GLENCORE ENERGY UK Ltd will pay £280,965,092.95 million (ie over 400 million US dollars) after a Serious Fraud Office (SFO) investigation revealed that the company paid US$29 million in bribes in order to gain preferential access to oil in Africa.
Sentencing at Southwark Crown Court on Thursday 3 November, Mr Justice Fraser reflected in his judgement that: “The facts demonstrate not only significant criminality, but sophisticated devices to disguise it”. The Judge sentenced the commodities trading giant to pay a financial penalty in response to the seven charges of bribery representing “sophisticated offending that was sustained over prolonged periods of time”.
Mr Justice Fraser also remarked on the culture that developed at Glencore “in which bribery was accepted as part of the West Africa desk’s way of doing business… The corruption is of extended duration… It was endemic among traders on that particular desk… Bribery is a highly corrosive offence. It quite literally corrupts people and companies and spreads like a disease.”
Commenting on the financial penalty – the largest ever for an SFO case following a conviction, in fact – Mr Justice Fraser noted: “This is a significant overall total. Other companies tempted to engage in similar corruption should be aware that similar sanctions lie ahead.”
Back in June this year, Glencore pleaded guilty to seven counts of bribery after an SFO investigation exposed that the organisation had paid bribes to maximise its oil trading profits in five African countries.
The conviction includes the first-ever use of substantive bribery offences for a company, meaning that senior individuals at Glencore authorised the bribery instead of simply failing to prevent it from occurring.
The financial penalty ordered by the Judge includes a fine, a confiscation order for the profit Glencore obtained from bribes and the SFO’s costs in full.
The confiscation order is not only the largest-ever for an SFO case, but the total amount the company will pay (ie £280 million) is the highest-ever ordered in a corporate criminal conviction.
The SFO opened an investigation into Glencore in 2019 focused on the activity of the London-based West Africa desk. This desk sourced and traded in crude oil from countries across Africa.
The investigation uncovered a trail of text messages, large cash withdrawals and deliberately concealed payments that showed Glencore paid bribes worth a total of $29 million to secure its access to oil in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.
In Nigeria, Equatorial Guinea and the Ivory Coast, Glencore was revealed to have used well-connected local agents to funnel bribes into state-owned oil companies and Government ministries, often disguising a bribe as an unspecified ‘service fee’, ‘signing bonus’ or ‘success fee’ in financial reports.
In Cameroon and South Sudan, the approach used was different. In August 2011, two Glencore executives from the West Africa desk flew to South Sudan by private jet, carrying with them $800,000 in cash. The money had been withdrawn from the cash desk at Glencore plc’s Swiss headquarters and recorded as expenses for “opening [the] office in South Sudan”.
The money was paid via a local agent to officials in the newly established Government in South Sudan. This was followed by a further $275,000 in cash.
Between 2012 and 2015, another Glencore trader withdrew a total of $8.2 million in cash from the company’s Swiss cash desk, recorded as ‘office expenses’, despite there being limited evidence of any office operating in the country. This, along with $5.5 million of ‘service fees’ withdrawn in cash by a Nigerian agent, was periodically flown, again on private jets, to Cameroon. It was used to bribe officials in the country’s national oil and gas companies.
View of the SFO
Lisa Osofsky, director of the SFO, said: “The SFO has brought justice to bear and exposed what was a deliberate and endemic culture of bribery at Glencore. This is a landmark case in UK anti-bribery enforcement, marking the first time since the introduction of the Bribery Act 2010 that a corporate entity has been convicted for the active authorisation of bribery, rather than purely a failure to prevent it from happening.”
Osofsky concluded: “For years now and right across the globe, Glencore pursued profits to the detriment of national Governments located in some of the poorest countries in the world. The company’s ruthless greed and criminality have been rightfully exposed.”
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