No one in the global oil and gas industry was remotely surprised when Glencore was issued with massive fines for bribery and corruption in Africa. The fines, handed down at Southwark Crown Court by Mr. Justice Fraser, amounted to over $300m and related to $29m of bribes that Glencore admitted to paying in cash between 2011 and 2016 to various agents and government officials in Nigeria, Cameroon and Ivory Coast.

The commodities giant also admitted to failing to prevent agents paying bribes on its behalf in South Sudan and Equatorial Guinea. This is not Glencore’s first rodeo: in May this year, it paid out $1.1bn in a settlement in the US around bribes paid within its mining operations across seven countries, including Nigeria, the Democratic Republic of Congo and Venezuela.

Glencore was founded in 1974 by the late Marc Rich who was indicted on tax evasion charges in the US, fled to Switzerland and remained in exile until he was inexplicably pardoned by Bill Clinton on his last day in office in January 2001. Until 10 years ago, Glencore, like its peers Vitol and Trafigura, was an intensely private company which was secretive, successful and well-known for paying its staff exceptionally well, in order to make sure that its senior executives really did make the money they thought they were worth.

Then Glencore, led by Ivan Glasenberg, floated in 2011 in a joint London-Hong Kong listing that valued the mining to trading company at $60bn, making a number of employees instant billionaires. Today it has a current market capitalisation of £67bn and is one of the UK’s largest listed companies. By way of comparison, Shell’s market cap is £173bn while BP’s is £88bn.

So Glencore is big business and the fines that it has incurred won’t hurt the company on a day-to-day basis at all. However, class actions from disgruntled shareholders are on their way and major investigations against the company continue in The Netherlands and in Switzerland. Perhaps of more concern to shareholders, Glencore announced with its results earlier this year that it saw no reason to change the $1.5bn provision in its accounts to pay for fines and costs in the US, the UK and Brazil. The whole affair adds to a whiff around Glencore that has been there from the start: that it will do whatever it takes and always has done. This explains why no one was surprised: it was Glencore and it was oil trading.

Bribery and the oil and gas sector were bedfellows in the fossil fuel industry from the very beginning as unscrupulous pioneers took advantage of unsuspecting naïfs, greedy landowners and inadequate governments. These days, however, men in ten-gallon hats no longer turn up in dusty climes with briefcases of cash to secure oil licences.

There are two main reasons for this. First, the days of making major oil discoveries in completely new territories is largely gone (with some important exceptions, notably Guyana and Namibia). These days companies are much more likely to look for oil on a low-risk basis in known oil provinces like the North Sea and no one is going to be bribing officials at the Department for Business and Energy for access to the most unstable tax regime in the world. Critically, signing contracts with governments gives companies liabilities not assets: they will be signing up to an agreed and regulated work programme over a number of years that will cost millions of dollars and with no guarantee of returns even if they are drilling close to current fields. Oil and gas remains a very risky game and it’s only for those with deep pockets and an appetite for hazard. The rewards can be great but so can the losses.

Second, regulation and oversight has caught up with companies that might want to tread on the dark side: the UK Bribery Act and the US Foreign and Corrupt Practices Act make directors liable for corruption within their companies whether they knew about it or not and the sanctions are intense. The onus is now on directors to show not only that they had no part of any corruption but also that they took all necessary proactive steps to try to ensure that it could not happen. That said, enforcement remains an issue: while Glencore has been stung with massive fines, somehow the individuals that made the corrupt payments and those that signed them off have not, as yet, been prosecuted.

Indeed, Mr. Justice Fraser seemed content in his sentencing remarks that the corruption of before would not happen in the Glencore of today and it is easy to see why, given the regulation around corruption and the transparency required of listed companies, he would feel reassured. Cash handling also requires far greater scrutiny with company treasury departments loath to hand over almost any cash both for fear of money-laundering enquiries and because the universality of digital banking makes it unnecessary.

This is not to say that corruption doesn’t exist in today’s oil and gas industry. Oil trading is a very obvious place to look: if you’re marketing oil cargoes on behalf of another company (and oil trading is a highly specialised skill), the commission that you can earn for your employers, and for yourself, can be substantial. Let’s say an oil trader is selling a one-million-barrel cargo on behalf of another company that doesn’t have the capacity to sell the cargo itself. If that oil trades at today’s prices of $95/barrel and the commission is 25 basis points, the trader has just earned $235,000 for his company. If he does this for, say 50 cargoes a year, that’s almost $12m of commission and fees for the price of one skilled trader, a phone and a Bloomberg terminal – and at a big trading house 50 cargoes is bound to be an underestimate. It is not hard to see, then, why oil trading has historically been so ripe for corruption.

Regulation, however, has largely caught up with this – a new industry of ethics and compliance (E&C) has been built and we can be sure that Glencore now provides worthwhile billets for a great many E&C officers. They will be very busy making sure that traders are very diligent around expense claims, government meetings and new contracts with every I dotted and every T crossed. Technology is very helpful too with the ability to record telephone calls, trace emails and read Whatsapps, and you can rest assured that the telephones traders are using belong to the company and not to them.

Elsewhere, there are two other main areas where corruption still takes place: supply chain and employment. Oil and gas companies are massive contracting companies. Shell might employ around 75,000 people directly but its contractors and sub-contractors will number at least 10 times that number and probably more. Due diligence and compliance processes will seek out conflicts of interest, hidden ownerships and poor governance but these processes can’t plug every hole. A supply chain colleague of mine was working on a contract in a remote African country where the company was looking for a local business to provide cars and drivers.

Four companies applied for the contract, but it turned out, after much investigation, that all four companies were owned by the same person. Nor can due diligence processes make sure that every person directly or indirectly employed is being employed for the right reasons or following a fair process: that new accountant you’ve just hired just happens to be the local MP’s son and your country manager thought it would help the relationship with the local government. However, even these examples are, by definition, minor examples and oil and gas companies now work very hard to make sure that the very large contracts they award for multi-year drilling campaigns or major development projects follow very clear processes that ensure transparency and accountability at all stages.

In the end, the Glencore saga feels like it’s a full stop in the long story of corruption in the oil and gas industry. What may have happened in the past is going to stay there. Regulation, technology and changing mores have made Glencore’s behavior anachronistic. It’s not the end of poor behavior within the industry, though: whether it is substandard environmental management, inadequate compensation or consultation of impacted communities or a strong element, certainly within the big oil and companies, to say one thing about energy transition but do another, there’s much that the industry can still do to make itself a better partner in society. After all, against all expectations and as the past year has shown us, the industry is going to be around for a long time to come.

Write to us with your comments to be considered for publication at letters@reaction.life