BusinessDay
NigeriaDecides2023

Glencore had front row seat to Nigeria’s rot and cashed in

A petroleum minister on the take, a state-oil company where sleaze was written into the standard operating procedure, a country where it seems like the fundamental objectives and directives principles of state policy is corruption, global commodity trader, Glencore, saw Nigeria and some African countries, as perfect staging grounds for international worst practices.

Their gamble was right on the money. They secured lucrative oil contracts by bribing corrupt government officials including a former minister of Petroleum, and their counterparts in the state oil firm, the Nigerian National Petroleum Corporation (NNPC). When people say Nigeria is a crime scene, it’s the actions of those it trusts with power and responsibilities that validates that assertion.

On Wednesday, prosecutors at a London court said a staff of the British unit of commodity trader Glencore conveyed cash using private jets to pay bribes to officials based in West Africa, to secure lucrative oil deals.

Glencore, headquartered in Switzerland, and has been awarded several NNPC crude lifting contracts pleaded guilty to seven counts of bribery in markets comprising Cameroon and Nigeria after an investigation by Serious Fraud Office (SFO), a government department, which investigates serious or complex fraud, bribery and graft.

Earlier in the year, Anthony Stimler, a former staff of Glencore told U.S. Justice Department investigators that he paid bribes to intermediaries on the understanding that it would be passed on to NNPC officials to influence government’s crude oil allocation during Alison Diezani Madueke’s tenure as petroleum minister.

Stimler said for a dozen years, he’d paid millions in bribes to African officials and intermediaries. ““When I made requests for payments to intermediaries, I was aware that other Glencore traders who worked with me were doing the same thing by directing our intermediaries to make bribe payments to government officials,” Stimler told a federal judge in New York, according to a transcript of his guilty plea.

“I intended that a proportion of the payment to intermediaries operating in Nigeria were to be passed on to Nigerian state-owned oil company officials. The purpose of the payment was to influence those officials’ decisions regarding the Nigerian government’s allocations of crude oil cargo,” he said.

US prosecutors said two associates of the minister set up companies shortly after she took office and were awarded contracts to sell large allotments of oil on global markets.

The pair were awarded dozens of crude cargoes worth about $1.5 billion, according to the prosecutors. Nigeria received little of the proceeds of those sales, which prosecutors say were diverted for Madueke and her associates.

Between 2013 and 2014, Glencore bought 15 cargoes totaling 7 million barrels from the men, paying more than $800 million. Of that, roughly a third — $272 million — was diverted into an account at a Nigerian bank used for the purchases for Madueke, the US government officials said.

Stimler’s career with Glencore began in 1998 he rose through the ranks, becoming head of its West African oil trading desk. He presided over a robust expansion of its crude flows and a nearly-doubling of his desk’s annual profits to nearly $200 million in 2017.

In that same year, 2017, prosecutors from the Justice Department’s kleptocracy team filed a case in Houston to seize nearly $145 million worth of assets — including an $80 million, 215-foot yacht called the Galactica Star, a $50 million Billionaire’s Row apartment in New York and homes in California — that it said were purchased for the benefit of Nigeria’s oil minister, Diezani Alison-Madueke, with embezzled funds.

Stimler has implicated seven others, including at least four Glencore traders, in making bribe payments, and authorities say the scheme started before him.

Read also: Nigeria fails in bid to restore 0.3mbpd oil pipeline

Following Buhari’s election in 2015, Madueke fled Nigeria and has been living in London. She has been charged with corruption by Nigerian authorities but has so far successfully evaded extradition, and she is under investigation by U.K. authorities as well.

But in hindsight it seemed, fleeing Nigeria was a hasty decision considering the scale of corruption and oil theft under Buhari, the supposed corruption fighter will make Diezani look like she’s ‘upcoming’ (apologies to Nigerian entertainers). Since Buhari took over the realms as Petroleum minister and president, paying bribes seems tame when 3million barrel capacity vessels are docking on Nigerian waters and hauling stolen crude directly from flowlines.

Which is why Nigeria’s bid to claim compensation from the British subsidiary of mining and trading group Glencore over bribes paid to officials at NNPC – which it enabled – seemed absurd. Nigerian lawyers appealed to the London Court before Glencore’s sentencing for a right to a portion of the compensation but were denied.

Judge Peter Fraser ruled that Nigeria did not have the right to be heard, as only the prosecution, in the case the UK SFO, and the defence could make arguments at a sentencing hearing slated for Thursday.

Nigeria cannot be a victim in a crime it enabled!

The insatiable greed of Nigerian government officials including officials of the state oil company, the NNPC, means ordinary Nigerians lose out. They are not able to derive benefits from oil in their land.

Just as was seen in the United States, the UK stands to benefit from any ruling indicting Glencore for its crime. The United States fined Glencore, the sum of $1.2 billion as penalty for bribes paid to corrupt officials in Nigeria and other countries, in a move that rewards a country that suffered no damage from the company’s crime.

Following prolonged investigations by Brazil, the United Kingdom, and the United States, two Glencore subsidiaries pleaded guilty on May 24 to multiple charges of market manipulation and bribery, including corruption related to the company’s oil operations in Africa and South America.

Glencore’s penalties to the U.S. alone for violating the U.S. Foreign Corrupt Practices Act (FCPA) and manipulating commodity prices is about $1.2 billion. The company is registered in the United States hence the investigation.

According to the investigating countries, Glencore’s corrupt actions included more than $100 million in bribes to officials in Brazil, Cameroon, Côte d’Ivoire, Equatorial Guinea, Nigeria, South Sudan, and Venezuela between 2007 and 2018.

“The scope of this criminal bribery scheme is staggering,” said U.S. Attorney Damian Williams for the Southern District of New York. “Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money – hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives.”

According to the US department of Justice release, in the DRC, Glencore admitted that it conspired to and did corruptly offer and pay approximately $27.5 million to third parties, while intending for a portion of the payments to be used as bribes to DRC officials, in order to secure improper business advantages.

Glencore also admitted to the bribery of officials in Brazil and Venezuela. In Brazil, the company caused approximately $147,202 to be used, at least in part, as corrupt payments for Brazilian officials. In Venezuela, Glencore admitted to conspiring to secure and securing improper business advantages by paying over $1.2 million to an intermediary company that made corrupt payments for the benefit of a Venezuelan official.

Following the US decision to fine Glencore and keep the proceeds, the African Energy Chamber called on the U.S. government to use the USD1.2 billion in penalties Glencore is paying to empower Africans.

“They’re the real victims of Glencore’s malfeasance and mistakes,” the group said.

According to AEC, Glencore’s penalties should go to organizations like Power Africa, a public-private partnership formed by the U.S. to help address energy poverty in sub-Saharan Africa — a goal shared by the African Energy Chamber.

Glencore’s corruption and state capture have undermined efforts to make energy poverty history. Directing money to Power Africa will help change living conditions for more than 600 million people in sub-Saharan Africa who currently go without reliable electricity, the group said.

Alternatively, the group said African countries need trillions of dollars to finance their transition to renewable energies in support of international climate goals and the funds could go a long way.

But that never happened, the United States government kept the money and the UK government could also keep what fines and penalties it forces Glencore to pay. Yet Nigeria and other poor African countries where these fraudulent actions occur, gets no dime.

If the Buhari government were serious about fighting corruption, the successful prosecution of Glencore in the United States and the United Kingdom should have triggered some sort of legal inquiry in Nigeria to hold accountable those Nigerian officials who enabled the corruption.