Business Maverick

Glencore Faces New Corruption Investigation With CFTC Probe

By Bloomberg 26 April 2019
A contractor works at the underground Agnico Eagle Mines Ltd. LaRonde mine in Malartic, Quebec, Canada, on Thursday, Sept. 10, 2015. Photographer: Valerian Mazataud/Bloomberg

Glencore Plc said it’s under investigation by the U.S. Commodity Futures Trading Commission for possible corrupt practices, the latest legal headache for the world’s biggest commodity trader.

The probe comes after the London-listed company was subpoenaed last year by the U.S. Justice department for documents relating to its dealings in Nigeria, the Democratic Republic of Congo and Venezuela since 2007.

Glencore said Thursday that the CFTC had notified it of investigations into whether the company and its subsidiaries “may have violated certain provisions of the Commodity Exchange Act and/or CFTC Regulations through corrupt practices in connection with commodities.”

The company said it believes the CFTC’s investigations “have a similar scope in terms of subject matter” to the DOJ probe, which became public last July. CFTC spokeswoman Erica Elliott Richardson didn’t return a request for comment on the probe.

The commodity trading industry is facing a multitude of bribery and corruption investigations in jurisdictions ranging from Brazil to the U.S., drawing comparisons with the early 1980s when Glencore’s founder Marc Rich was prosecuted for tax evasion.

This is “clearly an unhelpful headline for Glencore, which reminds the market of the outstanding DOJ investigation,” said Macquarie Group Ltd. analyst Grant Sporre. “However I don’t think this will impact the size of the fine or sanction due to agreements on not duplicating fines.”

James McDonald, the director of enforcement at the CFTC, said last month in a speech that the agency was investigating overseas fraud and manipulation under the Commodities Exchange Act. While he didn’t refer to any specific investigation, he gave several examples of types of behavior the regulator was looking into, including:

Paying bribes to secure business in connection with activities like trading, advising, or dealing in derivatives. Using corrupt practices to manipulate benchmarks that serve as the basis for derivatives contracts. Altering through corrupt practices prices in commodity markets that drive U.S. derivatives prices.”Companies and individuals engaging in foreign corrupt practices should recognize that this sort of misconduct might constitute fraud, manipulation, false reporting, or a number of other types of violations under the CEA, and thus be subject to enforcement actions brought by the CFTC,” he said in the speech in New Orleans.

In its annual report, Glencore disclosed that it incurred $24 million of legal costs last year related to the DOJ investigation. Glencore’s shares have declined about 8 percent since that probe began last year, even as most miners gained. Investor sentiment is still negative regarding Glencore, analysts at Jefferies LLC noted last week


In other news...

The South African economy is choking harder than the Proteas. Although to be choking you have to actually be eating and the Proteas seem to be on some sort of juice cleanse-like fast…*

Back to the economy: In the first quarter the GDP dive-bombed by a whopping 3.2%. The sense of futility can paralyse us into inaction and moaning. But it’s times like these that call for effort and action, no matter how small. Yes, South Africa is hurting. Yes the ravaged economy is evident everywhere you look. But you can make a difference, in your own personal way and by supporting independent media like Daily Maverick. We’ve pledged to continue the fight through producing incisive and impactful investigations and analysis, the same way we have done every day for the last decade.

By becoming a Maverick Insider you can help us keep doing what we do, so that you and others who can’t afford it, can keep reading the truth. For whatever amount you choose, you can support DM and it only takes a minute.

Support Daily Maverick→Payment options

*Proteas, you know we love you. We’d just love you more if you won occasionally...

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.


Naspers approaches its existential crisis

By Tim Cohen

"But still it moves, just the same" ~ Galileo Galilei (after forcibly having recanted his statement on earth revolving around the sun)