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OPINION: Glencore leadership must be held accountable for the company’s corrupt behavior (by NJ Ayuk)

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  By NJ Ayuk CEO of the African Energy Chamber www EnergyChamber org After US energy company Enron grabbed global headlines in the early 2000s for accounting and corporate fraud attention quickly turned to those responsible for the company s actions Ultimately Enron executives Kenneth Lay Jeffrey Skilling and Andrew Fastow were convicted of federal felonies That was the appropriate response When corporations engage in illegal behavior the people responsible face repercussions and often do Why then have the executives of Swiss based mining and commodity multinational Glencore Plc been spared the consequences of responsibility for years of corrupt behavior In May two of the company s subsidiaries pleaded guilty to various charges of market manipulation and bribery in various countries following extensive investigations by Brazil the United Kingdom and the United States A month later a Glencore subsidiary pleaded guilty to seven bribery charges related to its oil operations in Cameroon Congo Equatorial Guinea Ivory Coast Nigeria and South Sudan I realize that the US UK and Brazil have imposed over 1 5 billion in fines on Glencore and more could follow after the Swiss and Dutch investigations are completed But the repercussions should not be limited to fines No company has pleaded guilty to so much corruption We find it extremely troubling that executives who sanctioned and profited from corruption have thus far escaped unscathed The African Energy Chamber firmly believes that Glencore s leaders must be held accountable for their actions Anything less sends the message that bribery is a necessary evil in regions of the world like Africa That is not true Now is the time to make that reality very clear to the corporate leaders who do business here Brazen behavior It is important to note that Glencore s actions were more than a one time event Glencore International AG and its subsidiaries bribed officials in seven countries for more than a decade In fact corrupt behavior was well ingrained in the company culture The bribe was simply one of their operating expenses It is also galling to see how Glencore behaved in African countries In 2015 for example when Glencore wanted to buy cargoes of oil from Nigeria it handed over 50 000 per cargo for what it described as advance payment The result for Glencore 124 million in illicit profits The results for Nigerian government business and communities missed opportunities to engage in productive partnerships with companies interested in creating jobs supporting local businesses sharing knowledge and fostering economic growth Glencore has also managed to avoid the consequences of unethical business dealings in Africa In one case after the company was sued for breach of contract in the Democratic Republic of the Congo and fined 16 million in damages Glencore paid the judge 500 000 and the lawsuit was gone Glencore has admitted to paying 27 5 million in bribes in the Democratic Republic of the Congo alone Imagine if Glencore were an African company Adding insult to injury in the Glencore scandal are the obvious double standards we have been seeing Consider IOC due diligence and know your customer KYC policies for doing business in Africa IOCs tell local business representatives who dare to bribe or tip a police officer harassing them on the streets that they don t do due diligence They will never be contracted for the provision of goods or services I want to be clear I respect companies that demonstrate high standards of ethical behavior The problem arises when those standards are not applied uniformly At the same time that African companies are being scrutinized for the slightest hint of corrupt behaviour Glencore continues to do business with oil gas and mining companies that claim to be champions of transparency Banks also continue to work with Glencore Aside from some negative attention and financial repercussions Glencore appears to be avoiding serious consequences for its actions Last spring I petitioned the Oslo based Extractive Industries Transparency Initiative EITI to terminate Glencore s membership pointing out that the company s participation in the EITI began when Glencore was engaged in the exact type of behavior that the initiative strives to eradicate That has not happened EITI raised concerns about Glencore s behavior in a statement from its chairman Rt Hon Helen Clark but nothing else has emerged Their silence is a betrayal of the very principles they hold dear Let s look at the sanctions imposed on Glencore They re big but when you consider Glencore s size and resources it s hard to imagine they ll have a significant impact On the contrary Glencore appears to be prospering In a recent article UK based Proactive Investors Limited noted that Glencore shares have risen in value by more than 50 in the past year One reason is that all the ESG environmental social and corporate governance bluster about ending coal use is now being dismissed by one European country after another and Glencore produces a lot of coal Proactive writes And that s only part of the picture for Glencore As Christopher Helman wrote for Forbes Glencore is in the enviable position of being among the world s largest energy traders at a time of rising prices and scarcity as well as one of the largest miners of metals such as copper aluminum and cobalt all vital in the manufacture of batteries for electric vehicles and other alternative energy sources Which means that while billions of dollars in fines may sting a bit Glencore probably won t feel it in the long run Glencore s African victims are not so bulletproof but we have yet to hear of compensating them for the corruption and injustices that have taken place in their countries Africans then and now need good governance to meet their needs grow the economy address energy poverty create jobs and business opportunities and foster stability Bribery undermines all of that Currently African oil and gas producing countries are struggling to maintain their energy industries which are capable of supporting the goals listed above against tremendous pressure from environmentalists and Western countries who want to see an immediate transition to green energy in our continent Yes Europe has relaxed a bit in looking to Africa to help lessen its dependence on Russian oil but that won t last forever Glencore s corrupt acts and manipulation have robbed African countries of some of the precious time they need to fully capitalize on their oil and gas resources And the damage doesn t stop there As I have written more than once corruption is not a new problem in Africa but it is one that many are working to eliminate Corruption robs people of justice Instead of empowering people to improve their lives it entrenches communities in poverty It is an ingredient for dissatisfaction lack of trust in government leaders instability and even violence Yes every corrupt act Glencore engaged in involved another party a scope had to accept their bribes But the company s full acceptance of the bribe and the grotesquely large payments it handed out only helped corruption become more entrenched in Africa Once again Glencore s corruption is more than a company it all goes back to the people who make the decisions So yes investigating Glencore was the right decision The financial sanctions were appropriate But those steps are simply not enough Glencore should face the same kind of repercussions that African companies would face for continued blatant corruption You shouldn t be doing business as usual And neither should the executives behind Glencore s stock
OPINION: Glencore leadership must be held accountable for the company’s corrupt behavior (by NJ Ayuk)

