Swiss company, Glencore in trouble with US govt over alleged corruption in Nigeria, DRC
London, July 3, 2018 (AltAfrica)-Glencore Plc tumbled the most in two years as its African troubles escalated dramatically after U.S. authorities demanded documents relating to possible corruption and money laundering.
The world’s biggest commodity trader announced that it’s been subpoenaed by the U.S. Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and United States 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 11 percent.
Glencore said it is reviewing the subpoena and will provide further information in due course as appropriate.
The shares dropped to the lowest since July 2017 and were down 10 percent by 9:06 a.m. in London.
“Given the flow of negative news we’ve had through the course of this year, the knee jerk reaction is worse than it otherwise might have been,” Hunter Hillcoat, an analyst at Investec Securities Ltd., said by phone. “The DOJ fines can be big, but to wipe out 10 percent of the market cap would be bigger than any fine I can recall.”
Last month, the company’s problems seemed to be easing as it headed off two of its biggest challenges in the DRC. Faced with the risk of losing control of its mines, Glencore bowed to the demands from two entities with close government ties — the state-run mining company Gecamines and Gertler, who’s currently under U.S. sanctions.
Glencore’s bonds also slumped on the news. The company’s 500 million euros ($583 million) of notes due April 2026 led the decline, falling 3 cents on the euro to 108 cents, the biggest drop in more than two years, according to data compiled by Bloomberg.