Corrupt Oil Trader Exposes Nigeria’s Ex-Minister, Diezani For Bribery Payments

Anthony Stimler departed Glencore Plc in August 2019 with two huge secrets: he'd paid millions in bribes to Nigerian and other African authorities through middlemen for the previous 12 years.

And he was now assisting a US Justice Department probe against the firm and a number of former employees.

In the extraction and trade of commodities, especially in developing countries, corruption is not uncommon. However, details of Stimler's cooperation agreement, obtained from the Manhattan office of the United States Attorney, provide a rare opportunity to observe how it works - the magnitude, scope, and virtually everyday character of such deals.

One element is the role of intermediaries, which is frequently favored by regional governments.

The so-called briefcase businesses, according to Bloomberg, operate as conduits for dealers' bribes to officials, collecting a share and steering state business back to the traders.

Glencore claims it no longer employs middlemen as part of a revised and cleaned-up business in Nigeria, Chad, the Republic of Congo, and Equatorial Guinea, where it was formerly a major role.

“Agents and intermediaries in the mix are an issue that comes up with trader misconduct,” said Alexandra Gillies, an adviser at the Natural Resource Governance Institute, which aims to eradicate corruption in emerging market commodities.

“Clearly, this is the most effective method of operation for these schemes.”

Glencore of Baar, Switzerland, is one of a few companies that control worldwide oil, gasoline, metals, minerals, and food trade, acting as intermediaries between suppliers and refiners who transform the goods into finished products. Marc Rich, a famous trader and banker who fled the United States in 1983 to avoid punishment for trading with Iran during the American hostage crisis, co-founded the firm in 1974. In 2020, it made $142 billion in revenue.

Stimler had been involved in the game for a long time, dating back to 2007.

And, despite the fact that it sounds like a tough job, he has a kind demeanor. He went by the Yiddish moniker "Hershy" in his London Jewish community and sat on the board of Camp Simcha, which aids ill children. He took a two-year hiatus in the midst of his term to care for his own leukemia-stricken kid (and subsequently recovered).
His guilty plea to international bribery and money laundering charges in July, the first by a Glencore trader, shows that he understood exactly what he was doing — and that he wasn't acting alone. Stimler's lawyer, as well as Glencore's, declined to comment for this piece. Stimler is free on bail in the United Kingdom and will be sentenced at a later date.

According to a transcript of Stimler's guilty plea, "when I made requests for payments to intermediaries, I was aware that other Glencore traders who worked with me were doing the same thing by ordering our intermediaries to make bribe payments to government officials."
“I planned for a percentage of the money to Nigerian middlemen to be passed on to executives of Nigeria's state-owned oil firm. The payment was made in order to sway those officials' judgments on crude oil shipment allocations by the Nigerian government.
“I knew what I was doing was illegal and criminal, your honor,” he continued..“I am very regretful for my actions.”

Despite this, the behavior was richly rewarded.

Stimler, now 49, climbed through the ranks of the famous Swiss trading company, eventually becoming head of its West African oil trading department, over a two-decade career that began in 1998. According to sources acquainted with internal statistics, he presided over a rapid growth of the company's oil flows and a nearly doubling of his desk's yearly earnings to almost $200 million in 2017.

Prosecutors from the Justice Department's kleptocracy unit filed a case in Houston in 2017 to seize nearly $145 million worth of assets, including a $80 million 215-foot yacht called the Galactica Star, a $50 million Billionaire's Row apartment in New York, and homes in California, that it claimed were purchased for the benefit of Nigeria's oil minister, Diezani Alison-Madueke.

Prosecutors claim that two of the minister's cronies established firms soon after she entered the office and were given contracts to sell huge amounts of oil on worldwide markets. According to the prosecution, the two were granted dozens of oil shipments totaling $1.5 billion.

Prosecutors claim that a small portion of the revenues from such transactions was transferred to Madueke and her colleagues.

According to investigators, Glencore was one of the main trading firms that stepped forward to acquire those shipments.

According to them, Glencore paid more than $800 million for 15 shipments totaling 7 million barrels from the guys in 2013 and 2014. They claim that almost a third of that — $272 million — was transferred to a Nigerian bank account for Madueke's purchases.

Prosecutors gathered evidence such as bank records, emails, and witness testimony in putting together the case. The minister expressed concern about the magnitude of the corruption in at least one taped discussion. She reprimanded one of the associates for making such high-profile purchases, warning that authorities would be alerted.

