Bribing officials and manipulating markets: mysterious commodity giant Glencore fined $10 billion

It is reported that the $1.5 billion fine sets one of the highest anti-corruption penalty records to date—yet for Glencore, this sum is merely a drop in the bucket. Analysts estimate that, buoyed by surging commodity prices, Glencore’s profits this year are expected to exceed $17 billion—meaning the company could recoup the fine in just one month. Notably, although Glencore has already reached settlements with authorities in the U.S., the U.K., and Brazil, it still faces ongoing investigations by Swiss and Dutch authorities—the timelines and outcomes of which remain uncertain. Over a Decade of Bribery Yielding Extraordinary Returns According to Glencore’s admitted misconduct, this industry giant engaged in bribery for over ten years. Government officials bribed were primarily from seven countries: Nigeria, Cameroon, Côte d’Ivoire, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo. Through this series of bribery schemes, Glencore reaped substantial returns. As stated by the U.S. Department of Justice, between 2007 and 2018, Glencore paid $52 million in bribes to Nigerian officials and earned $124 million in profits; in Cameroon, a $21 million bribe generated $67 million in profit; in Côte d’Ivoire, a $4 million ‘investment’ yielded a $30 million ‘return.’ Glencore also paid officials in Brazil and Venezuela to secure favorable cooperation with Petrobras and obtain special treatment from Venezuela’s state-owned oil company PDVSA. Additionally, Glencore bribed judges to win a lawsuit… Such cases are numerous. What is certain, however, is that Glencore spared no expense to secure gains—sometimes raising bribe amounts to as much as half its illicit profits. To conceal bribery, Glencore used coded terms such as “newspaper,” “journal,” and “chocolate.” Bribe payments were sometimes hidden among large cash deliveries or routed through third-party companies; at other times, they were disguised as “advance payments,” “marketing services,” or “commissions” on falsified invoices. Glencore’s bribery scandal continues to unfold, drawing in senior executives. According to U.S. Department of Justice documents, former Glencore executives directly participated in the bribery scheme. Specifically, “Executive 1” agreed in 2011 to pay $14 million via a West African intermediary company, fully aware that “this money would be used, at least in part, to bribe Nigerian officials.” “Executive 3” participated in bribery in the Democratic Republic of the Congo. In email correspondence with Glencore’s local agent, the executive was informed that “political pressure” was needed to win a contractual dispute—and that a reasonable quantity of “ammunition” would successfully alter the case’s outcome. Days later, a Glencore subsidiary paid $500,000. Leaking False Information to Manipulate Oil Benchmarks Beyond bribery, Glencore also admitted to manipulating U.S. fuel price benchmarks. As the world’s largest commodities trader, Glencore’s operations include fuel oil trading. To boost profits, Glencore traders conspired to manipulate U.S. petroleum benchmark prices. Documents show that, between 2011 and 2019, Glencore employees were instructed to submit bids and offers during the daily trading window used by data provider S&P Global Platts to set its price assessments—intentionally inflating or depressing Platts’ price evaluations.

Inside the energy futures manipulation case

Across the Atlantic in the United States, another classic tactic is known as “banging the close.” As early as March 2007, Dutch proprietary trading firm Optiver and its subsidiaries targeted light sweet crude oil, New York Harbor heating oil, and gasoline futures contracts traded on the New York Mercantile Exchange (NYMEX). Optiver’s strategy was highly precise: it built large positions in Trade-at-Settlement (TAS) contracts, then—in the critical moments before market close—actively bought and sold corresponding futures contracts to deliberately inflate or depress the settlement price. Through such manipulation, Optiver artificially engineered settlement prices favorable to its own positions. The Commodity Futures Trading Commission (CFTC) noted that, during that month alone, Optiver attempted market manipulation at least 19 times—succeeding in creating artificial prices on five occasions. Even more egregiously, when NYMEX launched an investigation, Optiver and its executives attempted to cover up their conduct by making false statements. In 2012, a court ultimately ordered Optiver to pay $14 million in penalties and disgorgement of ill-gotten gains, while imposing multi-year trading bans on the implicated executives. II. A “Systemic Scheme” by a Commodities Giant: The Glencore Case If manipulation by individual traders and small institutions amounts to minor skirmishes, the scale of misconduct involving global commodities trading giant Glencore is staggering. This case reveals how market manipulation can become institutionalized and systematically executed across an entire corporation. According to the CFTC’s investigation, from 2007 through at least 2018—spanning more than a decade—Glencore implemented a sweeping scheme to manipulate the oil market and defraud other market participants, using both bribery and material non-public information. The central targets of this scheme were a series of fuel oil benchmark prices published by S&P Global Platts—including the Los Angeles marine fuel oil benchmark and the New York Harbor No. 6 fuel oil benchmark. These benchmarks are not only used in physical spot transactions but also serve as settlement references for derivative contracts valued in the trillions of dollars. Glencore’s traders were intimately familiar with Platts’ “Market-on-Close” (MOC) pricing mechanism—wherein bids and offers submitted by market participants during a specific daily trading window are incorporated into Platts’ price assessments. Investigations revealed that, on days when Glencore held massive risk exposure to Platts’ fuel oil benchmarks, its traders submitted quotes during the MOC window solely to influence—or even control—the resulting assessment, thereby steering Platts’ evaluation in directions beneficial to Glencore’s positions. For example, in November 2012, Glencore’s average daily position in the U.S. Gulf Coast high-sulfur fuel oil benchmark exceeded 8.8 million barrels—equivalent to the cargo capacity of over four super-tankers. During this period, Glencore traders submitted 728 bids and bid increases to Platts, along with only 59 actual purchases—clearly aiming to manipulate the benchmark price. In July 2018, when Glencore held short positions exceeding 4 million barrels in the same benchmark, it again attempted to depress Platts’ assessment by submitting low-priced quotes during the MOC window—thus profiting from its short positions. Glencore’s scheme extended far beyond this.

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