Last month, Glencore and Lafarge, two well-known multinationals, made international headlines after their guilty pleas for criminal conduct abroad led to multimillion dollar settlements and gave rise to civil claims. Glencore, a mining company headquartered in Switzerland, reached a multimillion dollar settlement with the Democratic Republic of the Congo (“DRC”). That same month, US military families sued Lafarge, a French company, after the company reached a settlement with the US government for financing terrorist groups in Syria.
Glencore’s settlement with the DRC was part of a complex investigation involving the United Kingdom, Brazil, and the United States. In May 2022, the Department of Justice announced that Glencore agreed to pay over $1.1 billion for foreign bribery and market manipulation schemes. The DOJ’s investigation revealed that Glencore, through its employees and agents, designed a scheme to pay more than $100 million in bribes to officials in several countries in Latin America and Africa, including in the DRC.
Additionally, families of servicemen killed by ISIS sued Lafarge after the company pleaded guilty to financing a foreign terrorist organization to keep its cement operations in Syria in the midst of a brutal armed conflict.
This post discusses the Glencore and Lafarge cases and their recent guilty pleas for bribery and for financing foreign terrorist organizations, respectively. These cases are discussed through the lens of the DOJ’s new strategy to prosecute corporate misconduct. This blog considers how these cases could be a starting point for corporate accountability and access to remedy, rather than as the gold standard.
In the fall of 2021, Lisa Monaco, the Deputy Attorney General of the United States, announced a shift in the DOJ’s strategy on prosecuting corporate crimes: DOJ was going to get much tougher. Previously, the Department resorted to Deferred or Non-Prosecution Agreements to reach settlements with corporations that violated federal laws. Deferred Prosecution Agreements (“DPAs”) require a corporation to admit to some facts to support an indictment, while Non-Prosecution Agreements (“NPAs”) do not require admission of liability – nor do they result in charges filed against the company. Both DPAs and NPAs entail an agreement that, in exchange for the corporation’s compliance with certain conditions and the payment of a penalty, the DOJ would not move forward with a prosecution or civil claim against the company. In contrast, a guilty plea requires the company to admit to the crime as part of the settlement. NPAs and DPAs have been the norm, making the DOJ’s inability to prosecute corporate executives evident.
DOJ’s strategy shift for prosecuting corporate crimes
The Department’s new strategy shifts away from seeking DPAs or NPAs and commits to seeking guilty pleas with three goals: (1) holding individual executives accountable; (2) targeting repeat offenders; and (3) expanding the use of independent corporate compliance monitors. (As part of a corporate criminal resolution, the DOJ mandates the adoption of a compliance program, which is evaluated by independent corporate monitors.) To hold individuals accountable, the DOJ would require companies to provide all non-privileged information about all individuals who may be relevant to the investigation. This shift took away all discretion from the companies and stopped them from determining whether individual misconduct should be disclosed to the government. To target repeat offenders, the DOJ would consider the defendant’s “full criminal, civil and regulatory record” to determine the appropriate course of action. Then, by expanding the use of DOJ imposed independent corporate monitors, the agency would rescind previous guidance that the use of monitors is the exception, not the rule. (Monaco also identified the process of monitor selection and corporate recidivism as additional areas for review, promising to improve the monitor selection process and determine how to account for companies that repeatedly become the subject of DOJ investigations across multiple divisions.)
Still, at this point it is not yet clear –and possibly too early to analyze – how the shift in the DOJ’s strategy has affected the overall number of cases reaching guilty pleas and convictions. However, individual high-profile cases, such as the recent series of prosecutions involving Glencore and Lafarge (as well as those against Pilgrim’s Pride and Claxton Poultry Farms), signals the DOJ’s implementation of this shift towards accountability, particularly from individual executives, and fighting corporate misconduct.
