New reports highlight Glencore's alleged opaque deals and legal troubles in the Democratic Republic of Congo; the company declines to comment

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Company non-response
26 November 2018

Glencore's response

Author: Glencore


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20 November 2018

Glencore’s Growing Legal Troubles With Katanga Mining

Author: Rights and Accountability in Development (RAID)

A year ago, Katanga Mining Limited...a subsidiary of Glencore...was forced to publish an embarrassing internal audit after its activities were probed by Canada Ontario Securities Commission (OSC), which oversees the Toronto Stock Exchange. The audit found "material weaknesses" in financial reporting relating to the company's activities in the Democratic Republic of the Congo, where Katanga Mining operates one of the richest copper and cobalt mines in the world. Since then the legal and regulatory troubles of Glencore and its subsidiary have deepened...The OSC probe into Katanga Mining continues and new investor lawsuits have been filed against both companies and senior managers. In December 2017, United States authorities sanctioned one of Glencore's key business partners, notorious Israeli billionaire Dan Gertler, and in July 2018 the U.S. Department of Justice (DOJ) issued Glencore with a subpoena for information as part of a corruption investigation. Glencore also faces the prospect of a UK Serious Fraud Office (SFO) investigation. All this raises important questions about how one of the world's largest mining companies is conducting business...The legal pressure is mounting. In December 2017, under the Global Magnitsky Human Rights Accountability Act, the U.S. imposed financial sanctions on Gertler and his affiliated companies, whose partnership with Glencore dates back to 2007 and who previously controlled Katanga Mining. The US Treasury stated that Gertler "amassed his fortune through hundreds of millions of dollars' worth of opaque and corrupt mining and oil deals in the Congo". On 15 June 2018, Glencore and Katanga Mining announced that they would, through subsidiaries, continue paying royalties to Gertler-associated companies, despite U.S. sanctions designed to prevent such payments. The same day, the US Treasury Department added a further 14 entities affiliated with Gertler to the sanctions list...In July 2018, further legal troubles followed. Glencore was subpoenaed by the DOJ for compliance with the FCPA and money-laundering statutes in Congo and elsewhere.

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16 November 2018

Trouble in the Congo: The Misadventures of Glencore - What a time to own the world’s most valuable cobalt mine, and to have to fight to keep it.

Author: Franz Wild, Vernon Silver and William Clowes, Bloomberg Businessweek

...Glencore announced that the U.S. Department of Justice had subpoenaed documents and other records related to its Congolese investments and other deals, and was examining its compliance with U.S. laws on foreign corruption and money laundering. The U.K.’s Serious Fraud Office is also considering whether to open an investigation...These actions do not necessarily mean that the company committed any wrongdoing or that charges will be filed. Glencore and Glasenberg declined to comment for this article...At the center of it all: a two-decade swath of corruption allegedly cut across Congo by Gertler. Public and confidential the business relationship between Gertler and Glasenberg is deeper than was previously known...Glasenberg personally managed Glencore’s relationship with Gertler...The money flowed from Glencore to Gertler’s companies for more than a decade in the form of hundreds of millions of dollars of loans and contracts for various services...the relationship between Glencore and Gertler deepened. The company rolled over loans to him at the last minute, never requiring him to pay the principal. It gave him stock options at a discounted price...Glencore even played a role in a complicated arrangement whereby Gertler became the owner of a valuable stream of mining royalty payments Glencore paid to Gecamines, a Congolese state-owned company. Gecamines yielded the royalties to Gertler after defaulting on a loan. Glencore then made a generous upfront royalty payment to Gertler...In October of that yea...reached a settlement with U.S. prosecutors in which it admitted to conspiring to bribe Congolese officials... 

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