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African Energy Chamber

By NJ Ayuk, CEO of the African Energy Chamber (www.EnergyChamber.org) After US energy company Enron grabbed global headlines in the early 2000s for accounting and corporate fraud, attention quickly turned to those responsible for the company’s actions.

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Ultimately, Enron executives Kenneth Lay, Jeffrey Skilling, and Andrew Fastow were convicted of federal felonies.

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That was the appropriate response.

When corporations engage in illegal behavior, the people responsible face repercussions, and often do.

Why, then, have the executives of Swiss-based mining and commodity multinational Glencore Plc been spared the consequences of responsibility for years of corrupt behavior?

In May, two of the company’s subsidiaries pleaded guilty to various charges of market manipulation and bribery in various countries following extensive investigations by Brazil, the United Kingdom and the United States.

A month later, a Glencore subsidiary pleaded guilty to seven bribery charges related to its oil operations in Cameroon, Congo, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.

I realize that the US, UK and Brazil have imposed over $1.5 billion in fines on Glencore, and more could follow after the Swiss and Dutch investigations are completed.

But the repercussions should not be limited to fines.

No company has pleaded guilty to so much corruption.

We find it extremely troubling that executives who sanctioned and profited from corruption have, thus far, escaped unscathed.

The African Energy Chamber firmly believes that Glencore’s leaders must be held accountable for their actions.

Anything less sends the message that “bribery is a necessary evil” in regions of the world like Africa.

That is not true.

Now is the time to make that reality very clear to the corporate leaders who do business here.

Brazen behavior It is important to note that Glencore’s actions were more than a one-time event.

Glencore International AG and its subsidiaries bribed officials in seven countries for more than a decade.

In fact, corrupt behavior was well ingrained in the company culture.

The bribe was simply one of their operating expenses.

It is also galling to see how Glencore behaved in African countries.

In 2015, for example, when Glencore wanted to buy cargoes of oil from Nigeria, it handed over $50,000 per cargo for what it described as “advance payment.”

The result for Glencore: $124 million in illicit profits.

The results for Nigerian government, business and communities: missed opportunities to engage in productive partnerships with companies interested in creating jobs, supporting local businesses, sharing knowledge and fostering economic growth.

Glencore has also managed to avoid the consequences of unethical business dealings in Africa.

