Fraud investigation into major mining company

Marco Green
December 8, 2019

Global mining giant Glencore is under investigation from the UK Serious Fraud Office.

Institutional investors in Glencore will sue the world's biggest commodities trader and one of its largest mining companies for share price declines from bribery investigations in the U.S., the United Kingdom and Canada, a law firm representing them said after the latest probe was announced.

The SFO cast a wide net, saying it's looking into suspicions of bribery by the company, its employees, agents and associated persons.

"Glencore will co-operate with the SFO investigation", it said.

Glencore Australia operates multiple coal mines in the Bowen Basin including mines in Clermont, Collinsville, Glenden, Emerald and Middlemount.

The move by the Serious Fraud Office adds to ongoing corruption probes that Glencore is facing in the USA and Brazil, which have scared investors and shaken the company over the past two years. It declined to comment further.

"This is an obvious negative for the Glencore investment case", said Tyler Broda, an analyst at RBC Capital Markets.

It has emerged just days after Ivan Glasenberg, the firm's billionaire chief executive, suggested he could leave the company sooner than expected. 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. Once a new layer of management was in place, he would be in a position to step aside, he said.

The SFO investigation follows the decision by the US Department of Justice (DoJ) in October 2018 which subpoenaed Glencore to provide documents relating to its business in the Democratic Republic of Congo, Venezuela, and Nigeria since 2007.

But investigators were said to be examining the firm's activities previous year with Israeli billionaire Dan Gertler and former DRC president Joseph Kabila.

Gertler, 45, and Kabila, 48, have been implicated in bribery investigations before, with Gertler hit by United States sanctions in 2017 amid allegations that he had used his friendship with Kabila to amass an illicit fortune.

The firm has already seen its shares fall more than 20% this year as a result of broader concerns about safety and sustainability in DRC.

Other reports by Click Lancashire

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