Corporate South Africa is once again bearing witness to a massive scandal of another JSE-listed giant, this time commodity behemoth Glencore.
Glencore, which is listed on the JSE and London Stock Exchange, said on Tuesday it anticipated paying up to $1.5 billion (R23.6bn) to settle accusations of bribery and market manipulation, as authorities in the US, Britain and Brazil announced that three of the company's subsidiaries were pleading guilty to crimes.
Shareholders have borne the brunt of executive greed, as corporate misdeeds from the likes of Steinhoff International, Tongaat Hulett and EOH, which have gutted these firms and decimated their share prices.
This as Glencore’s current management team is striving to bolster its tattered reputation as it faces the music of a bribery and market manipulation scandal, with its chairperson, Kalidas Madhavpeddi, saying: “Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred.”
South African-born Ivan Glasenberg was replaced as chief executive at Glencore last year by another South African, Gary Nagle.
By 1.41pm, Glencore’s shares were 1.88 percent lower at R102.10. The shares have risen 117.35 percent in the past three years. Glencore’s market cap is worth R1.5 trillion.
The findings come as Glencore is benefiting from soaring commodity prices.
As Glencore navigates tricky litigation waters, it has sought to reassure the market that it now has its ethics well in-hand.
The mining firm said significant steps had been taken to enhance its ethics and Compliance Programme.
Madhavpeddi said: “The Board and the management team are committed to operating a company that creates value for all stakeholders by operating transparently under a well-defined set of values, with openness and integrity at the forefront. We want the Glencore of today to be an employer of choice, attracting and retaining the best talent and competing across its sectors not only in terms of the unique value proposition that Glencore has to offer but also in its commitment to act ethically and responsibly across all aspects of its business.”
“Starting before the company knew of the DOJ’s (Department of Justice’s) investigations, Glencore had invested substantial resources towards developing a best-in-class Ethics and Compliance Programme.
“Glencore has also taken extensive remediation actions, including through the separation or discipline of employees involved in the wrongdoing. The company had a refreshed board and management team who are dedicated to fostering a culture of integrity, responsibility and transparency. The DOJ noted certain enhancements to Glencore’s compliance programme and internal controls in the resolutions,” it said.
The group said it had bolstered its compliance structures and controls through a comprehensive programme built around risk assessment, policies, procedures, standards and guidelines based on international best practices associated training and awareness initiatives as well as monitoring systems.
This had included strengthening the group’s Code of Conduct and launching a comprehensive global awareness and training campaign designed to embed Glencore’s values throughout its business, set expectations and ensure accountability for all employees.
It had also established a centralised, independent and empowered compliance function and, in 2020, appointed a new dedicated head of compliance, as well as making a significant investment in compliance systems and resources, as well as experienced personnel.
It had significantly enhanced and expanded the group’s ethics and compliance training programmes; instituted a comprehensive business partner management programme, including significantly reducing the company’s use of third-party business generating intermediaries and employing end-to-end controls to oversee their engagement; implemented extensive monitoring and testing mechanisms, including through the use of data analytics, to assess whether its controls were entrenched and effective across the group and ensure continuous improvement.
Glencore had also engaged leading external advisers to review Glencore’s systems and verify that controls were working as intended.