By Tyla Lee Coertzen
Glencore International A.G (“Glencore”) and Glencore Ltd, major producers and marketers of commodities relating to mining and oil, have recently pleaded guilty to various allegations of bribery and corrupt activities in various jurisdictions. On 24 May 2022, the entities announced their resolutions concluded with authorities in the United States, the United Kingdom and Brazil.
According to the US Department of Justice (“DOJ”)’s media release on the matter, Glencore and its subsidiaries were inflicted in a decade long scheme to “make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries”. Glencore further admitted to manipulating oil prices at two major US shipping ports.
In the UK, the Serious Fraud Office (“SFO”) charged Glencore Energy on seven charges of bribery related to its oil connections in various African jurisdictions including Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. The SFO has stated that Glencore had engaged in payment of bribes of over USD25 million. Glencore Energy pleaded guilty at a hearing on 24 May 2022 and was subsequently charged by the Southwark Crown Court in London on all charges of bribery brought against it. It is due to be sentenced in November 2022.
The Glencore settlements are indicative of guilty pleas – a form of non-trial resolution as envisaged by the OECD’s Recommendations for Further Combatting Bribery of Foreign Public Officials in International Business Transactions (“the Recommendations”). A key feature of the Recommendations is for OECD member states to implement a regime for non-trial resolutions to be used in cases of foreign bribery. Non-trial resolutions have the potential to save state resources, preventing loss of reputation and reduced penalties as a reward for full cooperation with the relevant authority.
According to the OECD’s Report on resolving foreign bribery cases with non-trial resolutions, plea agreements / guilty pleas are the most common form of non-trial resolutions. Guilty pleas result from a negotiation by the relevant firm and the prosecuting authority from which guilt is admitted. Generally, the conclusion of guilty pleas results in a charge, an admittance of guilt and the payment of a fine. The agreement may be subject to conditions imposed on the firm. These are often entered into with the relevant prosecution authorities by firms without any guarantee on the ultimate sanction that may be imposed against it.
The guilty plea concluded by Siemens AG in 2008 was the first coordinated non-trial resolution between member states of the Anti-Bribery Convention. Siemens AG had disclosed conduct contravening the US Foreign Corrupt Practices Act of 1977 (“the FCPA”). As a result, the US and Germany simultaneously announced their sentences following the DOJ and the US Securities and Exchange Commission cooperation with the relevant German authorities. This settlement has been used by various jurisdictions as an example of conclusion of non-trial resolutions as well as how different authorities can cooperate to expeditiously resolve foreign cases of bribery.
The Glencore guilty plea concluded in the US has will result in Glencore’s liability of a fine of over USD 1 billion, which was said by the DOJ’s media release to be an appropriate consequence for Glencore’s criminal conduct. This has been met with criticism, with many noting that the fine is merely trivial to the company, and it can easily recoup funds spent on the fine within a couple of weeks and that there has been significant harmful impact on poor citizens affected by Glencore’s corruption.
In addition to the fine, the DOJ and Glencore have agreed to the appointment of independent compliance monitors for a period of three (3) years to monitor Glencore’s compliance and internal controls. The imposition of compliance programs and monitorship is a common feature of guilty pleas in cases of corruption and bribery.
Since the finding by the DOJ and the SFO, Glencore has taken active steps in adherence to the conditions of the guilty plea. Recently, it has uploaded an ‘Ethics and Compliance Programme’ on its website which stipulates its commitment to becoming a responsible and ethical operator. In this regard, it has embarked on the following measures:
- the establishment of new leadership of the company;
- the investment into a new compliance programme;
- the reduction of use of third-party business generating intermediaries and the employment of end-to-end controls to oversee management;
- the appointment of external advisory for review of its controls and compliance measures; and
- a commitment to a culture of integrity, responsibility and transparency for the future operations of Glencore.
While non-trial resolutions have mainly been used by Germany, the US and the UK, they are a fairly novel consideration in South Africa. However, there is an expectation that the South African National Prosecuting Authority will soon develop and implement a policy for the use of non-trial resolutions in South African cases involving foreign bribery and corruption. This flows as part of South Africa’s obligations under the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions as well as the Recommendations.
Primerio has been at the forefront of the promotion and implementation of non-trial resolutions in the context of South Africa. In March 2022, Primerio hosted an event on this topic in conjunction with the OECD and International Bar Association. Several keynote speakers, including the South African Minister of Justice and Correctional Services, Ronald Lamola recognise the importance of introducing a formal NTR regime in South Africa. Primerio Director, Michael-James Currie, who also serves as the African Regional Representative of the IBA Anti-Corruption Committee recently spoke at the 18th Annual IBA Anti-Corruption Conference on the progress made by South Africa in implementing the OECD Recommendations and specifically the challenges surrounding the use of plea agreements and NTRs.
With many positive examples from foreign jurisdictions and in light of recent developments following the finalisation of the Zondo Commission of Inquiry reports, South Africa is currently well placed to begin implementing non-trial resolutions in order to address complex cases of bribery and corruption.
Currie said further that “it is essential that government, civil groups, prosecuting authorities and business actively debate the appropriate NTR regime in South Africa to ensure its credibility, transparency and most importantly efficacy in addressing corruption. The principles set out in the 2021 OECD Recommendations is a great point of departure”.