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.