A fine of 10 billion!

Bribery to many countries for more than 10 years, manipulation for 8 consecutive years... The global giant "confessed"!

Using "newspaper" and "chocolate" as a secret to cover up bribery

  Moon in the Cloud

  On May 24, under a joint investigation by the United States, the United Kingdom and Brazil, the Swiss commodity trading giant Glencore admitted years of bribery and market manipulation in many countries around the world, and agreed to pay up to $1.5 billion. fine (about 10 billion yuan).

  Admit bribery!

Glencore to pay $1.5 billion fine

  According to the British "Financial Times" and other media reports, under the joint investigation of the United States, the United Kingdom and Brazil, the corruption of the global commodity giant Glencore over the years has been exposed, which has aroused the attention of the global market.

Glencore has pleaded guilty to multiple bribery and market manipulation crimes and will pay a fine of up to $1.5 billion (about 10 billion yuan).

  According to public information, Glencore is the world's largest commodity trader, and is currently the world's largest zinc producer, third largest copper miner, and largest cobalt supplier.

According to 2020 data from the Prospective Economist, Glencore holds 25% of the world's proven cobalt ore reserves, and the annual cobalt ore production accounts for about 30% of the global output, which has a decisive influence on the global cobalt supply.

  On May 24, The UK Serious Fraud Office charged the group's subsidiary Glencore Energy UK with oil operations in Cameroon, Equatorial Guinea, Côte d'Ivoire, Nigeria and South Sudan for alleged Seven cases of profit-driven bribery and corruption.

  The UK Serious Fraud Office said in a statement its case was that Glencore agents and employees, with the company's approval, paid more than $25 million in bribes to gain priority over oil operations in Africa.

Glencore will be sentenced by a London court on June 21.

  In the U.S., Glencore has pleaded guilty in two separate criminal cases and agreed to pay about $1.1 billion in criminal fines and forfeit related proceeds.

Of these, the first case was described by prosecutors as a "decade-long bribery scheme."

In the second case, Glencore's U.S. commodities trading arm admitted to taking part in an eight-year scheme to manipulate U.S. fuel price benchmarks.

  The U.S. Commodity Futures Trading Commission (CFTC) investigation said that between 2007 and 2018, the company's traders attempted to manipulate the prices of four physical U.S. oil benchmarks, affecting futures and swaps trading profits based on those prices.

  U.S. Attorney General Merrick Garland said the case was the Justice Department's "largest criminal enforcement action to date for commodity price manipulation in the oil market."

  Brazil's federal prosecutor's office has accused Glencore of being involved in a corruption investigation called "Operation Car Wash" involving state-controlled Petrobras and Petrobras.

  Glencore said it would pay a total fine of about $1.5 billion, including $1.1 billion to U.S. authorities, $40 million to Brazilian prosecutors and due to the U.K. to be finalized at a sentencing hearing. amount.

Glencore set aside $1.5 billion in reserves for the settlement of the case in February, and the company said on Tuesday it did not expect the total amount of fines to be “materially different” from the amount set aside.

  The DOJ will also reportedly place two independent compliance monitors at Glencore for a three-year period to examine its internal controls.

  Using "newspaper" and "chocolate" as a secret to cover up bribery

  According to Bloomberg, executives at Glencore have used cryptograms such as "Newspapers" and "Chocolates" to reap staggering returns from bribery and corruption in Africa and Latin America.

  Between 2007 and 2018, the Swiss commodities company paid $52 million in bribes to Nigerian officials and made $124 million in profits, according to the U.S. Justice Department.

In Cameroon, the payoff was even better, with a $21 million bribe resulting in a $67 million profit.

In Côte d'Ivoire, a $4 million investment resulted in a $30 million profit.

  The company also paid officials in Brazil and Venezuela to win favorable contracts with Petrobras and special treatment from PDVSA, prosecutors said.

  According to foreign media reports, according to a court document, the bribery case involved the highest level of Glencore.

But while Attorney General Merrick Garland has made holding individuals accountable for corporate fraud a priority, no executives have been charged in the announced settlement.