In one case, after the company was sued for breach of contract in the Democratic Republic of the Congo and fined $16 million in damages, Glencore paid the judge $500,000 and the lawsuit “was gone”.

Glencore has admitted to paying $27.5 million in bribes in the Democratic Republic of the Congo alone.

Imagine if Glencore were an African company Adding insult to injury in the Glencore scandal are the obvious double standards we have been seeing.

Consider IOC due diligence and know-your-customer (KYC) policies for doing business in Africa.

IOCs tell local business representatives who dare to bribe or tip a police officer harassing them on the streets that they don’t do due diligence.

They will never be contracted for the provision of goods or services.

I want to be clear: I respect companies that demonstrate high standards of ethical behavior.

The problem arises when those standards are not applied uniformly.

At the same time that African companies are being scrutinized for the slightest hint of corrupt behaviour, Glencore continues to do business with oil, gas and mining companies that claim to be champions of transparency.

Banks also continue to work with Glencore.

Aside from some negative attention and financial repercussions, Glencore appears to be avoiding serious consequences for its actions.

Last spring, I petitioned the Oslo-based Extractive Industries Transparency Initiative (EITI) to terminate Glencore’s membership, pointing out that the company’s participation in the EITI began when Glencore was engaged in the exact type of behavior that the initiative strives to eradicate.

That has not happened.

EITI raised concerns about Glencore’s behavior in a statement from its chairman, Rt Hon Helen Clark, but nothing else has emerged.

Their silence is a betrayal of the very principles they hold dear.

Let’s look at the sanctions imposed on Glencore.

They’re big, but when you consider Glencore’s size and resources, it’s hard to imagine they’ll have a significant impact.

On the contrary: Glencore appears to be prospering.

In a recent article, UK-based Proactive Investors Limited noted that Glencore shares have risen in value by more than 50% in the past year.

“One reason is that all the ESG (environmental, social and corporate governance) bluster about ending coal use is now being dismissed by one European country after another, and Glencore produces a lot of coal,” Proactive writes.

And that’s only part of the picture for Glencore.

As Christopher Helman wrote for Forbes, “Glencore is in the enviable position of being among the world’s largest energy traders at a time of rising prices and scarcity, as well as one of the largest miners of metals such as copper, aluminum and cobalt, all vital.

in the manufacture of batteries for electric vehicles and other alternative energy sources”.

Which means that while billions of dollars in fines may sting a bit, Glencore probably won’t feel it in the long run.

Glencore’s African victims are not so bulletproof, but we have yet to hear of compensating them for the corruption and injustices that have taken place in their countries.

Africans, then and now, need good governance to meet their needs, grow the economy, address energy poverty, create jobs and business opportunities, and foster stability.

Bribery undermines all of that.

Currently, African oil and gas producing countries are struggling to maintain their energy industries, which are capable of supporting the goals listed above, against tremendous pressure from environmentalists and Western countries who want to see an immediate transition to green energy in our continent.

Yes, Europe has relaxed a bit in looking to Africa to help lessen its dependence on Russian oil, but that won’t last forever.

Glencore’s corrupt acts and manipulation have robbed African countries of some of the precious time they need to fully capitalize on their oil and gas resources.

And the damage doesn’t stop there.

As I have written more than once, corruption is not a new problem in Africa, but it is one that many are working to eliminate.

Corruption robs people of justice.

Instead of empowering people to improve their lives, it entrenches communities in poverty.

It is an ingredient for dissatisfaction, lack of trust in government leaders, instability and even violence.

Yes, every corrupt act Glencore engaged in involved another party: a scope had to accept their bribes.

But the company’s “full” acceptance of the bribe and the grotesquely large payments it handed out only helped corruption become more entrenched in Africa.

Once again, Glencore’s corruption is more than a company: it all goes back to the people who make the decisions.

So yes, investigating Glencore was the right decision.

The financial sanctions were appropriate.

But those steps are simply not enough.

Glencore should face the same kind of repercussions that African companies would face for continued blatant corruption.

You shouldn’t be doing business as usual.

And neither should the executives behind Glencore’s stock.

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