After Criminal complaint by Public Eye: Glencore convicted following corrupt mine deals in the DRC

^{22. August 2024}

Seven years ago, Public Eye filed a criminal complaint against Glencore. On 5 August 2024, the OAG announced the long-awaited guilty verdict. It found Glencore guilty of "inadequate organisation" (Art. 102 of the Swiss Criminal Code (SCC)) and imposed a fine of 2 million Swiss francs and a claim of 150 million US dollars on the company. According to the OAG, the commodities trading group had failed to take the necessary precautions to prevent foreign public officials being bribed in connection with mine deals in the DRC. 

As long ago as May 2022, Glencore had pleaded guilty in the USA to cases of bribery in the DRC. The OAG extended its related investigation to cover these two additional cases and imposed a claim of 29.7 million US dollars on the company in May 2023. The most recent penatly in Switzerland allows Glencore to draw a line under a decade of corruption in the DRC, at least in legal terms. 

Corrupt mine deals

Glencore used the services of the Israeli businessman Dan Gertler in the DRC to engineer highly profitable mine deals. The British NGO Global Witness informed the authorities as long ago as 2012 about Gertler’s dubious practices and about the suspicion that he was paying bribes. Because of his corrupt business dealings, Gertler is now on the US sanction list. The fact that the Swiss justice system is penalising corrupt practices in this high-risk sector more than a decade later sends out a very positive signal.

Public Eye filed the criminal complaint following the publication of the "Paradise Papers", which shed new light on the purchase of copper and cobalt mines in the DRC. This concerned the company Katanga Mining, where Gertler brought about a staggering price reduction on behalf of Glencore in 2008 during new negotiations with Joseph Kabila’s government. It also related to the Mutanda and Kansuki mines, where in 2011 Gertler acquired shares from the Congolese state mining company at far below their market value. 

After four years of investigations, the OAG opted not to bring the case before the Swiss Federal Criminal Court and instead imposed a summary penalty order on Glencore. The OAG’s findings showed that around 26 million US dollars had been transferred to Swiss bank accounts controlled by Gertler, of which around 10 million US dollars were paid in cash to a high-ranking official and close associate of the then president of the DRC. Glencore ultimately benefited financially from the deals, as the OAG’s judgement states.

A manageable judgement

The decision not to bring the case before the court seems to have suited Glencore too, because the company did not contest the summary penalty order. This may be because the guilty verdict only concerned the Mutanda and Kansuki cases, but not Katanga Mining. The ruling and associated abandonment order of the OAG also brought the Katanga Mining proceedings to an end. In 2017, Public Eye estimated that the Katanga deal had deprived the people of the DRC of potential earnings of 445 million US dollars. Read more about this case in our web dossier.

Furthermore, as a result of investigations the OAG did not succeed in proving that Glencore or its employees were aware of specific bribes being paid. Public Eye finds this surprising, because during the same period from 2010 to 2012 Glencore admitted in the USA that a top executive from the copper division and another employee knew about other corrupt business dealings and bribery in the DRC. 

The OAG did not charge any Glencore employees as a result of its findings, but has found the company guilty of inadequate organisation (Art. 102 SCC) in connection with the bribery of foreign public officials (Art. 322septies SCC). It stated that Glencore had failed to identify the "key risk" of bribery and had "outsourced" its business activities to its business partner Gertler. 

Once again, a company is held liable while the actual decision-makers avoid prosecution.

Glencore comes off lightly

The summary penalty order of 150 million US dollars also lets Glencore off lightly, despite the fact that the OAG emphasises that it has imposed the order in the normal way on the basis of the principle that crime must not pay in financial terms. Unfortunately, outside observers fail to understand its calculations.

The OAG dismissed our attempt to find out more about this by submitting a list of questions. It stated that it was not able to provide any more information on the subject as this would equate to allowing confidential investigation files to be inspected. Even Public Eye, which filed the criminal complaint, is not permitted to access the files. The organisation has been calling for NGOs to be allowed to appear as private claimants in corruption cases, which would give them comprehensive rights of inspection and participation. 

Is the monetary penalty appropriate? A value estimate of the Mutanda mine which Glencore published only a few months after the corrupt transaction indicates that the Congolese people have been deprived of a much larger amount than that calculated by the OAG. Public Eye estimates that the summary penalty order would have to be at least 130 million US dollars higher simply to cover the earnings from shares in this mine obtained in a corrupt deal. 

Switzerland takes its share

The three mine deals involving Glencore deprived the Congolese people of almost one billion US dollars in public income. The DRC has received very little in return. As part of a settlement agreement for a decade of deals in the country that were suspected of being corrupt, the government of the DRC was paid 180 million US dollars by Glencore in December 2022. This agreement has been the subject of significant criticism in Congolese civil society. Not only its contents but also the purposes for which the money was used have remained secret. In addition, the agreement covers all previous and future allegations relating to this period. The result is that the company has permanently bought its way out of all accusations of corruption that apply to the period between 2007 and 2018 in a non-transparent manner. 

After Switzerland has already outsourced the environmental and human-rights-related risks involved in the mining industry, the new judgement from the OAG also puts Switzerland in a better position than the DRC from a purely financial perspective. The country, which is home to many commodities firms, is set to receive monetary penalties of 179.7 million US dollars and fines of 2 million Swiss francs from Glencore. Combined, this is over one million Swiss francs more than was paid to the central African state. 

This money is not being returned to the Congolese people. Following another corruption case in the commodities sector, in 2022, the Swiss Federal Council stated that "the statutory requirements for repayment have not been met". It is likely that this interpretation also applies in the current case and it has already been subject to criticism from observers in the DRC. 

The Swiss parliament urgently needs to introduce reform to ensure that Swiss economic policy does not culminate in the country increasing its wealth following crimes of corruption committed by Swiss-based companies abroad.

A poor deal for the people of the DRC

Glencore continues to dispute the result of the investigation by the OAG, but has not contested the summary penalty order. The company, which is based in the town of Baar, can now close a dark chapter in its history while only paying out a fraction of its earnings from the mines in the DRC. In 2023, they produced copper and cobalt, two metals which are essential to the so-called green revolution, with a value of more than 3 billion US dollars.

Although Dan Gertler has been placed on the US sanctions list because of his role as a corrupt middleman in the DRC, he continues to receive tens of thousands of dollars from Glencore every day as royalty payments from these mines, which were purchased as a result of criminal activities. 

The conclusion of the proceedings has brought little or no benefit to the actual victims. The Congolese people have been cheated out of hundreds of millions of dollars of earnings from the corrupt commodities transactions which should have been used by the state to fund infrastructure projects such as schools and hospitals.