Glencore guilty pleas to offer welcome relief for SFO


Glencore has indicated that it will plead guilty to seven counts of bribery in connection with its oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria, and South Sudan. The Serious Fraud Office opened its investigation into Glencore's activities in 2019 and alleges that the commodities giant approved the payment of over $25m in bribes for preferential access to oil.

The reported pleas relate to five offences of bribing another person under s.1 of the Bribery Act 2010 (the SFO's first successful prosecution of a company under that section) and two under the much-hyped s.7 (failure of commercial organisations to prevent bribery), also known as the "failure to prevent" offence. Glencore has made a $1.5bn accounting provision for potential fines and settlements, including $1.1bn which it has already agreed to pay to the US Department of Justice and c.$40m to the Brazilian Federal Prosecutor's Office. The amount payable in the UK will be decided at a sentencing hearing which is scheduled for 21 June. Separate investigations by Swiss and Dutch prosecutors are ongoing.

This will provide some much-needed good news for the SFO after a challenging few weeks. Earlier this month, the High Court dismissed a claim by ENRC that the SFO's actions in that investigation amounted to misfeasance in public office, but found that its acceptance of confidential information about ENRC amounted to a "serious breach" of its duties. Meanwhile, the SFO awaits the conclusions of Sir David Calvert-Smith's review into its handling of the Unaoil case, which is due imminently. Supporters and detractors of the SFO will be equally keen to see how far the report goes with its recommendations.

The case also offers a salutary reminder of how the consequences of corrupt activities (or even allegations of corruption), can go beyond the immediate financial liability. Conviction under s.1 is grounds for mandatory exclusion of an offending party from tendering for public sector contracts, while a s.7 conviction is grounds for discretionary exclusion. A lengthy investigation can act as a significant drain on management time and company resources, as might any regulator-mandated scrutiny of future operations. Going forward, the threat that individual executives might face prosecution for past misdeeds only makes it more difficult for businesses to patch up any reputational damage and move on.


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