UK bribery investigation adds to Glencore's legal headaches

By Yadarisa Shabong, Julia Payne and Kirstin Ridley

LONDON (Reuters) – The UK’s Serious Fraud Office (SFO) has launched a bribery inves­ti­ga­tion into Glencore <GLEN.L>, adding to legal trou­bles that have hit the shares of one of the world’s biggest min­ers and com­mod­i­ty traders.

The SFO said on Thursday it had opened an inves­ti­ga­ton into sus­pi­cions of bribery in the con­duct of busi­ness by the Glencore group of com­pa­nies, its offi­cials, employ­ees, agents and asso­ci­at­ed per­sons in June. It declined to com­ment on the scope of its inquiry.

The London-list­ed shares of Glencore, which has oper­a­tions in over 150 coun­tries, fell 9% to 216.9 pence, their low­est lev­el in more than three years, knock­ing 2.6 bil­lion pounds off the company’s mar­ket value.

Glencore, which was sub­poe­naed in July 2018 by the U.S. Department of Justice over pos­si­ble vio­la­tions of the Foreign Corrupt Practices Act relat­ing to oper­a­tions in Nigeria, Venezuela and the Democratic Republic of Congo (DRC), said it would coop­er­ate with the investigation.

Two sources famil­iar with the mat­ter said the SFO had recent­ly sought infor­ma­tion relat­ing to Glencore’s involve­ment in the DRC and its for­mer busi­ness part­ner, Israeli bil­lion­aire busi­ness­man Dan Gertler.

Reuters was unable to ascer­tain whether those enquiries were part of the SFO’s bribery probe.

A London-based spokesman for Gertler declined to comment.

Gertler was sanc­tioned by the United States in 2017 over alle­ga­tions he used his friend­ship with for­mer DRC President Joseph Kabila to secure sweet­heart min­ing deals. He denied all alle­ga­tions of impro­pri­ety at the time.

Over the course of this year, Glencore’s shares have fall­en more than 20%, pres­sured by broad­er con­cerns about safe­ty and sus­tain­abil­i­ty in the DRC. Canada’s reg­u­la­to­ry author­i­ties fined a Glencore-con­trolled sub­sidiary last year after alle­ga­tions of inad­e­quate finan­cial dis­clo­sures in the DRC.

The legal dif­fi­cul­ties have upset share­hold­ers. Boies Schiller Flexner, a London-based law firm, said it was mount­ing a ful­ly-fund­ed legal action on behalf of insti­tu­tion­al investors against Glencore for dam­ages that could exceed 1.0 bil­lion pounds.

Glencore’s CEO Ivan Glasenberg told investors ear­li­er this week he expect­ed to step down next year once a new man­age­ment team is in place.

The inves­ti­ga­tion is one of the most high-pro­file SFO probes launched under Lisa Osofsky, a for­mer FBI lawyer appoint­ed direc­tor last August, who has come under fire for aban­don­ing some of the agency’s most promi­nent and lengthy probes.

The SFO dropped its inves­ti­ga­tions into aero engine mak­er Rolls-Royce <RR.L> and drugs mak­er GlaxoSmithKline <GSK.L> in February and end­ed a sev­en-year, Libor bench­mark inter­est rate inquiry in February.

(Additional report­ing by Yadarisa Shabong in Bengaluru; Alistair Smout, Barbara Lewis and Zandi Shabalala in London; Editing by Jane Merriman and Elaine Hardcastle)

Original arti­cle: EURONEWS