Corruption riddled diversified natural resource company Glencore will have to pay more than $400 million after an investigation by UK authorities revealed it paid $29 million in bribes to gain preferential access to oil in Africa.
A UK judge, Justice Fraser, slammed the conduct of Glencore when it conducts business. “The facts demonstrate not only significant criminality but sophisticated devices to disguise it”, before sentencing the commodities trading giant to pay a financial penalty in response to the seven charges of bribery that “represent sophisticated offending that was sustained over prolonged periods of time”.
Fraser also said it was clear to him that a corrupt culture had 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 amongst traders on that particular desk…Bribery is a highly corrosive offence. It quite literally corrupts people and companies, and spreads like a disease.”
Glencore pleaded guilty in June this year to seven counts of bribery, after an investigation by the UK’s Serious Fraud Office (SFO) exposed that it had paid bribes to maximise its oil trading profits in five African countries. The SFO opened an investigation into Glencore in 2019, focused on the activity of the London-based West Africa desk
It emerged in court this week that Glencore favored the use of cash when it bribed government officials in Africa. Glencore traders hand delivered large quantities of cash to government officials, they sought to profit from political turmoil, and they inserted themselves into government-to-government deals that had been negotiated at preferential rates, according to a report by Bloomberg.
Kalidas Madhavpeddi, chairman of Glencore said the conduct that took place was inexcusable and has no place in Glencore. “The Company is 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. The Company has taken significant action towards implementing a world-class Ethics and Compliance 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,” he said in a statement.
What the SFO investigation uncovered:
- large cash withdrawals were deliberately concealed payments that showed Glencore paid bribes worth a total of $29m 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.
- $15 million of “office expenses” was used as cash bribes
- 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 $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”.
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