Glencore drops 13% on US corruption probe
london — Glencore tumbled the most in two years as US authorities demanded documents relating to possible corruption and money laundering.
The world’s biggest commodity trader said on Tuesday that it’s been subpoenaed by the US Department of Justice to hand over documents related to the Foreign Corrupt Practices Act and US money laundering statutes. The documents relate to the company’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to the present.
The shares plunged as much as 13 per cent before paring some of the losses, wiping up to £6.7 billion ($8.8 billion) off Glencore’s market value, more than half the $14.8 billion of profit the company made last year.
It’s been a tumultuous year for Glencore, mostly due to challenges linked to its business in the Congo, where it operates giant copper and cobalt mines. The Swiss trader and miner is already facing the possibility of a bribery investigation by UK prosecutors over its work with Dan Gertler, a close friend of Congo President Joseph Kabila, people familiar with the situation said in May.
“It’s a very worrying development for any multinational to be subpoenaed by the US Justice Department given their reputation for prosecuting foreign corruption and money-laundering aggressively,” said Daniel Leader, a lawyer for Leigh Day in London. “The DoJ takes a very aggressive stance on jurisdiction so it’s sufficient for the transaction to be in US dollars for them to say they have jurisdiction.”
Glencore said it’s reviewing the subpoena and will provide further information as appropriate. The shares dropped to the lowest in almost a year and were down 5.3 per cent by 2:10pm in London. — Bloomberg