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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Glencore    GLEN   JE00B4T3BW64

GLENCORE

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Glencore : Faces Bribery Probe, Sending Shares Lower--4th Update

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12/05/2019 | 06:08pm EST

By Alistair MacDonald and Scott Patterson

LONDON -- Britain's top financial cop said it is investigating Glencore PLC for alleged bribery, sending shares of the mining and commodities-trading company down 9% and adding to regulatory woes elsewhere that have weighed on the company all year.

The U.K.'s Serious Fraud Office said it was investigating suspicions of bribery "in the conduct of business by the Glencore group of companies, its officials, employees, agents and associated persons." It didn't elaborate. Glencore also disclosed the probe in a statement on Thursday. It declined to comment further.

The agency has been looking into the mining giant's activities in the Democratic Republic of Congo and its relationship with Israeli diamond merchant Dan Gertler, according to a person familiar with the probe.

Glencore's shares have fallen nearly 25% this year amid regulatory scrutiny all over the world. During the same period, most large miners' stock has risen. Analysts blame Glencore's underperformance on its legal and regulatory troubles, among other factors.

Glencore said in July 2018 that it had received a subpoena from the U.S. Justice Department, demanding records relating to its compliance with American antibribery and money-laundering laws in the Democratic Republic of Congo, Nigeria and Venezuela. Glencore has also said that it is the subject of an investigation by the U.S. Commodity Futures Trading Commission.

The company has engaged external legal counsel and forensic experts to assist in responding to the Justice Department and CFTC investigations, Glencore said in posting its half-year results in August.

"This is an obvious negative...there is a serious discount already in the Glencore share price" as a result of investigations, said Tyler Broda, an analyst at the Royal Bank of Canada.

Mr. Broda said regulatory investigations and other problems, such as the group's exposure to coal, mean the company was already trading at a $28 billion discount to peers such as BHP Ltd.

The Journal reported last year that the focus of the Justice Department's probe is Glencore's ties to Mr. Gertler.

The U.S. Treasury Department sanctioned Mr. Gertler in 2017, alleging he traded on a friendship with former Congolese President Joseph Kabila to amass a fortune through "opaque and corrupt" deals on behalf of multinational companies seeking to do business in Congo.

Glencore provided nearly $1 billion in loans and advances to companies associated with Mr. Gertler in a roughly 10-year period starting in 2007, according to documents reviewed earlier this year by The Wall Street Journal.

The loans were designed in part to help finance investments by Mr. Gertler in copper-mining operations in Congo alongside Glencore, the documents show.

A spokesman for Mr. Gertler's main company in Congo, Fleurette Group, didn't immediately comment. The group has denied wrongdoing in the past.

Glencore's shares have been weighed down by regulatory investigations, but the company faces other problems, including weakness in the price of coal and cobalt and underperformance at its African copper division.

On Tuesday, Glencore Chief Executive Ivan Glasenberg signaled senior management changes for 2020, paving the way for his own eventual departure.

Mr. Glasenberg, who joined Glencore in 1984 and has been CEO since 2002, told investors that the company would meet in early 2020 to talk about a change to its "old guard." Once a new layer of management was in place, he would be in a position to step aside, he said.

The 62-year-old South African-born executive joined Glencore in 1984 and has been CEO since 2002. He merged Glencore, a commodities-trading company with Xstrata, one of the world's biggest mining companies, in a $29.5 billion deal that created one of the world's largest coal, copper and zinc producers in 2013.

The company also moved heavily into cobalt and copper, two metals that are seen as a bet on the electrification of transport, and a play that increased its exposure to Congo.

The company's shares have been on a volatile ride in recent years amid concerns about overleverage in 2015 and more recently a lengthening list of regulatory investigations.

Write to Alistair MacDonald at alistair.macdonald@wsj.com and Scott Patterson at scott.patterson@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
GLENCORE -0.58% 241.8 Delayed Quote.3.34%
SILVER 0.23% 18.062 Delayed Quote.1.02%
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Financials (USD)
Sales 2019 214 B
EBIT 2019 4 398 M
Net income 2019 1 406 M
Debt 2019 33 127 M
Yield 2019 5,81%
P/E ratio 2019 29,4x
P/E ratio 2020 15,0x
EV / Sales2019 0,35x
EV / Sales2020 0,34x
Capitalization 41 741 M
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 3,63  $
Last Close Price 3,16  $
Spread / Highest target 103%
Spread / Average Target 14,7%
Spread / Lowest Target -56,9%
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Managers
NameTitle
Ivan Glasenberg Chief Executive Officer & Executive Director
Anthony Bryan Hayward Non-Executive Chairman
Steven F. Kalmin Chief Financial Officer
Peter Roland Coates Non-Executive Director
Leonhard Heinrich Fischer Independent Non-Executive Director
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