Glencore sets aside $1.5bn to settle UK, US and Brazil probes

Regulatory scrutiny has hung over Glencore, the world's biggest commodities trader, which is also co-operating with investigations in Switzerland, where it is based, and the Netherlands Keystone / Dado Galdieri

Glencore expects to resolve bribery and corruption investigations in the UK, US and Brazil this year and has set aside $1.5 billion (CHF1.4 billion) to cover potential fines and costs.

This content was published on February 16, 2022 - 09:39 February 16, 2022 - 09:39 Neil Hume, Financial Times

News of the provision came as the London-listed miner and commodity trader announced record earnings on the back of soaring prices for its cornerstone commodities and said it would return $4 billion to shareholders.

Gary Nagle, chief executive, said he was“not happy” with the $1.5 billion charge, but the company recognised there had been historic cases of“misconduct” and that it would try to resolve the investigations as“expeditiously as possible”.

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“We have worked very hard to correct that,” he told reporters.“We are changing the culture. We want to complete these investigations, put a line under that and move forward.”

The US Department of Justice launched its investigation in 2018 when it ordered Glencore to hand over records related to its compliance with the country's money-laundering laws and the Foreign Corrupt Practices Act in Nigeria, the Democratic Republic of Congo and Venezuela.

Authorities in the UK and Brazil also launched probes – as did the US commodities regulator into alleged market manipulation – casting a shadow over the Swiss-based company for the past four years.

Glencore is the world's biggest commodities trader, shifting millions of tonnes of metals, minerals and oil across the globe. It is also a leading mining house, with operations from Australia to Peru.

The focus of the US investigation in particular has become clearer in recent months after a former Glencore oil trader pleaded guilty in New York over his part in a scheme to bribe government officials in Nigeria in return for lucrative oil contracts.

The company said it was also co-operating with Swiss and Dutch investigations, the timing and outcome of which remained uncertain. However, it said it expected the results of these probes“to avoid duplicative penalties for the same conduct”.

Tyler Broda, analyst at RBC Capital Markets, said that“with the main investigations quantified, this will probably de-risk the company from this 'unknown known', which has been an overhang for the company since 2018”.

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Shares in Glencore rose 0.7% to 425p on Tuesday and are up more than 35% since Nagle replaced Ivan Glasenberg as chief executive in July.