Glencore guilty of bribery, market abuse
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The Anglo-Swiss multinational is also involved in an ongoing investigation by the Office of the Attorney General of Switzerland into corruption issues.
"Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred," the company's chairman Kalidas Madhavpeddi said.
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RBC Capital Markets analyst Tyler Broda agreed that Glencore—with new management at the CEO level at each of the divisions—has moved on from its past following almost four years of investigations "and a serious ESG overhang".
"It will continue to operate in challenging jurisdictions, where risks from variant legal regimes will remain, but the lessons learnt from this both from a monetary perspective, but more from the ESG implications the company has faced for the last few years, are not likely to be soon forgotten by management," Broda said.
"Glencore's trading business is now much more reliant on its own infrastructure and long-term partnerships for profitability than it was 10 years ago and we think this, and a wider cultural shift around marketing's place within a public company, makes the risks around new fines or investigations as low," he said.
The terms of the US resolutions will see Glencore pay penalties of $700.71 million to resolve bribery investigations and $485.64 million to resolve market manipulation investigations by the Department of Justice and the Commodity Futures Trading Commission.
Of that, up to $165.93 million 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 $1.02 million, the company said.
A further $39.6 million is to be paid under a resolution signed with the Brazilian Federal Prosecutor's Office in connection with its bribery investigation into the group, Glencore said.
A sentencing hearing in the UK is scheduled for June 21.
Glencore said it doesn't expect the aggregate amount, including the UK resolution, will differ materially from a $1.5 billion provision recorded in its 2021 financial statements.
Broda said RBC thinks that the market's reaction to the provision at the full year results moderates the impact of the news of the settlements.
"This said, today should remove most lingering concerns and take off the table any worries around any material impact to the ongoing business/ forced divestments and or any criminal sentences," he said.
As part of the DOJ agreement, an independent compliance monitor will watch over Glencore for a period of three years to assess the effectiveness of the company's compliance programme and internal controls.
"The scope of this criminal bribery scheme is staggering," US Attorney Damian Williams for the Southern District of New York said.
"Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear.
"At bottom, Glencore paid bribes to make money—hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives," he said.
Glencore's share price was GBX519.40 on May 25, having risen 1.25% day on day.