Sheikh’s firm weighs in to Glencore legal battle
After mining giant is ordered to pay £281m in bribery case, City firms are set to sue for billions
AN INVESTMENT giant backed by Sheikh Mansour – the owner of Manchester City – has lined up with a group of powerful funds to sue FTSE100 group Glencore following a damning bribery case.
Mubadala Investment Company, an Abu Dhabi sovereign wealth fund whose board includes the Sheikh, is pursuing the crisis-hit Anglo-Swiss multinational commodity trading and mining company in a joint action alongside dozens of other major firms, including HSBC and Standard Life.
Glencore was last week ordered to pay £281 million by a London court. The Serious Fraud Office (SFO) said group subsidiary Glencore Energy UK facilitated the payment of millions of dollars in bribes to officials in five African countries.
Prosecutors said Glencore’s employees and agents used private jets to transfer cash to pay the bribes.
Hopes of drawing a line under the scandal have been dashed after documents seen by The Mail on Sunday revealed a wave of incoming legal claims against Glencore, which experts believe could add up to billions of pounds.
It is feared that the litigation could run for years against Glencore and may entangle board members past and present, including former chief executive Ivan Glasenberg and current non-executive director Peter Coates.
The bribery case relates to about $26 million (£23 million) that was paid to officials of crude oil firms in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan from 2011 to 2016.
A judge said the case demonstrated ‘not only significant criminality but sophisticated devices to disguise it’, adding that corruption was ‘endemic’ among Glencore’s traders.
Claimants include Mubadala – where Mansour is deputy chairman – the British Airways pension fund, investment giant Abrdn and Wirral Council. Other sovereign wealth funds involved include the Kuwait Investment Authority and Norway’s Norges
Bank. The allegations are believed to relate to losses suffered by shareholders in the wake of the bribery and corruption probes. The claimants are expected to argue that news of the investigations resulted in billions of pounds being wiped off Glencore’s value. Southwark Crown Court recently imposed a fine of about £183million on Glencore – which was cut from £274million after the company submitted a guilty plea. A £93.5million confiscation order was also made and it had to pay £4.6million for the SFO’s costs. Earlier this year, Glencore reached a £957 million settlement with the US Department of Justice.
Iskander Fernandez, a whitecollar crime lawyer in the City, said the new civil case may cast a ‘huge cloud’ over the business.
He said: ‘It would have been great for the company to say it had been sentenced and moved on with a root and branch change in the organisation, but it will now be pushed back into the limelight.’
The litigation could lead to Glencore having to hand over historic evidence and it is possible that senior Glencore executives will be cross-examined.
Current chairman Kalidas Madhavpeddi recently described the bribery as ‘inexcusable’ and stressed that the firm is ‘committed to operating transparently’.
Giuseppe Bivona – an activist investor at Bluebell Capital – said the situation at Glencore has become ‘untenable’. He added that there is a ‘significant culture problem at the company’.
Chief executive Gary Nagle defended the firm in a recent statement, saying ‘this type of behaviour has no place at the group’.
Glencore is currently worth more than £65billion. Its stock value has not fallen since the claims were filed.
Ben Lewis, a mining expert at Liberum Capital, said: ‘The challenges for Glencore are more in their rear-view mirror rather than worrying about what’s ahead.’
Glencore and the claimants’ legal representatives declined to comment.