World’s Most Corrupt Companies: Glencore

World’s Most Corrupt Companies: Whilst we reward multinationals that make genuine attempts to conduct business with integrity wherever they operate, I decided to start a new segment called “World’s most corrupt companies”. Because, let’s face it, some companies frankly deserve the title.

The first company that comes to mind for this segment, is Swiss mining giant Glencore which only became a giant thanks to its extensive questionable business practices in developing countries.

I’ve strongly hesitated whether to include the Glencore enforcement action on my blog. When Glencore got hit with its $1.2b settlement with US, UK, and Brazil Authorities last week for widespread corruption in Africa and Latin America, I long debated whether I wanted to dissect the enforcement actions as I do usually on this blog, in order to extract compliance lessons, compliance officers and other risk managers may benefit from.

For those coming to this story cold, Glencore International A.G. (Glencore) and Glencore Ltd., Swiss commodity trading and mining firms, each pleaded guilty in the US and agreed to pay over $1.2 billion to resolve government’s investigations into foreign corrupt practices and a commodity price manipulation scheme. Glencore Energy UK Limited will also plead guilty to charges brought by the UK Serious Fraud Office  in respect of its bribery investigation (penalty to be determined). Glencore has further agreed to pay $39,598,367 under a resolution signed with the Brazilian Federal Prosecutor’s Office in connection with its bribery investigation into the Group.

It is understood that Glencore is additionally being investigated by Swiss and Dutch Authorities.

But for me, something about the enforcement actions just didn’t feel right… I read the US enforcement action, pondered on some of the quotes, got tagged by a dozen people to get my attention on the case, and called by a few more to tell me did you see that, they will pay “1.2 BILLION”? I saw, but something just didn’t sit right.

After all, Glencore, a Swiss giant, is one of the world’s biggest mining groups. If you follow its history up close you will unpeel the layers of darkness that have enveloped the group for years.

From its alleged murky partnership with sanctioned Israeli businessman Dan Gertler in Africa, to sending children to work in mines underground, to dumping raw acid polluting rivers, to paying bribes to dictators for securing hundreds of millions in oil contracts, but also paying bribes to avoid any type of government scrutiny and make lawsuits disappear, it was time the world was made aware of the staggering scope of misconduct this company committed in all impunity in Africa for decades. Mind you, this is just what the DOJ and some investigative journalists shared with us, God knows what else is hiding in the shadows.

I’ve previously expressed that the fines levied so far ($1.2b) were a slight slap on the wrist for a giant that makes billions of dollars every year buying and selling commodities — above the money it makes digging metals, pumping crude or harvesting crops.

But today it is the African continent that is outraged. The African Energy Chamber is officially calling for justice:

– Glencore’s dealings in African countries should be scrutinized locally, and African officials who have taken bribes should be held accountable.
-Investigations should be opened and Glencore should be forced to shed full light on the extent of its corruption cases.
-Glencore as a member of the Norway-based Extractive Industries Transparency Initiative (EITI), based on its years of corrupt actions, should be suspended as an EITI supporting company.
-The US government should use the $1.2 billion in penalties Glencore will pay to empower the Africans who are the real victims of Glencore’s wrongdoing and mistakes.

This case reminds us that while African countries are being punished for their “perceived” corruption on indices like Transparency’s CPI, the double standard is unfair and sends the wrong message to Africans.

It is time we start an index of countries that export corruption, so we, developing nations, may also conduct bribery & integrity risk assessments before granting lucrative rights to companies who will engage in corruption and gross misconduct on our shores.

After all, just as there are two parties to a corrupt contract, it does take two to tango.