One of General Motors’ prominent partners in the automaker’s drive to develop electric vehicles has agreed to pay fines in Brazil, the U.S. and the U.K. totaling $1.2 billion for criminal behavior of various subsidiaries.
“The scope of this criminal bribery scheme is staggering,” Damian Williams, U.S. Attorney for the Southern District of New York, says after Glencore pleaded guilty to criminal charges in the U.S. and agreed to pay more than $700 million in fines. Authorities in Brazil and Great Britain levied other penalties exceeding $500 million.
“Glencore paid bribes to secure oil contracts,” Williams (pictured, below left) says. “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.”
U.S. Attorney Vanessa Roberts Avery adds, “Glencore’s market price manipulation threatened not just financial harm, but undermined participants’ faith in the commodities markets’ fair and efficient function that we all rely on.”
According to court documents, Glencore and its subsidiaries made payments totaling approximately $79.6 million to intermediary companies between approximately 2007 and 2018 in order to improperly obtain and retain business with state-owned and state-controlled entities in West Africa, including Nigeria, Cameroon, Ivory Coast and Equatorial Guinea.
Switzerland-based Glencore, one of the world’s largest mining concerns, concealed the bribery scheme by entering into sham consulting agreements, paying inflated invoices and using intermediary companies to make corrupt payments to foreign officials, the documents show.
“This guilty plea, and the substantial financial penalty incurred, is an appropriate consequence for Glencore’s criminal conduct, and we are pleased that Glencore has agreed to cooperate in any ongoing investigations and prosecutions relating to their misconduct, and to strengthen its compliance program companywide,” Roberts Avery says.
GM issued this statement regarding Glencore: “Prior to the execution of our agreement with Glencore for cobalt sourced from its Australian operations (April 2022: GM and Glencore Enter Multi-Year Cobalt Supply Agreement), we spent significant time performing due diligence and evaluating Glencore’s compliance position. Their recent settlement confirms Glencore is implementing remediation actions and is allocating resources towards developing a best-in-class ethics and compliance program.”
Automakers are scrambling to find acceptable sources of critical minerals as they begin the transition to battery-powered vehicles, which require minerals such as cobalt, copper and nickel. Cobalt is a metal that makes up only 0.001% of the earth’s crust. It is known for its heat-resistant properties and is added to lithium-ion battery cathodes to improve energy density and battery longevity.
Glencore and GM now have a multi-year sourcing agreement in which Glencore will supply the automaker with cobalt from Australia rather than West Africa. The cobalt processed from Australia will be used in GM’s Ultium battery cathodes, which will power vehicles such as the battery-electric Chevrolet Silverado, GMC Hummer and Cadillac Lyriq.
“The agreement builds on a commitment both companies share to create strong, sustainable and resilient supply chains through collective industry and multi-stakeholder platforms,” according to GM’s announcement of the deal with Glencore.
Adds Jeff Morrison, GM vice president-Global Purchasing and Supply Chain: “GM and our suppliers are building an EV ecosystem that is focused on sourcing critical raw materials in a secure sustainable manner. Importantly, given the critical role of EVs in reducing the carbon footprint of the transportation sector, this agreement is aligned with our approach to responsible sourcing and supply-chain management.”