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 selling the trading house to his proteges in 1994. By the time President Bill Clinton pardoned Rich on his last day in office in 2001, the company had been renamed Glencore International. Rich died in 2013, aged 79, a billionaire and free man — an example that Glencore’s next generation of fat cats now seek to follow.
Including Rich (and his longtime right-hand Pincus Green, now retired with an estimated $900 million) the company has birthed at least nine billion-dollar fortunes. The richest of the Glencore gang is former CEO Ivan Glasenberg, at $8.9 billion, according to the Forbes Real-Time Billionaire rankings. Others include Daniel Maté, 58, a metals trader worth an estimated $3.6 billion, and oil trader Tor Peterson at $2.7 billion.
All three left the company in the past two years, but neither they nor other billionaire executives have yet been fingered in the Department of Justice investigation into Glencore’s misdeeds, resolved this week with the company’s admissions of guilt and $1.1 billion in fines.
According to a statement from U.S. attorney Damian Williams, the execs likely knew something: “With approval and knowledge of top executives,” Glencore traders for more than a decade until 2018 made illicit payments seem customary. Glencore admits now that its traders bribed foreign officials to secure contracts and cargoes, bribed bureaucrats to avoid audits, and bribed judges to make lawsuits disappear. Its fine under the Foreign Corrupt Practices Act will amount to $430 million, with forfeiture of $270 million of ill-gotten gains.
Two Glencore traders have so far pled guilty and are soon to be sentenced. First, Emilio Jose Heredia Collado of California admitted to conspiring to manipulate the price of marine fuel oil in the ports of Los Angeles and Houston. (Those shenanigans will cost Glencore a fine of $341 million and the forfeiture of $144 million in profits.) Second is the government’s star witness, Anthony Stimler, formerly a senior oil trader overseeing west Africa. Stimler last year pled guilty to bribery and money laundering. He has reportedly shown remorse, and has been helping to elucidate for prosecutors the details of how Glencore, via “dozens of agreements” paid millions in bribes to Nigerian officials.
According to DOJ filings, Glencore traders referred to bribes in code as “newspapers,” “journals” and “pages.” For example, when a trader requested $90,000 to grease the palms of officials at Nigeria’s PPMC (Pipelines Products Marketing Company), they said in an email that it was the “amount they needed to cover PPMC in newspapers reading material.” A Glencore west Africa intermediary emailed that “the newspapers will be delivered” by him in person.
In 2014 Stimler, according to DOJ filings, was told to contribute an “advance” of $300,000 toward the re-election campaign of a Nigerian official. The payment flowed via wire transfer from a Glencore bank account in Switzerland through a New York bank to a Nigerian-owned account in Cyprus. In 2015 in order to get the opportunity to buy cargoes of oil from Nigeria, Glencore was required to submit $50,000 per cargo as an “advance payment.” According to court documents, Glencore made illicit profits of $124 million due to the scheme.
Other details include $147,000 in “Operation Carwash” payments made to three Brazilian officials at state-controlled oil giant Petrobras which were disguised as a “service fee” of 50 cents per barrel of Brazilian oil that Glencore bought. All told, Glencore allegedly made $40 million in illicit payments to Brazilian officials.
In Venezuela Glencore paid government-connected intermediaries $1.3 million in order to speed up $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 that Glencore had breached a contract and owed $16 million in damages, a company intermediary had a private meeting with the judge presiding over the case, paid a bribe of $500,000 disguised as a fake invoice for legal work, and the lawsuit went away. In DRC, Glencore admits to paying $27.5 million in bribes.
DOJ documents don’t mention any Glencore execs other than Stimler and Heredia Collado by name. But there are plenty of unnamed parties. “Executive 1” is a U.K. citizen who until 2019 was responsible for oil trading worldwide. “Executive 2” was an oil and gas trader who had been with the company since 1987 and left in 2018 after having approved a $325,000 payment by an intermediary to Nigerian officials. “Executive 3,” another U.K. citizen, directed trading in copper and zinc.
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 stipulated that it doesn’t provide protection against prosecution of any individuals.
Without presuming to know who could be in legal jeopardy, it’s worth considering who has the most to lose. Along with the aforementioned Glasenberg, Maté and Peterson, Glencore’s other billionaires include:
Aristotelis Mistakidis, 60, who left in 2018 after being sanctioned by Canadian authorities over accounting violations at a mine in the Democratic Republic of Congo. He had managed the copper business, and is worth an estimated $3.5 billion.
Alex Beard, 55, head of worldwide 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’s 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 derived from his 2017 sale to Glencore of two mines in the Democratic Republic of Congo. The Trump Administration sanctioned Gertler for making an illicit fortune while acting as an agent for DRC President Joseph Kabila, to whom he’s alleged to have paid millions in bribes. Gertler has since been sparring with Glencore over payment of hundreds of millions of dollars in royalties from Congo cobalt mines. This year Gertler has reportedly been negotiating a plea deal with U.S. officials in an attempt to bring an end to criminal probes against him.
Glencore investors don’t seem troubled by the bribery scandal. The company had previously disclosed that it expected a financial hit of roughly $1.5 billion. Its bonds trade around par; shares at $13 (down 1% Thursday on the London exchange) are just off a 10-year high. Glencore’s market cap is $85 billion, about 18 times earnings. Glencore is in the enviable position of being among the world’s biggest energy traders at a time of surging prices and shortages, as well as one of the biggest miners of metals like copper, aluminum and cobalt — all vital in making batteries for electric vehicles and other alternative energy sources.
The company insists they’ve already been cleaning house for years, and that even before they knew of DOJ investigation they had moved to improve ethics and compliance and had taken remediative actions including punishing employees. CEO Glasenberg departed last year to be replaced by Gary Nagle, 47, who joined Glencore in 2000. In a statement this week, Chairman Kalidas Madhavpeddi insisted they’ve cleaned house. “Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred.”