Day: May 31, 2022

“The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.  The Justice Department will continue to bring to bear its resources on these types of cases, no matter the company and no matter the individual.” That was Attorney General Merrick B. Garland, who announced the resolution of an enforcement action involving Glencore plc and related entities.
When Attorney General Merrick Garland has a Press Conference to announce a settlement you know it is significant. We were certainly treated to that last week when the AG and a host of other Department of Justice (DOJ) officials announced the settlement of a massive Foreign Corrupt Practices Act (FCPA) and market manipulation case against Glencore plc. (Glencore). Over the next several blog posts, I will be reviewing the matter and mining it for lessons learned for the compliance community. Today, in Part I, we review and announcement and basic facts of the matter.
The case involved massive bribery and corruption perpetrated by Glencore in multiple countries by multiple subsidiaries, involving multiple executives at the highest levels of the company. As stated in the DOJ Press Release, “Glencore, acting through its employees and agents, engaged in a conspiracy for over a decade to pay more than $100 million to third-party intermediaries, while intending that a significant portion of these payments would be used to pay bribes to officials in several countries, including Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo (DRC).”
The resolution with the DOJ imposed $429 million in criminal penalties and forfeiture of $272 million. According to the FCPA Blog (who as usually broke the story for the compliance community), “as part of the U.S. resolution, a subsidiary of Glencore also agreed to plead guilty and pay $485.6 million to resolve market manipulation investigations by the DOJ and the Commodity Futures Trading Commission. After crediting about $166 million of that payment to amounts to be paid in the UK and possibly other countries, penalties assessed in the United States will be just over $1 billion.”
As was noted by U.S. Attorney Damian Williams, “The scope of this criminal bribery scheme is staggering.  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.  The criminal charges filed against Glencore in the Southern District of New York are another step in making clear that no one – not even multinational corporations—is above the law.”
Assistant Attorney General Kenneth A. Polite, Jr. said that “Glencore’s guilty pleas demonstrate the Department’s commitment to holding accountable those who profit by manipulating our financial markets and engaging in corrupt schemes around the world.  In the foreign bribery case, Glencore International A.G. and its subsidiaries bribed corrupt intermediaries and foreign officials in seven countries for over a decade. In the commodity price manipulation scheme, Glencore Ltd. undermined public confidence by creating the false appearance of supply and demand to manipulate oil prices.”
U.S. Attorney Vanessa Roberts Avery said: “Glencore’s market price manipulation threatened not just financial harm, but undermined participants’ faith in the commodities markets’ fair and efficient function that we all rely on.  This guilty plea, and the substantial financial penalty incurred, is an appropriate consequence for Glencore’s criminal conduct, and we are pleased that Glencore has agreed to cooperate in any ongoing investigations and prosecutions relating to their misconduct, and to strengthen its compliance program company-wide.  I thank both our partners at the U.S. Postal Inspection Service for their hard work and dedication in investigating this sophisticated set of facts and unraveling this scheme, and the Fraud Section, with whom we look forward to continuing our fruitful partnership of prosecuting complex financial and corporate criminal cases.
FBI Assistant Director Luis Quesada added, the “guilty pleas by Glencore entities show that there is no place for corruption and fraud in international markets.  Glencore engaged in long-running bribery and price manipulation conspiracies, ultimately costing the company over a billion dollars in fines. The FBI and our law enforcement partners will continue to investigate criminal financial activities and work to restore the public’s trust in the marketplace.”
The matter also involved enforcement actions in multiple countries. In the UK, Glencore also had “charges brought against it by the U.K.’s Serious Fraud Office (SFO) and reached separate parallel resolutions with the Brazilian Ministério Público Federal (MPF) and the Commodity Futures Trading Commission (CFTC). Under the terms of the plea agreement, the department has agreed to credit the company over $256 million in payments that it makes to the CFTC, to the Court in the U.K. as well as to authorities in Switzerland, in the event that the company reaches a resolution with Swiss authorities within one year.”
SFO Director Lisa Osofsky, said in a Press Release, “This significant investigation, which the Serious Fraud Office has brought to court in less than three years, is the result of our expertise, our tenacity and the strength of our partnership with the US and other jurisdictions. “We won’t stop fighting serious fraud, bribery and corruption, and we look forward to the next steps in this major prosecution.”
Interestingly, the plea agreement requires Glencore to retain two compliance monitors for three years. This is a very significant development, which ties to the DAG Lisa Monaco speech from October 2021. We will consider the implications as well in greater detail.
Tomorrow we will consider the bribery schemes.