Glencore and its bribery practices
The DOJ’s 2022 plea deal with Glencore International A.G., Glencore Ltd., and their executives (“Glencore”) seemed to reinforce the agency’s commitment to seeking guilty pleas and holding individuals accountable for corporate crimes. The DOJ’s investigation involves the violation of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme of fuel oil prices. The FCPA case concerns Glencore’s payments of over $100 million in bribes through intermediaries to foreign officials across seven countries (Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the DRC). In related proceedings, former Glencore traders pleaded guilty to conspiracy for manipulating fuel oil prices in financial markets. The plea agreement amounts to $1.1 billion across the two cases. Glencore also agreed to retain an independent compliance monitor for three years.
It is evident that Glencore’s pattern of ongoing misconduct and corruption has impacted African and Latin American countries for years. These guilty pleas are part of a complex set of investigations in which law enforcement authorities in Switzerland, the United Kingdom, Brazil, Cyprus, and Luxembourg assisted the United States. In fact, the DOJ agreement provides for the monetary resolutions of these cases to be credited against resolutions in parallel cases in the UK and Brazil. Last month, Glencore agreed to pay $180 million to the DRC to settle the corruption cases related to the DOJ investigations where Glencore’s misconduct can be traced back as far as 2007 and as recent as 2018.
Financing terrorist organizations: the Lafarge case
Only five months after the DOJ announced Glencore's guilty plea, it announced a $778 million plea agreement with Lafarge, a French cement company with operations in the US (and now a subsidiary of Switzerland-based Holcim group), for financing the terrorist organization ISIS in Syria. Lafarge executives entered into a financial arrangement with terrorist groups to continue operating in the country amidst a violent armed conflict that has displaced millions and claimed the lives of hundreds of thousands of civilians. According to the DOJ’s investigation, Lafarge paid millions of dollars to brutal terrorist organizations, including ISIS, and later tried to conceal the payments and falsify records. The DOJ also accused Lafarge’s shareholder, the Holcim Group, and their leadership of failing to conduct proper post-acquisition due diligence when purchasing the company. Like Glencore, Lafarge also faces investigations and prosecutions in parallel processes abroad. In France, a court of appeals confirmed charges against Lafarge for complicity in crimes against humanity committed by ISIS. Previously, the French Supreme Court found that the company, in its efforts to pursue commercial activities, paid millions of dollars to terrorist organizations, which constituted complicity.
The last time a similar settlement was announced by the DOJ was over fifteen years ago, when the Department reached a settlement with Chiquita Brands International Inc. (“Chiquita”) over financing the Autodefensas Unidas de Colombia (“AUC”), a designated terrorist organization. (To learn more about the Chiquita case see our blog on providing evidence on corporate complicity in armed conflict to Colombian peace tribunal and our blog about the amicus brief that CAL filed asking the US Supreme Court to grant certiorari in the case Doe v. Chiquita International).
Access to remedy for victims impacted by corporate abuse should be a priority
Despite DOJ investigations and these recent settlements with Lafarge and Glencore, corporate impunity might persist when victims of corporate misconduct are not compensated. Especially, when there are no current legislative solutions that address corporate misconduct abroad and the Supreme Court has expanded the rights of corporations through recent decisions. It is impossible to calculate the exact impact that bribery, corruption and financing terrorist organizations have on victims and impacted communities. But it is an undeniable reality that corporate criminal behavior and misconduct directly impact people and vulnerable communities. The Chiquita case is perhaps the best illustration of victims’ long and taxing fight against corporate impunity. Despite the 2007 DOJ settlement, victims impacted by Chiquita’s financing scheme are still fighting for justice and remedy in multiple jurisdictions, including a complex multidistrict litigation in US federal court.
The DOJ’s announcement of its shift in corporate prosecution strategy, as well as the early signals of upholding its commitment to prosecuting individuals in high-profile cases, are a good start, but this should not be the end goal. But Glencore’s settlement with the DRC and the lawsuits against Lafarge by US military families continue to pave the way towards access to remedy for those directly impacted by corporate abuse. Hopefully, 2023 will show that the DOJ’s announced strategy is indeed taking root and paving the way towards a new corporate accountability regime, thus avoiding the ongoing corrosion of the rule of law.
Tatiana Devia is a Staff Attorney at Corporate Accountability Lab.
