Mining and commodities conglomerate Glencore is unlikely to feel the pinch from the R5.7 billion (£276 million) fine imposed on its subsidiary, Glencore Energy UK, for bribery in African jurisdictions in cash-for-oil deals.
Since the corruption was exposed the group has gone to the trouble of cleaning house and ousting former CEO Ivan Glasenberg, under whose watch the practice evolved.
Glencore’s profits more than doubled to a record R342bn in the first half of the year, bolstered by a surge in coal prices and its commodity portfolio as Russia waged war on Ukraine, making the fine a mere drop in the ocean.
“I thought the fine would be a lot higher. They are hardly likely to suffer reputational damage as well. The market has been expecting this for a long time and with Ivan Glasenberg, the person who caused it long gone, there is someone a lot more acceptable to the market in Gary Nagle,” said a market analyst who declined to be named.
Nagle is the current CEO, who has to deal with the bribery scandal.
The analyst said Glencore would unlikely face suspension or being barred from trading in several jurisdictions, as was the case with Bain & Company, which has been suspended from trade in the UK and from South African government business contracts.
Glencore South Africa would not be drawn to comment on the matter.
But the African Energy Chamber has been calling for stronger action against Glencore and says its leadership must be held accountable for the company’s corrupt behaviour.
In September, the executive chairperson of the African Energy Chamber, NJ Ayuk, said, “I realise that more than $1.5 billion in penalties have been imposed on Glencore by the US, the UK and Brazil — and more could follow after Swiss and Dutch investigations are completed. But the repercussions shouldn’t be limited to fines. No company has ever pleaded guilty to this much corruption. We find it extremely troubling that the executives who approved and benefited from the corruption have, as of yet, gone unscathed.
“The African Energy Chamber strongly believes that Glencore’s leaders must be held accountable for their actions. Anything less sends the message that ‘bribery is a necessary evil’ in regions of the world like Africa. That is not true. Now is the time to make that reality abundantly clear to corporate leaders who do business here,“ he said.
Glencore’s shares closed 0.7% lower on the JSE yesterday, at R106.76. The shares have ridden a commodity price boom over the past three years, and are up 129.43%.
Yesterday, Glencore was fined £276m by the Southwark Crown Court in London after pleading guilty to numerous bribes amounting to more than £29m to government officials for access to oil rights across Africa.
The group admitted to seven counts of bribery across five countries including Nigeria and Cameroon, following a long-running Serious Fraud Office investigation. Prosecutors focused on the firm’s London trading desk, saying Glencore’s traders and executives paid more than $28 million in bribes to secure access to oil cargoes between 2011 and 2016.
In a statement, Glencore chairperson Kalidas Madhavpeddi said the hearing followed Glencore’s announcement in May that it had reached co-ordinated resolutions of investigations by authorities in the UK, the US and Brazil into past activities in certain group businesses related to bribery, and separate US investigations related to market manipulation.
“Glencore continues to co-operate with a previously disclosed and ongoing investigation by the Office of the Attorney General of Switzerland into Glencore International 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,” he said.
Glencore initially set aside $410m for the UK fine in the 2021 accounts of its British subsidiary. In May, Glencore said it expected to pay around $1.5bn in total to resolve three investigations.
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