Dem. Rep. of Congo: Glencore would bypass US sanctions by paying Gertler in euros rather than dollars to safeguard its lucrative copper and cobalt mines says Global Witness

Get RSS feed of these results

All components of this story

Article
3 July 2018

Glencore gets U.S. subpoena on compliance with money-laundering laws

Author: Julia Payne, Zandi Shabalala, Reuters

U.S. authorities have demanded the U.S. arm of Glencore Plc (GLEN.L) hand over documents relating to its business in Nigeria, the Democratic Republic of Congo and Venezuela, sending shares in the parent company down more than 10 percent...The Swiss-based commodities trader and miner received a subpoena from the U.S. Department of Justice requesting documents and records on compliance with the Foreign Corrupt Practices Act and U.S. money-laundering statutes...The documents requested from subsidiary Glencore Ltd relate to the group’s business in the three countries from 2007 to present, Glencore said, adding it was reviewing the subpoena. The U.S. Foreign Corrupt Practices Act makes it a crime for companies to bribe overseas officials to win business. Analysts at Barclays and Credit Suisse viewed the share price drop as steeper than warranted. “From our perspective, while it is clearly a risk factor, we stress that these types of requests are more common than perhaps the aggressive drop in the Glencore share price today suggests,” a note from Credit Suisse said...Jefferies lowered its target price for Glencore but maintained its buy rating. “The news today regarding a subpoena from the U.S. increases the geopolitical overhang on Glencore shares, even if there are no charges against the company in the end,” analysts at the financial services company wrote...Glencore accounts for more than a quarter of the world’s cobalt output, most of it from Congo, which itself is the source of around 60 percent of global supplies...Washington slapped sanctions on 13 “human rights abusers and corrupt actors” in December last year, including Israeli billionaire Dan Gertler, who was Glencore’s former partner in the DRC and is a close friend of Congo’s president. Glencore said last month that it had agreed to pay Gertler royalties it still owed in euros instead of U.S. dollars after litigation threats. In May, Bloomberg reported that Britain’s Serious Fraud Office was investigating Glencore’s activities in the DRC.Separately, the U.S. Department of Justice has been investigating bribery plots involving payments to Venezuela’s state oil firm PDVSA and charged five individuals last year...

Read the full post here

Article
+ Français - Hide

Author: Margot Mollat du Jourdin, Global Witness

La semaine dernière, le géant minier Glencore a réglé deux contentieux juridiques qui menaçaient ses actifs en République démocratique du Congo, acceptant de verser des centaines de millions à la Gécamines, entreprise publique congolaise au fonctionnement opaque, ainsi qu'à Dan Gertler, homme d'affaires israélien visé par des sanctions américaines. De tels accords révèlent que l'entreprise est hélas prête à prendre de gros risques pour conserver ses mines lucratives de cuivre et de cobalt, quel que soit le prix à payer. En outre, Glencore ne peut pas continuer de payer d'énorme redevances à Dan Gertler, se soustrayant ainsi à d'importantes mesures de lutte contre la corruption ; à moins que les États-Unis ne réagissent en appliquant leurs sanctions, cela signalerait de façon alarmante que les grandes entreprises peuvent agir en toute impunité pour protéger leurs intérêts commerciaux...La nouvelle explosive selon laquelle Glencore contournerait les sanctions américaines en payant Dan Gertler en euros plutôt qu'en dollars a fait la une de la presse économique la semaine dernière. Il est difficile de ne pas voir en cette action une tentative risquée et désespérée du négociant suisse de s'extraire d'un pétrin créé par lui-même...Dan Gertler et Glencore ont constamment nié avoir entrepris tout acte répréhensible dans leurs transactions commerciales en RDC...En décembre, le Trésor américain a sanctionné Dan Gertler et plusieurs de ses sociétés suite à des « transactions minières et pétrolières opaques et corrompues s'évaluant à des centaines de millions de dollars » en RDC. Cela a obligé Glencore à cesser de verser ses redevances à Dan Gertler, qui a immédiatement poursuivi l'entreprise devant les tribunaux de Londres et de Hong-Kong, réclamant près de 3 milliards de dollars de dommages-intérêts pour non paiement des redevances...Après quelques mois de négociations à l'amiable, Glencore a décidé de risquer la colère des autorités américaines en reprenant le paiement des redevances, mais en euros plutôt qu'en dollars. Cet accord signifie que Glencore va injecter des millions d'euros dans les poches d'un individu que les États-Unis accusent de corruption et d'avoir « agi en tant qu'intermédiaire lors de la vente d'actifs miniers » pour le compte de Joseph Kabila...Les accords de Glencore avec Dan Gertler et la Gécamines ont permis de résoudre des litiges extrêmement graves qui auraient pu faire perdre à Glencore ses précieux investissements dans les secteurs du cuivre et du cobalt au Congo...Mais cela n'autorise pas les entreprises à effectuer n'importe quel versement à n'importe qui, en espérant que cela protège leurs investissements. Les sociétés qui tirent profit des minerais en RDC, tel Glencore, doivent s'engager à soutenir des chaînes d'approvisionnement propres et transparentes et porter la responsabilité de tous les risques de corruption impliqués dans les transactions qu'elles concluent.

 

 

 

Read the full post here

Item
22 June 2018

What price will Glencore pay for its murky deals in DR Congo?

Author: Margot Mollat du Jourdin, Global Witness

Last week, mining giant Glencore settled two legal disputes threatening its assets in Democratic Republic of Congo, agreeing to pay hundreds of millions to opaque Congolese state-owned company Gécamines and sanctioned Israeli businessman Dan Gertler. These agreements raise fears that the company is willing to take significant risks and pay any price to safeguard its lucrative copper and cobalt mines in Congo...The explosive news that Glencore would bypass US sanctions by paying Gertler in euros rather than dollars made headlines across the business press last week. It is hard to see this latest move as anything but a desperate and risky attempt by...[Glencore] to extricate itself from of a mess of its own making...Both Gertler and Glencore have consistently denied any wrongdoing in their business deals in Congo...In December the US Department of Treasury sanctioned Gertler and several of his companies following “hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals” in Congo. This compelled Glencore to halt royalty payments to Gertler, who immediately sued Glencore in London and Hong Kong courts for nearly $3 billion in damages for non-payment of royalties...After a couple of months of out of court talks, Glencore decided to risk the wrath of US authorities and resume paying the royalties, but in euros rather than dollars. The settlement means that Glencore will pump millions of euros into the pockets of an individual accused by the US of bribery and of “acting as a middleman for mining assets” on behalf of Kabila...Glencore’s agreements with both Gertler and Gécamines have resolved extremely serious disputes that could have seen Glencore lose its valuable investments in Congo’s copper and cobalt sectors...But that does not give companies carte blanche to make whatever payments necessary, to whomsoever necessary, in order to safeguard their investments. Companies profiting from minerals in Congo, like Glencore, must commit to supporting clean and transparent supply chains and take responsibility for any corruption risks involved in the deals they make...Glencore cannot be allowed to get around important US anti-corruption measures and continue to pay Gertler massive royalty fees; unless the US responds by enforcing its sanctions, this sends a dangerous message that huge companies can act with impunity to protect their business interests.

Read the full post here