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Glencore's Certification and Guilty Plea Puts Spotlight on Individual Accountability and Cooperation Glencore's Certification and Guilty Plea Puts Spotlight on Individual Accountability and Cooperation

Glencore's Certification and Guilty Plea Puts Spotlight on Individual Accountability and Cooperation Credit for Internal Investigations

On May 24, 2022, Glencore International A.G. pled guilty in the Southern District of New York to violations under the Foreign Corrupt Practices Act (FCPA), while Glencore Ltd., pled guilty in the District of Connecticut to a commodity price manipulation scheme conspiracy as part of a separate resolution. 

The result of this investigation and plea agreement made three things clear: (1) internal investigations must move swiftly to receive full cooperation credit; (2) remediation of culpable employees must move swiftly to receive full cooperation credit; and (3) individual compliance certifications signed by C-Suite executives holding them personally accountable, appears to be the trend among future corporate plea agreements. Glencore’s plea agreement is consistent with Deputy Attorney General Lisa Monaco’s keynote address earlier this year at the New York City Bar Association’s 10th Annual White Collar Crime Institute, in which she stated individual accountability is a top priority for the Biden administration and seen as an invaluable mechanism for deterrence.   

As explained in the Department of Justice’s recent press release, Glencore’s violations under the FCPA were substantial. Glencore made approximately $100 million in payments to intermediaries to retain business with state-owned or state-controlled entities in seven different countries across two different continents. The core conduct at issue involved bribes in the form of sham consulting agreements, inflated invoices, and using sham intermediaries to make corrupt payments to various foreign officials.   

Under the terms of its plea agreement, Glencore pled guilty to one count of conspiracy to violate the FCPA and agreed to a criminal fine of $428,521,173. In its press release dated May 24, 2022, the Department of Justice found that while compliant, Glencore “did not at all times demonstrate a commitment to full cooperation” by failing to timely produce relevant evidence and by failing to timely implement appropriate remedial measures against certain culpable employees of Glencore. 
 

Take-aways from the Glencore plea agreement. 


While recognizing Glencore’s cooperation, the Department of Justice ultimately found the results of Glencore’s internal investigation to be not “timely enough” when it came to reviewing and producing documents and identifying and disciplining culpable individuals. Put another way, it appears there was some debate over whether Glencore’s internal investigation could have moved faster to demonstrate a greater level of commitment to “cooperation.” That debate highlights the friction between a corporate client’s desire to undertake a deliberate and thorough root cause analysis while trying to control the costs it takes to perform those same tasks at a pace deemed timely enough to demonstrate full cooperation. Glencore’s timing challenges and failure to be granted full cooperation credit makes this friction much less hypothetical. 

In its plea agreement, Glencore’s Chief Executive Officer and Head of Compliance were required to certify to the Fraud Section of the Department of Justice that Glencore has met its compliance obligations pursuant to the terms and conditions set forth in its plea agreement. Importantly, this certification constitutes a material statement and representation under 18 U.S.C. §1001. And while the Department of Justice characterizes this new certification requirement as encouraging corporate ownership in the company’s compliance program, it also represents a shift in corporate liability to make it more personal to the individual signatories for these certifications. 

The Glencore Certification states the CEO and Head of Compliance certify that Glencore’s compliance program is now “reasonably designed” to prevent future anti-corruption violations pursuant to 18 U.S.C. § 1001. What constitutes a reasonably designed compliance program, however, is inherently subjective creating a unique risk profile for any executive signing a Glencore type certification. Moreover, individual liability related to a “Glencore Certification” becomes much more complicated when a company’s compliance program extends to dozens of business operations for thousands of employees all over the world.    

As certifications like Glencore’s become more mainstream, it is likely the size, shape, and speed of internal investigations will adjust accordingly to not only secure full cooperation credit, but to provide a basis upon which individuals feel comfortable personally certifying an organization’s compliance infrastructure pursuant to the new standards the Department of Justice is requiring. 

For more information about this issue, contact Daniel Polatsek, white collar partner focusing on internal investigations and anti-corruption compliance.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
 
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