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Glencore hit by DoJ probe

Shares in the the Swiss commodities trader have been hammered by news of an apparently wide-ranging DoJ probe
July 3, 2018

Glencore’s (GLEN) legal challenges are mounting. On Monday, the US Department of Justice (DoJ) ordered the commodity giant to hand over documents and other records relating to its business in Nigeria, Venezuela and the Democratic Republic of Congo (DRC) over the last 11 years.

IC TIP: Hold at 313p

News of the subpoena, which Glencore says is related to compliance with the US Foreign Corrupt Practices Act and money laundering statutes, wiped as much as 13 per cent off the company’s share price, or almost £7bn in market capitalisation in early trading.

The DoJ intervention comes a fortnight after Glencore settled a dispute with Israeli billionaire Dan Gertler, who was threatening the group with legal action for unpaid royalties. Glencore concluded it could resume payments to Mr Gertler by paying him in euros, thereby avoiding a US Treasury sanctions regime, which last December placed the tycoon on a no-dealing list. The US alleges Mr Gertler has amassed a fortune via “opaque and corrupt mining and oil deals” in the DRC, a charge Mr Gertler denies.  

The same day Glencore announced its work-around, the US Treasury added 14 companies affiliated with Mr Gertler to its sanctions list, including the vehicle to which royalties will be paid.