Glencore was this week quick to emphasise that the $1.2bn (about R19bn) in admittance of guilt fines for its nefarious schemes of “bribes for business” issued by the US department of justice (DOJ) will not affect its South African business.
It also exonerated President Cyril Ramaphosa, of any connection with the company’s corrupt dealings in Africa or elsewhere. It also said the admittance of guilt did not involve any of its past business dealings in SA.
“Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred. Starting before the company knew of the DOJ’s investigations, Glencore has invested substantial resources towards developing a best-in-class ethics and compliance programme,” the company said in a statement.
Glencore International and Glencore Ltd, both part of a multinational commodity trading and mining firm headquartered in Switzerland, each pleaded guilty this week, agreeing to pay more than $1.2bn to resolve the US government’s investigations into two separate cases of violations of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme.
The DOJ found that between 2007 and 2018 Glencore and its subsidiaries paid intermediary companies about $79.6m to secure improper advantages in dealings with entities in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, the Democratic Republic of the Congo (DRC), Brazil and Venezuela.
In Nigeria alone, Glencore and its intermediaries paid more than $52m in bribes to Nigerian officials.
Glencore’s South African business dates back to 1974 when controversial financial criminal Marc Rich founded Marc Rich & Co, headquartered in Switzerland with offices in various countries including SA
Ramaphosa was entered into the fray because he was the group executive chair of Shanduka, which had a joint venture with Glencore. Ramaphosa founded Shanduka in 2001 but left after being elected ANC deputy president in December 2012.
Allegations that the venture benefited illegally from coal deals with Eskom have this week resurfaced, with Ramaphosa’s adversaries claiming the Glencore admittances of guilt were proof of their allegations made before the Zondo commission into state capture.
Ramaphosa’s term at Shanduka corresponds roughly with the period of investigations into Glencore’s activities for which it agreed to pay a fine. However, SA was not cited in the DOJ’s investigations.
At the helm of Glencore was South African-born Ivan Glasenberg, whose Lithuanian Jewish family settled in SA in the 1950s. As a qualified chartered accountant, he joined Glencore’s corporate predecessor, Marc Rich & Co, in 1984 in its coal division but quickly rose through the ranks until he later became the CEO in 2002. He retired in 2021.
Rich, by his own admission, based his earlier business on violating international trade embargoes and doing business with, among others, the apartheid regime of SA.
Operating from the US, Rich in 1983 fled to Switzerland after he was indicted on 65 criminal counts, including income tax evasion, racketeering and trading with Iran during the oil embargo.
Glasenberg, who has citizenship in SA, Australia and Switzerland, was one of the group of senior managers who orchestrated a buyout of Marc Rich & Co and renamed the new company Glencore International AG in 1994.
According to veteran mining analyst Peter Major, Glencore’s first joint venture in SA was concluded in 2005/06 with billionaire Patrice Motsepe as its BEE partner.
Glencore tended to go with the flow in the South African mining and commodities industry not any more or any less unscrupulous than most of the bigger mining companies. They were tough guys to deal with and drove a hard bargain in negotiations.
— Peter Major, mining analyst
Glencore became embroiled in allegations of state capture when its name was dragged before the Zondo commission by former Eskom executives Brian Molefe and Matshela Koko.
They alleged that Glencore used its relations with Ramaphosa to extract preferential contracts from Eskom for coal supplies to its Hendrina power station from Glencore’s Optimum coal mine.
When Molefe was appointed CEO of Eskom he claims to have scuppered a long-term power supply contract with Glencore.
The mine was eventually sold to the Gupta family after the Guptas, former mineral resources minister Mosebenzi Zwane and former Eskom chair Dr Ben Ngubane negotiated a deal worth R2.15bn with Glasenberg in Switzerland.
In explaining the company’s way forward, Glencore this week said it had agreed to the appointment of independent compliance monitors for three years.
Whether the leopard can so effortlessly change its spots remains to be seen — especially considering the damning findings by the DOJ: “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear... And it did so with the approval and even encouragement of its top executives.”
However, the hapless countries that were exploited will not see any of the fines nor reparations for the damage done. No Glencore executives are facing prosecution either.
“African countries do not have a good reputation in prosecuting those involved in mining corruption, mainly because many governments and officials are on the payroll of the intermediaries,” said Major.
“In SA it will now become harder for Glencore to conduct its business and for the company to grow while under the US and international spotlight.”
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