Marc Rich, the legendary commodities trader, fled the United States for Europe in 1983 after being indicted for trading Iranian oil during the 1979 hostage crisis and evading $50 million in taxes . From Switzerland, Rich continued to operate Marc Rich & Co. until he sold the trading house to his proteges in 1994. By the time President Bill Clinton pardoned Rich by his last day in office in 2001, the company had been renamed Glencore International. Rich died in 2013, aged 79, a billionaire and a free man – an example Glencore’s next generation of big cats are now looking to follow.
Including Rich (and his longtime right-hand man Pincus Green, now retired with around $900 million), the company has spawned at least nine billion-dollar fortunes. The wealthiest of the Glencore gang is former CEO Ivan Glasenberg, at $8.9 billion, according to the Forbes Real-Time Billionaire ranking. Others include Daniel Mate, 58, a metals trader worth an estimated $3.6 billion, and oil trader Tor Peterson at $2.7 billion.
All three left the company within the past two years, but neither they nor other billionaire executives have yet been singled out in the Justice Department’s investigation into Glencore’s misdeeds. solved this week with the company’s admissions of guilt and $1.1 billion in fines.
According to a statement by US attorney Damian Williams, executives probably knew something: “With the approval and knowledge of key executives”, Glencore traders for over a decade until 2018 made sure that bribes seem common. Glencore now admits its traders have bribed foreign officials to secure contracts and shipments, bribed bureaucrats to avoid audits and bribed judges to snuff out lawsuits. His fine under the Foreign Corrupt Practices Act will be $430 million, with forfeiture of $270 million in ill-gotten gains.
Two Glencore traders have so far pleaded guilty and will soon be sentenced. First, Emilio Jose Heredia Collado of California admitted conspiring to manipulate the price of marine fuel oil at the ports of Los Angeles and Houston. (These shenanigans will cost Glencore a $341 million fine and the confiscation of $144 million in profits.) The second is the government’s star witness, Anthony Stimler, a former senior oil trader overseeing West Africa. Last year, Stimler pleaded guilty to bribery and money laundering. He owns would have shown remorseand helped elucidate for prosecutors the details of how Glencore, via “dozens of deals”, paid millions in bribes to Nigerian officials.
According to documents filed by the DOJ, Glencore traders referred to the bribes in the code as “logs”, “newspapers” and “pages”. For example, when a trader asked for $90,000 to grease the hands of Nigeria’s Pipelines Products Marketing Company (PPMC) officials, they said in an email that was the “amount they needed to cover PPMC in newspaper reading material”. An intermediary from Glencore West Africa sent an e-mail stating that “the logs will be delivered” by him in person.
In 2014, Stimler, according to DOJ documents, was ordered to make a $300,000 “advance” for the re-election campaign of a Nigerian official. Payment was made by wire transfer from a Glencore bank account in Switzerland via a New York bank to an account belonging to a Nigerian in Cyprus. In 2015, in order to be able to buy oil shipments from Nigeria, Glencore had to pay $50,000 per shipment as an “advance payment”. According to court documents, Glencore made illicit profits of $124 million from the scheme.
Other details include $147,000 in ‘Operation Carwash’ payments to three Brazilian officials at state-controlled oil giant Petrobras, which were disguised as a ‘service charge’ of 50 cents per barrel of Brazilian oil purchased by Glencore. In total, Glencore allegedly paid $40 million in illicit payments to Brazilian officials.
In Venezuela, Glencore paid $1.3 million to government-linked intermediaries to expedite $12 million in late payments that Petroleos de Venezuela owed the trading house under oil contracts.
In the Democratic Republic of Congo, when a lawsuit alleged Glencore breached a contract and owed $16 million in damages, a company intermediary held a private meeting with the judge presiding over the case, paid a $500,000 bribe disguised as a bogus invoice for legal work, and the lawsuit is off. In the DRC, Glencore admits to having paid 27.5 million dollars in bribes.
DOJ documents do not mention any Glencore executives other than Stimler and Heredia Collado by name. But there are many unnamed parties. “Executive 1” is a British citizen who, until 2019, was responsible for trading oil around the world. “Executive 2” was an oil and gas trader who had worked for the company since 1987 and left in 2018 after approving a $325,000 payment through an intermediary to Nigerian officials. “Executive 3”, another British citizen, ran the copper and zinc trade.
Stimler’s cooperation will likely earn him leniency in sentencing. And he may not be the only one looking for a deal among Glencore’s 133,000 employees. The DOJ’s agreement with Glencore stated that it offered no protection against individual lawsuits.
Without assuming who might be in legal danger, it’s worth asking who has the most to lose. Besides the aforementioned Glasenbergs, Mates and Petersons, other Glencore billionaires include:
Aristotelis Mistakidis, 60, who quit in 2018 after being disciplined by Canadian authorities for accounting violations in a mine in the Democratic Republic of the Congo. He had managed the copper business and its value is estimated at $3.5 billion.
Alex Beard, 55, Head of Global Oil Trading, retired in 2019; his net worth is estimated at $2.25 billion.
Gary Fegel, 48, who ran the aluminum business, left in 2013. He is worth at least $1.6 billion.
And then there’s Dan Gertler. The 48-year-old Israeli has a fortune estimated by Forbes at $1.2 billion, much of it stemming from his 2017 sale to Glencore of two mines in the Democratic Republic of Congo. The Trump administration has sanctioned Gertler for making his fortune illegally acting as an agent for DRC President Joseph Kabila, to whom he is alleged having paid millions in bribes. Gertler has since been fight with Glencore on the payment of hundreds of millions of dollars in royalties from Congo’s cobalt mines. This year, Gertler has reportedly negotiated a plea deal with US officials in an effort to end criminal investigations against him.
Glencore investors seem unfazed by the bribery scandal. The company previously revealed that it expected a financial hit of around $1.5 billion. Its bonds trade around par; shares at $13 (down 1% on Thursday on the London Stock Exchange) are just off a 10-year high. Glencore’s market capitalization is $85 billion, or about 18 times earnings. Glencore is in the enviable position of being among the world’s biggest energy traders in a time of soaring prices and shortages, as well as one of the biggest miners of metals like copper, aluminum and cobalt. – all essential for the manufacture of batteries for electric vehicles and other alternative energy sources.
The company insists it has already been cleaning house for years and that even before it knew about the DOJ investigation, it had taken steps to improve ethics and compliance and took corrective action, including punishing employees. CEO Glasenberg left last year to be replaced by Gary Nagle, 47, who joined Glencore in 2000. In a statement this week, chairman Kalidas Madhavpeddi insisted they had cleaned things up. “Glencore today is no longer the company it was when the unacceptable practices that gave rise to this misconduct occurred.”