Glencore Probed for Bribery in Congo
November 20 2017 - 11:05AM
Dow Jones News
By Scott Patterson
LONDON-- Glencore PLC's copper operations in the Democratic
Republic of Congo face scrutiny from Canadian regulators over
financial statements and disclosures related to international
bribery and anticorruption laws, the company said Monday.
Canada's Ontario Securities Commission, or OSC, the country's
biggest regional securities regulator, is also investigating the
governance practices of Glencore copper subsidiary Katanga Mining
and the related conduct of certain directors and officers, the
company said. Katanga is listed in Toronto and owned by Glencore,
the Swiss commodity giant.
Three Katanga directors, including Glencore's billionaire copper
chief, Aristotelis Mistakidis, are stepping down from its board
following an internal review that found "material weaknesses" in
the company's controls over financial reporting, Glencore said.
Glencore nominated three new directors to the board, including
its Chief Financial Officer Steven Kalmin. Katanga's CFO, Jacques
Lubbe, resigned, Katanga said. Glencore, in a separate statement
Monday, said it plans to implement "various structural and control
changes" across its copper department.
Monday's disclosures reveal a chaotic situation at the giant
Congolese copper mine, which Glencore first invested in 2008, as it
ramped up operations. Recurring spills, power outages and plant
modifications from 2010 to 2013 resulted in the inadvertent dumping
of a large amount of copper into a nearby waste dam.
Glencore suspended operations at Katanga in 2015 to revamp its
infrastructure and boost production.
The Wall Street Journal reported in July that Glencore is
subject to an investigation by Canada's OSC regarding more than
$100 million in payments Katanga Mining made to a company owned by
an Israeli businessman. An OSC spokeswoman confirmed that the
agency has an active investigation regarding Katanga Mining.
The OSC investigation stems from payments Katanga was expected
to make to Congo's state-run mining company, Gecamines, that were
instead sent to a Caymans Island company owned by the businessman,
Dan Gertler, the Journal reported. Glencore had acknowledged the
shift in payments and said it was done at the request of
Gecamines.
Mr. Gertler was a central figure in a $412 million settlement in
September between the U.S. Justice Department and the Securities
and Exchange Commission with New York hedge fund Och-Ziff Capital
Management Group LLC. The Justice Department said Och-Ziff went
into business with Mr. Gertler despite a consultant's warnings that
he used political connections in Congo to benefit himself and his
associates.
The Justice Department said a business associate of Och-Ziff's,
who people familiar with the matter said is Mr. Gertler, paid more
than $100 million in bribes to Congolese officials, though he
hasn't been charged.
A spokesman for Mr. Gertler's company, Fleurette, has denied
allegations of bribery. Daniel Och, chairman and chief executive of
Och Ziff, has said the firm's conduct scrutinized by the Justice
Department was "inconsistent with our core values."
Glencore in February purchased Mr. Gertler's stake in Katanga
Mining, as well as his stake in another jointly run Congo copper
mine, for nearly $1 billion including debt.
Write to Scott Patterson at scott.patterson@wsj.com
(END) Dow Jones Newswires
November 20, 2017 10:50 ET (15:50 GMT)
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