Glencore, a commodities trader and mining firm that is a supplier to Tesla, pleaded guilty on May 24 in connection with a decades-long bribery and corruption scheme stretching across Africa and South America. Separately, the company also admitted to manipulating oil prices.
To settle the charges, Glencore agreed to pay the U.S. government $1.1 billion in fines and forfeitures. The guilty pleas were part of a coordinated resolution with criminal and civil authorities in the United Kingdom, Brazil, and the United States.
Glencore’s operations supply Tesla as well as several other U.S. companies with cobalt, an essential component in batteries used in electric vehicles (EV).
“Mining has an important role to play in the transition to sustainable energy and we engage with suppliers to ensure mining is done in a responsible way. ... Tesla joined the Initiative for Responsible Mining Assurance (IRMA) and uses the IRMA Standard as well as other internationally recognized responsible mining standards in our due diligence.”
Tesla’s Words
In its 2021 Impact Report, Tesla went into impressive detail when discussing its approach to ensuring its suppliers act conscientiously.“Tesla is committed to ensuring that our suppliers operate responsibly. We do this by proactively identifying and addressing potential risks in our supply chains. The Tesla Supplier Code of Conduct, Human Rights Policy, and Responsible Materials Policy outline Tesla’s expectations for suppliers.”
Specifically, the report states that Tesla collects data on the companies supplying minerals such as cobalt, nickel, and lithium and engages with suppliers to ensure upstanding mining practices among its suppliers.
Tesla also acknowledged that raw materials are often concentrated in countries that face socio-economic issues, so where possible, Tesla uses direct source mining, which helps to ensure responsible and humane mining conditions. As part of their agreement with Tesla, the mines agree to binding contracts with environmental and social requirements.
Not happy with stopping there, Tesla also stated that 83 percent of its refiners and mine sites, plus 100 percent of refiners from whom Tesla sources directly, undergo or are in the process of “independent external sustainability audits.”
Corruption and Human Rights Abuse
Glencore’s May 24 entanglement with the law is but an instance in a long list of purported double-dealings and corruption allegations dating back 20 years.“Glencore pumped cash, loans, and shares worth over half a billion dollars into offshore companies owned by Gertler, which allowed him to make at least $67 million in risk-free profit.”
In 2017, the offshore law firm Appleby found itself in the news after hackers leaked to reporters more than 13.4 million confidential electronic documents related to offshore investments.
“It was the company linked to the highest number of [human rights abuse] allegations in Africa, the second-highest in Asia-Pacific, and third-highest in South America.”
“In the foreign bribery case, Glencore International A.G. and its subsidiaries bribed corrupt intermediaries and foreign officials in seven countries for over a decade. In the commodity price manipulation scheme, Glencore Ltd. undermined public confidence by creating the false appearance of supply and demand to manipulate oil prices.”
U.S. Attorney Damian Williams for the Southern District of New York added: “The scope of this criminal bribery scheme is staggering. Glencore paid bribes to secure oil contracts. Glencore paid bribes to avoid government audits. Glencore bribed judges to make lawsuits disappear. At bottom, Glencore paid bribes to make money—hundreds of millions of dollars. And it did so with the approval, and even encouragement, of its top executives.”
The allegations, admissions of guilt, and the fact that agencies have pointed to Glencore’s corruption and human rights abuses for 20 years conflict with Tesla’s statement that it goes to great lengths to ensure responsibly sourced minerals.