the times | Wednesday May 25 2022 35
Business
Emily Gosden
Glencore is to pay fines of about $1.5 bil-
lion after the giant commodities group
admitted to a string of bribery offences
around the world and to manipulating
fuel markets in America.
Bribery was “built into the corporate
culture” at Glencore, resulting in a
“staggering” scheme in which it paid
more than $100 million in bribes in
South America and Africa, US author-
ities said yesterday.
The FTSE 100 group is to pay more
than $1 billion in penalties to American
authorities and $40 million to settle
bribery allegations in Brazil.
The Swiss-based trader has indicated
that it will also plead guilty in Britain to
seven bribery offences after being
charged by the Serious Fraud Office
yesterday. Penalties are due to be deter-
mined at a court hearing on June 21.
In the United States, Glencore
pleaded guilty to conspiring to violate
the US Foreign Corrupt Practices Act
over what Merrick Garland, the US
attorney-general, called a “decade-
long scheme to bribe foreign officials in
seven different countries”, including
Brazil, Venezuela, Nigeria and the
Democratic Republic of Congo. The
company also admitted to manipulat-
ing prices at two of America’s biggest
fuel oil markets over eight years.
The SFO said its investigation had
exposed “profit-driven bribery and
corruption across the company’s oil
operations in Cameroon, Equatorial
Guinea, Ivory Coast, Nigeria and South
Sudan”. It said that “Glencore agents
and employees paid bribes worth over
¤commoditiescommodities currenciescurrencies
$
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1.200$£/$
$1.2531 (-0.0026)
140
120
100
80Dow Jones
31,928.62 (+43.38)
36,000
34,000
32,000
30,0001.225
1.200
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$1,866.07 (+15.10) $
2,200
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8,000
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6,500world markets (Change on the day)
Brent crude (6pm)
$113.38 (+0.59)Apr 21May 4 11 18 Apr 25 May 3 11 18 Apr 21 May 3 11 18 Apr 25 May 3 11 18 Apr 21May 3 11 18 Apr 21May 3 11 18London-listed energy stocks fell
heavily yesterday after news broke that
Rishi Sunak is considering a windfall
tax on electricity generators.
About £2.5 billion was wiped off the
combined value of SSE, Drax and
Centrica, as companies across the sec-
tor scrambled to lobby the government
against imposing such a levy.
Analysts and executives warned that
Energy shares hit by talk of windfall tax at expense of investment
Jessica Newman, Emily Gosden tens of billions of pounds of investment
could be jeopardised by a windfall tax,
most likely on profits.
The chancellor and Boris Johnson
have indicated that they are minded to
impose a windfall tax on oil and gas
companies if they do not invest more in
Britain while profits soar because of
high commodity prices.
As the government looks to raise bil-
lions to support households facing a
steep rise in energy bills, Rishi Sunak is
considering a proposal that could ex-
tend any tax to encompass power gen-
eration companies, including wind
farm owners. The plans, first reported
by the Financial Times, said that the
government estimated £10 billion of
excess profits in the power sector.
Shares in SSE, the FTSE 100 group
that owns wind farms and gas plants
and is today expected to report rising
annual profits, fell by 150½p, or 7.9 per
cent, to £17.66. Drax, the FTSE 250company that owns a biomass and coal
power station in North Yorkshire, as
well as hydroelectric plants, declined by
12p, or 13.8 per cent, to 700p, while Cen-
trica, the British Gas owner that also
co-owns nuclear plants, lost 6½p, or
7.2 per cent, as it eased to 83¼p.
John Musk, of RBC Capital Markets,
called a tax “very short-sighted”. He
added: “The recent British Energy
Security Strategy highlights the need
for £100 billion of private investment by2030 and a large element of this would
be put at risk with a windfall tax.”
Deepa Venkateswaran, of Bernstein
Research, said she believed that the
government had “grossly overstated” a
windfall tax take from renewable gen-
erators by assuming incorrectly that
they sold all their power at spot prices.
One executive said the idea “beggars
belief”, putting at risk the investment
process in offshore wind farms.
David Smith, page 39Resources giant pleads guilty in UK and US
Glencore to
pay $1.5bn
bribes fines
$25 million for preferential access to oil,
with approval by the company”.
Glencore is one of the world’s biggest
commodities traders and miners, with
net profits of $5 billion last year. It said
it did not expect the total penalties for
the US, UK and Brazilian investiga-
tions to differ “materially” from the
$1.5 billion provision it had made in
February.
Damian Williams, US attorney for
the southern district of New York,
alleged that bribes were paid “with the
approval and even the encouragement
of top executives” and “the tone from
the top was clear: ‘whatever it takes’ ”.
Gary Nagle, Glencore’s chief execu-
tive, said: “We acknowledge the mis-
conduct identified in these investiga-
tions and have co-operated with the
authorities. This behaviour has no
place in Glencore and the board, man-
agement team and I are clear about our
commitment to be a responsible and
ethical operator wherever we work.”
Nagle, 47, took the top job last sum-
mer, succeeding Ivan Glasenberg, 65,
who had run the company for almost
two decades. Glencore said it had
invested in improving its ethics and
compliance, had let go or disciplined
employees involved in the wrongdoing
and had a “refreshed board and man-
agement team, dedicated to fostering a
culture of integrity, responsibility and
transparency”.
Tyler Broda of RBC Capital Markets,
said the news “should remove most lin-
gering concerns and take off the table
any worries around any material im-
pact to the business/forced divestments
and or any criminal sentences”.Private sector growth close to stalling
David Byers Assistant Money EditorGrowth in the private sector came close
to “grinding to a halt” this month as
businesses faced their fastest rise in
operating expenses for nearly 25 years,
heightening fears of a recession.
The S&P flash PMI composite output
index, a closely watched survey cover-
ing the services and manufacturing
industries, recorded a score of 51.8 —
down from 58.2 in April and a 15-month
low. Any score above 50 is considered
to represent growth.
“The inflation picture has worsened
as the rate of increase of companies’
costs hit yet another all-time high,”
Chris Williamson, chief business econ-
omist at S&P Global Market Intelli-
gence, said. “The survey data thereforepoint to the economy almost grinding
to a halt as inflationary pressure rises to
unprecedented levels.”
Until now, most surveys of British
business activity had been fairly robust,
despite inflation hitting a 40-year high
of 9 per cent and being forecast to rise
further. However, the S&P data showed
firms suffering their fastest rise in
operating expenses since the PMI
index was launched in January 1998.
“Even the relative buoyancy in
orders for travel and hospitality was not
enough to rescue service providers
from the sinking feeling that recession
is knocking on the door,” Duncan
Brock, group director at the Chartered
Institute of Procurement & Supply,
said.
Broken down by sector, the PMIfigures showed that the services sector
— which includes hotels and restau-
rants, among other businesses — took
the biggest hit, collapsing from 58.9 to
51.8. Manufacturing PMI was down
from 55.8 to 54.6. The overall flash
composite PMI score is compiled from
responses to questionnaires handed to
650 manufacturers and 650 service
providers. Data was collected between
May 12 and 20.
Samuel Tombs, at Pantheon Macro-
economics, the consultancy, said the
results might understate the problem.
“Don’t forget that the PMI excludes
retail sales, which are trending slightly
down, and public sector activity, which
will fall sharply, due to the dismantling
of the test-and-trace system and the
plunge in vaccinations.”Not so snappy now Miranda Kerr posed for selfies at the 2017 New York float of her husband’s company Snap, owner of
Snapchat. Yesterday the stock plunged by more than 40 per cent, leading a new technology sell-off. Full story, pages 42-43MARK LENNIHAN/AP