Glencore Faces Bribery Probe, Sending Shares Lower--3rd Update
By Alistair MacDonald and Scott Patterson
LONDON -- Britain's top financial cop said it is investigating
Glencore PLC for alleged bribery, sending shares of the mining and
commodities-trading company down almost 9% and adding to regulatory
woes elsewhere that have weighed on the company all year.
The U.K.'s Serious Fraud Office said it was investigating
suspicions of bribery "in the conduct of business by the Glencore
group of companies, its officials, employees, agents and associated
persons." It didn't elaborate. Glencore also disclosed the probe in
a statement on Thursday. It declined to comment further.
The agency has been looking into the mining giant's activities
in the Democratic Republic of Congo and its relationship with
Israeli diamond merchant Dan Gertler, according to a person
familiar with the probe.
Glencore's shares have fallen nearly 25% this year amid
regulatory scrutiny all over the world. During the same period,
most large miners' stock has risen. Analysts blame Glencore's
underperformance on its legal and regulatory troubles, among other
Glencore said in July 2018 that it had received a subpoena from
the U.S. Justice Department, demanding records relating to its
compliance with American antibribery and money-laundering laws in
the Democratic Republic of Congo, Nigeria and Venezuela. Glencore
has also said that it is the subject of an investigation by the
U.S. Commodity Futures Trading Commission.
The company has engaged external legal counsel and forensic
experts to assist in responding to the Justice Department and CFTC
investigations, Glencore said in posting its half-year results in
"This is an obvious negative...there is a serious discount
already in the Glencore share price" as a result of investigations,
said Tyler Broda, an analyst at the Royal Bank of Canada.
Mr. Broda said regulatory investigations and other problems,
such as the group's exposure to coal, mean the company was already
trading at a $28 billion discount to peers such as BHP Ltd.
The Journal reported last year that the focus of the Justice
Department's probe is Glencore's ties to Mr. Gertler.
The U.S. Treasury Department sanctioned Mr. Gertler in 2017,
alleging he traded on a friendship with former Congolese President
Joseph Kabila to amass a fortune through "opaque and corrupt" deals
on behalf of multinational companies seeking to do business in
Glencore provided nearly $1 billion in loans and advances to
companies associated with Mr. Gertler in a roughly 10-year period
starting in 2007, according to documents reviewed earlier this year
by The Wall Street Journal.
The loans were designed in part to help finance investments by
Mr. Gertler in copper-mining operations in Congo alongside
Glencore, the documents show.
A spokesman for Mr. Gertler's main company in Congo, Fleurette
Group, didn't immediately comment. The group has denied wrongdoing
in the past.
Glencore's shares have been weighed down by regulatory
investigations, but the company faces other problems, including
weakness in the price of coal and cobalt and underperformance at
its African copper division.
On Tuesday, Glencore Chief Executive Ivan Glasenberg signaled
senior management changes for 2020, paving the way for his own
Mr. Glasenberg, who joined Glencore in 1984 and has been CEO
since 2002, told investors that the company would meet in early
2020 to talk about a change to its "old guard." Once a new layer of
management was in place, he would be in a position to step aside,
The 62-year-old South African-born executive joined Glencore in
1984 and has been CEO since 2002. He merged Glencore, a
commodities-trading company with Xstrata, one of the world's
biggest mining companies, in a $29.5 billion deal that created one
of the world's largest coal, copper and zinc producers in 2013.
The company also moved heavily into cobalt and copper, two
metals that are seen as a bet on the electrification of transport,
and a play that increased its exposure to Congo.
The company's shares have been on a volatile ride in recent
years amid concerns about overleverage in 2015 and more recently a
lengthening list of regulatory investigations.
Write to Alistair MacDonald at email@example.com and
Scott Patterson at firstname.lastname@example.org
(END) Dow Jones Newswires
December 05, 2019 12:08 ET (17:08 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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