MAC: Mines and Communities

Glencore shareholders mull suing firm over corruption, bribery probes

Published by MAC on 2018-07-15

It seems that finally Glencore's risk-heavy business model is coming back to bite it.

Following mulitple corruption cases and legal actions (see: Glencore hammered by corruption and accusations of rights violations), the company now faces potential legal action in the UK from its shareholders.

These are of course the same shareholders who have been happy in general to profit from a company despite the accusations of abuse of rights and illegality. It appears that what is unacceptable is not being completely transparent about those risks to said shareholders (one assumes if things go wrong and the share price plummets as a result).


Glencore shareholders mull suing firm over corruption, bribery probes

Cecilia Jamasmie

14 July 2018

As if ongoing probes on both sides of the Atlantic weren’t enough to deal with for miner and commodities trader Glencore, now a group of shareholders is mulling potential actions against the company for causing them to lose money.

US law firm Quinn Emanuel, which is representing Glencore investors, said Thursday the recent news of imminent and ongoing probes into the Swiss firm’s dealings in the Democratic Republic of Congo (DRC), where it’s heavily invested, has caused the stock collapsed beyond acceptable limits.

“Glencore has a well-known appetite for risk and operates in many of the world’s most endemically corrupt countries, of which the DRC is a notable example,” Richard East, Quinn Emanuel’s Co-Managing Partner in London, said in an emailed statement. “We are of the view that Glencore shareholders may be entitled to bring claims in England under the terms of the Financial Services and Markets Act 2000 in order to seek compensation for losses caused by Glencore’s alleged untrue or misleading statements and/or failures to disclose relevant information to the market.”

Last week, the company revealed it had received a subpoena from by the US Department of Justice (DOJ) to produce documents related to the Foreign Corrupt Practices Act and US money laundering statutes. The records relate to the company’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to the present.

The company's stock dropped as much as 13% in London after the subpoena became public, wiping more than 5.5 billion pounds ($7.3 billion) off its market value, or about half the $14.8 billion profit Glencore made last year.

Glencore said Wednesday it had set up a board committee to oversee the company’s response to US authorities’ demand for documents relating to possible corruption and money laundering.

The SOJ request came weeks after Britain’s Serious Fraud Office said it was preparing a formal bribery probe into the company and its deals with Dan Gertler, Glencore’s former business partner in the DRC, where the firm is the top producer of copper and cobalt.

The firm’s shareholders’ claim is being backed by leading litigation funder Innsworth. Quinn Emanuel’s London office is asking Glencore’s shareholders interested in being kept up to date as matters progress or any who would like to know more about the potential actions, to contact them.


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