US Subpoenas Glencore Over Alleged Corruption

Published: 05 July 2018

mutanda mine copyThe Mutanda Mine in the Democratic Republic of the Congo (via youtube)

By Lydia Osborne

The US Justice Department Monday ordered Glencore, a Switzerland-based mining giant, to hand over documents relating to alleged money laundering and corruption. Following the announcement, shares in the firm hit a one-year low.

The subpoena pertains to compliance with the Foreign Corrupt Practices Act and US money laundering laws, the company said in a statement, and requests documents concerning business dealings in Nigeria, the Democratic Republic of Congo (DRC), and Venezuela from 2007 to the present.

“Glencore is reviewing the subpoena and will provide further information in due course as appropriate,” the company said.

The US Foreign Corrupt Practices Act makes it a crime for companies to bribe overseas officials to obtain business.

Last year, the Paradise Papers revealed that Glencore furtively loaned Israeli billionaire Dan Gertler tens of millions of dollars while the well-connected businessman helped the company secure a controversial mining agreement in the DRC.  

As part of the deal, two companies later controlled by Glencore received a total of US$440 million in discounts in 2008 on payments to a DRC-controlled copper mining company. At the time, this amount was greater than the country’s entire education budget, according to a report based on the leaked documents.

The report says Gertler, who is known to be a close friend of the Congolese president, was influential in helping the two mining companies obtain access to an extremely rich copper-cobalt
deposit at 48 times less than the market rate.

Glencore and Gertler have consistently denied wrongdoing in their business transactions in the DRC.

In December, the Treasury Department imposed sanctions on Gertler, essentially locking him out of the American financial system and potentially penalizing those doing business with him.

Consequently, Glencore cut ties with the billionaire, and a legal dispute erupted over unpaid royalties related to Congolese mines. According to the Guardian, the company and its former business partner settled that fight last month by agreeing to make royalty payments in euros rather than dollars to avoid the US sanctions.

In Venezuela, Glencore is among dozens of companies accused of paying millions in bribes to get an inside track on oil deals, Bloomberg reported in March. A lawsuit filed in the country alleges that the company funneled bribes through several shell companies set up by a pair of Venezuelan nationals.

Glencore is also facing a possible bribery investigation by UK prosecutors over its dealings with Gertler.

Shares in the oil giant plunged as much as 13 percent following the its disclosure of the subpoena, according to Bloomberg, wiping up to US$8.8 billion off Glencore’s market value.