Ex-Glencore trader Anthony Stimler turns on colleagues in Africa bribery case

Details of Stimler’s coop­er­a­tion deal offer a rare oppor­tu­ni­ty to see how cor­rup­tion works in the extrac­tion and trad­ing of commodities

When Anthony Stimler left Glencore Plc in August 2019, he had two big secrets: For a dozen years, he’d paid mil­lions in bribes to African offi­cials and inter­me­di­aries. And he was now help­ing a U.S. Justice Department inves­ti­ga­tion into the com­pa­ny and numer­ous for­mer colleagues.

Corruption isn’t exact­ly unheard of in the extrac­tion and trad­ing of com­modi­ties, espe­cial­ly in the devel­op­ing world. But details of Stimler’s coop­er­a­tion deal, obtained from the U.S. attorney’s office in Manhattan and which haven’t been report­ed before, offer a rare oppor­tu­ni­ty to see how it works — the scale, scope and almost rou­tine nature of such transactions.

One aspect is the role of inter­me­di­aries, often favored by gov­ern­ments in the region. The so-called brief­case com­pa­nies act as con­duits for traders’ bribes to offi­cials, tak­ing a cut and direct­ing state busi­ness back to the traders. Glencore was a dom­i­nant play­er in Nigeria, Chad, the Republic of Congo and Equatorial Guinea, and says it no longer uses inter­me­di­aries as part of a revamped and cleaned-up operation.

“An issue that comes up with trad­er cor­rup­tion is agents and inter­me­di­aries in the mix,” said Alexandra Gillies, an advis­er at the Natural Resource Governance Institute, which seeks to stamp out cor­rup­tion in emerg­ing mar­ket resources. “Clearly it’s the top modus operan­di for how these schemes work.”

Glencore of Baar, Switzerland is one of a hand­ful of firms that dom­i­nate glob­al trad­ing of oil, fuel, met­als, min­er­als and food, mid­dle­men who buy from pro­duc­ers and sell to refin­ers who turn the goods into fin­ished prod­ucts. It traces its roots to a com­pa­ny co-found­ed in 1974 by Marc Rich, a leg­endary trad­er and financier who fled the U.S. in 1983 to evade pros­e­cu­tion for trad­ing with Iran dur­ing the American hostage cri­sis. It had US$142 bil­lion in 2020 revenue.

Your hon­or, I knew what I was doing was wrong and unlawful

Anthony Stimler

Before get­ting caught, Stimler spent years in the game, begin­ning as ear­ly as 2007. And while it sounds like a hard-core busi­ness, he offers a mild-man­nered pro­file. Affable and polite, he’s known in his London Jewish com­mu­ni­ty by the Yiddish nick­name “Hershy” and served on the board of Camp Simcha, which helps sick chil­dren. He took a two-year break in the mid­dle of his tenure to care for his own child, who suf­fered from leukemia (and sub­se­quent­ly recovered).

His con­fes­sion in July to for­eign bribery and mon­ey laun­der­ing charges, the first ever by a Glencore trad­er, makes clear that he knew just what he’d been doing — and that he didn’t act alone. A lawyer for Stimler declined to com­ment for this arti­cle, as did Glencore. Stimler is out on bail in the U.K. and await­ing sen­tenc­ing at a lat­er date.

“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 direct­ing our inter­me­di­aries to make bribe pay­ments to gov­ern­ment offi­cials,” Stimler told a fed­er­al judge in New York, accord­ing to a tran­script of his guilty plea. “I intend­ed that a pro­por­tion of the pay­ment to inter­me­di­aries oper­at­ing in Nigeria were to be passed on to Nigerian state-owned oil com­pa­ny offi­cials. The pur­pose of the pay­ment was to influ­ence those offi­cials’ deci­sions regard­ing the Nigerian government’s allo­ca­tions of crude oil cargo.

“Your hon­or, I knew what I was doing was wrong and unlaw­ful,” he con­tin­ued. “I’m extreme­ly remorse­ful for my conduct.”

It was con­duct that was, nonethe­less, hand­some­ly rewarded.

