Glencore sets aside £1bn to settle corruption and bribery probes as it clocks up record profits
Glencore has set aside £1.1billion to settle corruption and bribery investigations as it clocked up record profits.
The mining and commodities trading titan said it is likely to resolve probes in the UK, US and Brazil this year – and expects heavy fines.
Chief executive Gary Nagle is keen to draw a line under the cases as he tries to clean up its reputation and fend off an attack from activist investor Bluebell Capital Partners. ‘We are changing the culture,’ he said.
Digging itself out of trouble: Glencore said it is likely to resolve corruption and bribery investigations in the UK, US and Brazil this year – and expects heavy fines
The comments came as Glencore reported a 43 per cent rise in revenues to £151billion last year after commodity prices spiralled as the world bounced back from Covid.
The FTSE 100 group made around £16billion in profits, up from £8.6billion the previous year, and said it would hand £3billion to investors through share buybacks and dividends.
The Swiss firm also announced more money for the UK electric car battery firm Britishvolt, which is building a factory in Northumberland.
Already an investor, Glencore has ploughed another £40million into the latest funding round, which raised £200million.
Glencore shares rose 1.2 per cent, or 4.9p, to 427p – the highest it has traded at since 2012.
Its stock has risen by more than a third since Nagle took over last year from Ivan Glasenberg, who took Glencore public in 2011.
Nagle said he was ‘not happy’ with setting aside £1.1billion, even though it was a fraction of turnover. He said: ‘We recognised there has been misconduct in this company historically.
‘We have worked very hard to correct that. We are changing the culture. We want to complete these investigations, put a line under that and move forward.’
The US Department of Justice began an investigation in 2018 into suspected corruption in Nigeria, the Democratic Republic of the Congo and Venezuela.
Russian oil giant jettisoned
Glencore has sold out of Russneft, one of Russia’s biggest oil companies, after 20 years of involvement.
The Footsie commodities giant helped build the Russian firm from scratch – funding expansion in return for oil ex-port rights. This allowed it to trade millions of barrels of oil.
Russneft was founded in 2002 by billionaire Mikhail Gutseriyev, who was sanctioned by the EU last year for his close ties with Belarusian leader Alexander Lukashenko.
Nagle kicked off the sale in December, and said: ‘If there is some sort of activity in Ukraine and Russia, it will cause severe disruptions in various commodity markets.’
He said Glencore does not have major concerns about other Russian investments.
In the UK, the Serious Fraud Office launched its probe in 2019, while cases were also brought by prosecutors in Brazil, Switzerland and the Netherlands – as well as another US case from the country’s commodities regulator into market manipulation.
Some of the cases have questioned Glencore’s links with Israeli billionaire Dan Gertler, who had close ties with former Congolese leader Joseph Kabila and was said to be the unofficial gatekeeper of natural resources deals there. Glencore employs around 135,000 people worldwide at around 150 sites.
It already mines battery metals including copper, nickel and cobalt – but it wants to refocus on ‘commodities of the future’ to hit net zero targets worldwide.
Nagle and his team are reviewing 27 assets, 14 of which are being sold.
Activist shareholder Bluebell Capital has said Glencore’s plan to keep thermal coal in its portfolio until 2050 was ‘morally unacceptable and financially flawed’.
Glencore’s strategy is to run down its coal business over three decades and this has been backed by its biggest shareholders.
On Monday, Bluebell suggested it spin off its coal arm into a separate company – though Nagle rejected the calls.
SP Angel analysts said: ‘Glencore is well placed to continue to benefit from strong demand for industrial metals and trading in raw materials.
‘High prices for oil, nickel, copper and coal are likely to continue to drive earnings higher.’