Glencore: Golden Jets of Cash
TL/DR: Mining company is fined $1.5 billion, which is half of their net income. You were too busy watching Elon set Twitter on fire to notice. If you did hear anything, it was that they literally flew bags of money from Switzerland to Africa. The upshot is: fining badly run companies is more "effective" (is that the right word?) than fining companies with high profit margins.
Glencore is "one of the world’s largest globally diversified natural resource companies." They trade in oil, coal, copper, nickel, and bribes, amongst other businesses. Or at least they admit they did over the period 2012 to 2022. The US and UK fined Glencore around $1.5 billion for market manipulation and price fixing. Astoundingly, this is actually a lot of money for Glencore.
LinkedIn doesn't have tables and I don't feel like making one and then taking a screen shot and pasting, so here it is in bullet point form where I weirdly use "0"s to pad out the numbers to get them to line up.
Glencore
$1 955 702 000 Gross Income
$0 003 533 000 Net Income
$0 001 500 000 Fines
The fines are 0.08% of top line income and 42% of bottom line.
Between 2012 and now, Glencore had some terrible years. In 2013 they reported an $8 billion dollar loss (!). I am not a mineral extraction expert. My experience with earth moving equipment is dropping a pitch fork into my big toe when I was 10. But it does seem like a bit unusual to take almost 2 trillion dollars of revenue and turn it into 3.5 billion of profit over a decade.
Compare this with, say JPMorgan Chase, who paid 20x what Glencore just got hit with over a similar timeframe, or $31.3 billion.
JPMC
$1 462 000 000 Gross Income
$0 295 591 000 Net Income
$0 031 300 000 Fines
The fines are 2% of top line income and 11% of bottom line.
What's the lesson? Here's what the Attorney General of the US said:
“The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor,” said Attorney General Merrick B. Garland.
Based on my numbers, that doesn't sound right. It seems likely Glencore wouldn't have made the revenue or profits they did get without the bribery. They did see benefits or they wouldn't have kept doing it. So is this a net win for them? And moreover, the "rich" might be considered companies with more profits stashed away, in which case that's not the threadbare income statement of Glencore.
I guess the lesson might be this: If you don't put bags of cash on airplanes, you will lose out to others who will. However, you should make sure that you run a tight enough ship to have sufficient profit to absorb the associated fines.
(This also makes me think I need to do a data analysis on net income versus fines. Back to the spreadsheets mines for me, where I can get RSI but am not likely to lose a toenail.)