The Anglo-Swiss multinational is also involved in an ongoing investigation by the Swiss Public Prosecutor’s Office into corruption cases.
“Today Glencore is not the company it was in when the unacceptable practices behind this bad behavior occurred,” said company chairman Kalidas Madhavpidi.
Tyler Broda, RBC Capital Markets analyst, agreed that Glencore – with new CEO-level management in each of the divisions – has moved on from its past after nearly four years of investigations and “serious ESG interference”.
“It will continue to operate in challenging jurisdictions, where risks will remain from diverse legal systems, but lessons learned from both a monetary, but unlikely, environmental, social and governance (ESG) impacts that the company has faced over the past few years management will soon forget.”
“Glencore’s business is now more dependent on its own infrastructure and long-term partnerships for profitability than it was 10 years ago and we believe this, and the broader cultural shift around where marketing is located within a public company, makes the risks related to new fines or investigations low.”
The terms of the US decisions will see Glencore pay fines of $700.71 million to resolve bribery investigations and $485.64 million to resolve market manipulation investigations by the Department of Justice and the CFTC.
The company said that up to $ 165.93 million will be tied up against other parallel matters, including in the United Kingdom, so that the net amount owed to the US authorities is expected to be $1.02 million.
Glencore said another $39.6 million will be paid under a decision signed with the Brazilian Federal Prosecutor’s Office in connection with an investigation into bribery in the group.
A sentencing hearing is scheduled for the UK on June 21.
Glencore said it did not expect the total amount, including the UK decision, to differ materially from the $1.5 billion provision recorded in its 2021 financial statements.
Broda said RBC believes the market reaction to provisions in its full-year results is tempering the impact of the settlement news.
That said, today most lingering concerns should be removed and any concerns about any material impact on business in progress/forced divestment or any criminal verdicts should be removed.
As part of the DOJ agreement, an independent compliance monitor will monitor Glencore for three years to assess the effectiveness of the company’s compliance program and internal controls.
“The scale of the criminal bribery scheme is staggering,” US Attorney Damian Williams said of the Southern District of New York.
“Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to hide lawsuits.
“Essentially, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, even encouragement, of its top executives,” he said.
Glencore’s share price was GBX519.40 on May 25, after rising 1.25% daily.