources to ensure that our core controls are entrenched and effective in every corner of our operations and that improper conduct has no place anywhere we do business.
Importantly, this work has included 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. We have no third-party business generating intermediaries in our oil marketing business and have engaged leading external advisors to review Glencore’s systems and verify that controls are working as intended.
7. What is the status of the other related investigations into Glencore?
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 a previously disclosed investigation of similar scope by the Dutch Public Prosecution Service (“OM”). The timing and outcome of these investigations remain uncertain.
8. Where can I find out more about Glencore’s Ethics and Compliance Programme?
You can find more details about Glencore’s Ethics and Compliance Programme on our website.
For further information please contact:
t: +41 41 709 28 80
m: +41 79 737 56 42
t: +41 41 709 24 62
m: +41 79 904 33 20