A court file in Stimler's case mentions a "Foreign Official 1," a high-ranking Nigerian who sought and received bribe money from 2010 to 2015. Madueke is Foreign Official 1, according to those acquainted with the situation. Madueke's lawyers have yet to reply to demands for comment.

According to a company statement at the time, Glencore received a Justice Department subpoena in July 2018 seeking records pertaining to Glencore's operations in Nigeria, the Democratic Republic of Congo, and Venezuela dating back to 2007.

According to a source familiar with the situation, Stimler departed Glencore just over a year later, a move that was misinterpreted at the time as part of an executive shake-up following the retirement of Alex Beard, Glencore's longstanding head of oil trading and a mentor to Stimler. Stimler started collaborating with prosecutors about that time.

Glencore and several of its officials now risk significant penalties and prison time as a result of a wide-ranging probe into techniques used in a variety of nations and commodities markets. Such cases are pursued by US authorities because, despite the fact that they involve occurrences in other countries, the payoffs are made in dollars that flow via the New York banking system.
Commodity trading is becoming increasingly important to other big countries. Authorities in the United States have become more active in enforcing rules against foreign bribery, slapping billions of dollars in fines on corporations. Prosecutors can assess sanctions under the Foreign Corrupt Practices Act depending on how much a corporation hoped to gain from paying bribes and then impose a penalty equal to twice the amount.

Glencore claims to be a different business now, and it is working with prosecutors. In the first half of the year, it set aside $216 million for expenditures associated with one of the numerous probes it is facing.

On a conference call with reporters in August, Gary Nagle, Glencore's new CEO, said the company had established new compliance procedures aimed at preventing illegal behavior, and that everyone involved in the Stimler case had been reprimanded or had departed the company. In addition, the corporation is scaling back its operations in high-risk areas and no longer employs intermediaries.

“In our oil company, we don't have any intermediaries,” Nagle said. “It's a very different business model than we had five to ten years ago. We have no plans to utilize them in our oil industry again.”

Over and beyond the money it gets mining metals, pumping oil, and harvesting crops, Glencore makes billions of dollars every year buying and selling commodities. Despite the impact of Covid-19 on the global economy, the firm had its greatest year ever in 2020, earning $3.3 billion in earnings before interest and taxes, up 41% from the previous year.

As the Justice Department probe proceeds, Stimler's guilty plea and the bargain he struck with prosecutors may ruffle feathers among his coworkers – and the firm itself.

According to the cooperation agreement, he must reveal all of his and his colleagues' activities that are pertinent to the case, as well as agree to appear before a grand jury for the inquiry and perhaps serve as a government witness if any cases go to trial. During his guilty appearance, he appeared via videoconference from the United Kingdom, telling Judge Kevin Castel of Manhattan federal court that he had been aiding the Justice Department for more than two years.

Stimler has been charged with making bribe payments with seven others, including at least four Glencore dealers, and police claim the conspiracy began before him. According to sources acquainted with the case, one of the people identified was a top African oil trader at Glencore dating back to the 1990s, Stimler's superior during his early ascent there; another worked with him on West African oil trading throughout the latter portion of the plan, the people said.

According to court records, while Stimler began bribing in 2007, frequently using coded language in emails, the payments appear to have increased throughout Madueke's tenure in government. Stimler agreed in late 2013 to pay an intermediate business more than twice the customary costs in exchange for better grades and loading dates of Nigerian oil, according to his guilty plea. He and a colleague paid another $500,000 three months later to be eligible for more Nigerian shipments. Prosecutors claimed Stimler “requested and got approval” for the payment to be made by a Glencore subsidiary, but did not say who approved it.

Later that fall, he received another request, this time from Foreign Official 1, who said he needed $300,000 per month from consumers of Nigeria's national oil firm for an impending election. According to prosecutors, Stimler authorized the payment.

Madueke quit the presidency in 2015 and now resides in London. Nigerian officials have accused her with corruption, but she has so far managed to avoid extradition, and she is also being investigated by UK authorities. The Galactica Star, the yacht, has subsequently been auctioned off. It has been renamed Illusion by its new owner, a shell business called Paxford Ltd. It was last spotted moored on the Sardinian shore. according to data from Bloomberg's ship monitoring service.

Nigeria's national oil corporation announced its new list of trade partners for the next year in May, including prized contracts to purchase and sell refined gasoline. They didn't include Glencore.