Over a two-decade career that began in 1998, Stimler, now 49, rose through the ranks of the sto­ried Swiss trad­ing house, becom­ing head of its West African oil trad­ing desk. He presided over a robust expan­sion of its crude flows and a near­ly-dou­bling of his desk’s annu­al prof­its to near­ly US$200 mil­lion in 2017, accord­ing to peo­ple famil­iar with inter­nal data.

In that same year, 2017, pros­e­cu­tors from the Justice Department’s klep­toc­ra­cy team filed a case in Houston to seize near­ly US$145 mil­lion worth of assets — includ­ing an US$80 mil­lion, 215-foot yacht called the Galactica Star, a US$50 mil­lion Billionaire’s Row apart­ment in New York and homes in California — that it said were pur­chased for the ben­e­fit of Nigeria’s oil min­is­ter, Diezani Alison-Madueke, with embez­zled funds.

Prosecutors said two asso­ciates of the min­is­ter set up com­pa­nies short­ly after she took office and were award­ed con­tracts to sell large allot­ments of oil on glob­al mar­kets. The pair were award­ed dozens of crude car­goes worth about US$1.5 bil­lion, accord­ing to the pros­e­cu­tors. Nigeria received lit­tle of the pro­ceeds of those sales, which pros­e­cu­tors say were divert­ed for Madueke and her associates.

One of the pri­ma­ry trad­ing hous­es that stepped up to buy those car­goes, accord­ing to pros­e­cu­tors: Glencore.

They say that over the course of 2013 and 2014, Glencore bought 15 car­goes total­ing 7 mil­lion bar­rels from the men, pay­ing more than US$800 mil­lion. Of that, they con­tend, rough­ly a third — US$272 mil­lion — was divert­ed into an account at a Nigerian bank used for the pur­chas­es for Madueke.

In assem­bling the case, pros­e­cu­tors amassed evi­dence includ­ing bank records, emails and wit­ness tes­ti­mo­ny. At least one record­ed con­ver­sa­tion showed that the min­is­ter wor­ried about the scale of the graft. She chas­tised one of the asso­ciates that such high-pro­file pur­chas­es would attract the atten­tion of authorities.

She was right.

A court fil­ing in Stimler’s case makes ref­er­ence to a “Foreign Official 1,” a high-rank­ing Nigerian from 2010 to 2015, who had demand­ed and received bribery pay­ments. According to peo­ple famil­iar with the mat­ter, Madueke is Foreign Official 1. Lawyers for Madueke didn’t respond to requests for comment.

As pros­e­cu­tors in the Houston case were going through the effort to seize the homes and yacht, Glencore received a Justice Department sub­poe­na in July 2018 for doc­u­ments relat­ed to Glencore’s busi­ness in Nigeria, the Democratic Republic of Congo and Venezuela dat­ing back to 2007, accord­ing to a com­pa­ny dis­clo­sure at the time.

Just over a year lat­er, Stimler left Glencore, a move wrong­ly viewed at the time as part of an exec­u­tive shake-up fol­low­ing the depar­ture of Alex Beard, Glencore’s long­time head of oil trad­ing and men­tor to Stimler, accord­ing to a per­son famil­iar with them. It was around that time that Stimler began coop­er­at­ing with prosecutors.

Now Glencore and some of its exec­u­tives face the prospect of steep fines and prison in a far-reach­ing inves­ti­ga­tion of tac­tics in numer­ous coun­tries and com­mod­i­ty mar­kets. U.S. author­i­ties pur­sue such cas­es because, though they involve events in oth­er coun­tries, the pay­offs were made in dol­lars that pass through the bank­ing sys­tem in New York. Other major coun­tries are also increas­ing­ly tar­get­ing com­mod­i­ty trad­ing. U.S. author­i­ties have got­ten increas­ing­ly aggres­sive in enforc­ing laws against for­eign bribery, impos­ing bil­lions of dol­lars of fines against com­pa­nies. Under the Foreign Corrupt Practices Act, pros­e­cu­tors can cal­cu­late fines based on how much a com­pa­ny sought to ben­e­fit from pay­ing bribes, and then dou­ble the amount in impos­ing the penalty.

Glencore says it’s a changed com­pa­ny and is coop­er­at­ing with pros­e­cu­tors. It reserved a US$216 mil­lion charge in the first half of the year for costs relat­ed to a spe­cif­ic ele­ment of sev­er­al inves­ti­ga­tions it is facing.

