The US regulatory investigation into Glencore’s activities in Nigeria and Venezuela is focused on agreements to secure oil supplies for its trading arm, according to the company’s annual report.
The Swiss-based group was ordered in July to hand over records related to its compliance with US money-laundering laws and the Foreign Corrupt Practices Act (FCPA) by the Department of Justice.
As well as the company’s operations in Nigeria and Venezuela, the DoJ is also investigating Glencore’s activities in the Democratic Republic of Congo, Africa’s biggest copper producer.
The scope of the investigation dates as far back as 2007. In the annual report, Glencore’s auditor Deloitte notes the company’s activities in Nigeria within this period were “limited primarily to oil offtake agreements.”
It goes on to say: “Its [Glencore’s] activities in Venezuela over the period which is subject to the investigation cover certain oil offtake contracts with the Venezuelan national oil company, Petróleos de Venezuela.”
It added: “On receipt of the subpoena, the Glencore Board of Directors reconstituted the existing Investigations Committee to assess the implications of the investigation and to oversee the Company’s response to the DoJ’s investigation.”
“This Committee has engaged external independent legal counsel in the US to lead the investigation, who has in turn appointed forensic accountants to assist in the investigation.”
The DoJ investigation has weighed heavily on Glencore’s share price, which has fallen 23 per cent over the past year and lagged all of its major rivals.
The DoJ subpoena arrived just weeks after Glencore settled a legal dispute over unpaid royalties with Dan Gertler, a former business partner who has been sanctioned by the US for “opaque and corrupt oil and mining deals” in the DRC.
Glencore has responded by launching a share buyback programme, with an aim to repurchase $3bn of stock this year.
In the annual report, Glencore also acknowledges that investigations have commenced “relating to transactions in Brazil with Petrobras by a number of trading companies including Glencore”.
The other traders embroiled in the latest iteration of Brazil’s Car Wash corruption scandal are Trafigura and Vitol.
