Glencore, a commodities trading giant, will have to pay more than $1.1 billion in its settlement with the United States’ Commodity Futures Trading Commission (CFTC) for market 'manipulation and deceptive conduct'.
Announced on Tuesday, three Glencore entities together have to pay a total of $1.186 billion, out of which $865.6 million has been levied as a civil penalty and disgorgement of $320.7 million. Both the penalty and disgorgement amount are the highest in any CFTC case to date.
Serious Misconduct
The CFTC investigation against the group company began in 2018 after which charges were brought. Now, Glencore is facing two separate criminal charges in the US brought by the Fraud Section of the Justice Department. However, the CFTC settlement will offset some of the forfeiture and penalty payments in criminal cases.
In parallel, the UK Serious Fraud Office also started to investigate Glencore in 2019 for bribery cases. Additionally, the company indicated that it will plead guilty to seven counts of bribery charges it is facing in the United Kingdom.
“Today’s enforcement action demonstrates that the CFTC will work with its enforcement partners around the world to ensure that the U.S. markets operate free of manipulation and corruption, and the CFTC will impose substantial and robust sanctions against those market participants who engage in such conduct,” said the Acting Enforcement Director of the CFTC, Gretchen Lowe.
The US commodities regulator detailed that Glencore has been indulging in illegal activities at least since 2007. The company increased its profits through physical and derivatives oil products trading by manipulating the benchmark prices as well as futures and swaps.
Moreover, the regulatory order found that the company was involved in fraud and corrupt payments, including bribery and kickbacks, to employees and agents in several foreign state-owned companies. Some of the countries where Glencore committed such activities are Brazil, Cameroon, Nigeria and Venezuela.
The company personnel conducted an organized operation that involved traders and other personnel throughout its oil trading group. It resulted in the gain of hundreds of millions of dollars in illicit gains.