Gary Nagle, Glencore’s new chief exec­u­tive, told reporters on a con­fer­ence call in August that the com­pa­ny has adopt­ed new com­pli­ance rules intend­ed to elim­i­nate illic­it con­duct, and that every per­son men­tioned in Stimler’s case has been dis­ci­plined or left the firm. The com­pa­ny is also reduc­ing its busi­ness in high-risk juris­dic­tions, and no longer works with middlemen.

“We don’t have any inter­me­di­aries in our oil busi­ness,” Nagle said. “It’s a dif­fer­ent busi­ness mod­el to what we used five to 10 years ago. We don’t plan to use them again in our oil business.”

Glencore makes bil­lions of dol­lars every year buy­ing and sell­ing com­modi­ties — above the mon­ey it makes dig­ging met­als, pump­ing crude or har­vest­ing crops. In 2020, the com­pa­ny enjoyed its best trad­ing ever, mak­ing US$3.3 bil­lion in earn­ings before inter­est and tax­es, up 41 per cent from the pre­vi­ous year despite the impact of COVID-19 on the glob­al economy.

Stimler’s guilty plea and the deal he cut with pros­e­cu­tors will rat­tle fel­low col­leagues – and the com­pa­ny itself – as the Justice Department inves­ti­ga­tion continues.

The coop­er­a­tion agree­ment requires him to dis­close his and all his col­leagues’ activ­i­ties rel­e­vant to the case, and agree to tes­ti­fy before a grand jury for the inves­ti­ga­tion and even serve as a gov­ern­ment wit­ness should any cas­es go to tri­al. He appeared by video­con­fer­ence from the U.K. dur­ing his plea hear­ing, dur­ing which he told Judge Kevin Castel of Manhattan fed­er­al court that he’d been assist­ing the Justice Department for more than two years.

Stimler has impli­cat­ed sev­en oth­ers, includ­ing at least four Glencore traders, in mak­ing bribe pay­ments, and author­i­ties say the scheme start­ed before him. One per­son named was a top African oil trad­er at Glencore dat­ing back to the 1990s, Stimler’s supe­ri­or dur­ing his ear­ly rise there, accord­ing to peo­ple famil­iar with the mat­ter; anoth­er worked with him on the West African oil trad­ing dur­ing the lat­ter part of the scheme, the peo­ple said.

While Stimler began brib­ing in 2007, often using cod­ed lan­guage in emails, the pay­ments appear to have accel­er­at­ed dur­ing Madueke’s time in office, accord­ing to the court doc­u­ments. Stimler agreed in late 2013 to pay more than triple the usu­al fees to an inter­me­di­ary com­pa­ny that would be passed on as bribes for favor­able grades and load­ing dates of Nigerian oil, his guilty plea says. Three months lat­er, he and a col­league made anoth­er US$500,000 pay­ment to be eli­gi­ble for addi­tion­al Nigerian car­goes. Stimler “request­ed and received approval” for a Glencore sub­sidiary to make the pay­ment, pros­e­cu­tors said, with­out spec­i­fy­ing who grant­ed it.

Later that fall, he received anoth­er request, say­ing Foreign Official 1 was seek­ing US$300,000 per month from cus­tomers of Nigeria’s nation­al oil com­pa­ny, in con­nec­tion with an upcom­ing elec­tion. Stimler autho­rized the pay­ment, accord­ing to prosecutors.

Madueke left office in 2015 and has been liv­ing in London. She has been charged with cor­rup­tion by Nigerian author­i­ties but has so far suc­cess­ful­ly evad­ed extra­di­tion, and she is under inves­ti­ga­tion by U.K. author­i­ties as well. The yacht, the Galactica Star, has since been auc­tioned off. Its new own­er is a shell com­pa­ny called Paxford Ltd., and it has been renamed Illusion. It was last seen docked on the coast of Sardinia, accord­ing to Bloomberg ship track­ing data.

In May, Nigeria’s nation­al oil com­pa­ny released its new list of trad­ing part­ners for the com­ing year, cov­et­ed con­tracts to buy its oil and sell it refined gaso­line. Glencore was not among them.

Bloomberg.com by Christian Berthelsen, Javier Blas and Bob Van Voris