  It is worth mentioning that, according to a court document, employees of Glencore's UK branch also "used coded language to hide their discussions of bribe payments", calling it "newspapers", "journals" or "pages".

  In email exchanges around November 2018, an unidentified trader reportedly told a West African agent to pay $90,000 for "newspaper reading material" — a reference to bribes Falsely underestimating the value of fuel.

The West African agent then replied: "The newspaper will be delivered by him personally".

  In a separate filing, the Commodities Futures Trading Commission (CFTC) cited similar evidence, using the cryptic signs to hide the true nature of Glencore's payments.

  CFTC filings also show that Glencore paid bribes, sometimes hidden in large amounts of cash or through third-party companies, and sometimes made false invoices for "advance payments," "marketing services," or "commissions." name.

  Manipulating the U.S. fuel price benchmark for eight years

  In addition, Glencore pleaded guilty in Connecticut to manipulating the oil price benchmark to artificially reduce costs to boost profits.

  The company admitted that from 2011 to 2019, employees were instructed to place bids and offers artificially high or low in the daily trading window that data feeder S&P Global Platts uses to set interest rates. Platts price assessment.

  Emilio Heredia, a former trader at Glencore in San Francisco, pleaded guilty last year to one charge of conspiracy to engage in commodity price manipulation and agreed to cooperate with prosecutors.

It is reported that its trading activity is related to Platts Los Angeles 380 CST fuel price assessment.

  According to Bloomberg, Glencore employees were asked to "talk the market" to Platts reporters to influence public opinion.

One day in October 2014, when Glencore was buying fuel from an unidentified trading company, trader Heredia texted a Glencore marketer to say, “Make sure you start lowering the market for fuel in Los Angeles. price".

  Later, a Platts reporter texted the marketer and asked, "Have you heard anything from LA?" The marketer responded that the fuel market was "still very soft...fuel demand is minimal and supply is very high."

The marketer's comments were quoted in Platts' market commentary that evening.

The move cut fuel prices from $515 a tonne to $471.50 a ton in one day and helped Glencore gain $2.1 million from the deal.

  According to Bloomberg, Glencore has made a lot of money by manipulating the fuel market.

In the end, Glencore agreed to a fine of $341 million and a forfeiture of $144 million.

The plea deal with the government requires Glencore to cooperate with the investigation.

In addition, according to a press release on the US Department of Justice website, Heredia is also scheduled to be sentenced on June 17, 2022.

  Glencore still faces Swiss and Dutch investigations

  Alexandra Gillies, a consultant at the Natural Resource Governance Institute, said: "Commodity traders, including Glencore, have a dismal record on corruption, so it's nice to see You can see the judicial consequences of this."

  He also said, "Glencore's financial performance will not be affected too much by this fine, especially given the current commodity price situation. But the fine is substantial under anti-bribery standards, which is a sign to the industry. sent an important signal."

  Analysts agree that Glencore is expected to generate more than $17 billion in revenue this year, according to Bloomberg, meaning the company could make $1.5 billion back in less than five weeks.

The company's shares have surged 70% over the past year as prices for commodities such as coal, cobalt and nickel have surged.

  Questions and answers related to the joint investigation between Glencore and the U.S., U.K. and Brazilian authorities have also been posted on Glencore’s corporate website.

  Glencore said: “Glencore began investing significant resources in developing a top-notch ethics and compliance program before learning of the DOJ investigation.

It has also taken extensive remedial action, including the isolation or disciplinary action of employees involved in the violation.

Glencore said: "The company has an energetic board and management team committed to fostering a culture of integrity, accountability and transparency."

  Glencore also said it would continue to operate in these countries where Glencore has committed misconduct.

"Glencore has taken significant action and invested significant resources to ensure that our core controls are firmly in place in every corner of our operations and that misconduct has no place anywhere we do business."

  It is worth mentioning that in addition to the above-mentioned allegations, the global commodities giant is also facing investigations by Swiss and Dutch authorities, the timing and results of which are still uncertain.

(Broker China)

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