DOJ Launches Investigation into Glencore

The US Department of Justice has launched a corruption and money laundering investigation on multinational trading and mining company, Glencore, after the announcement that US investigators have subpoenaed documents detailing Glencore’s activities in Nigeria, the Republic of Congo and Venezuela.  As a result, Glencore shares dropped by 13%, decreasing Glencore’s market value by $5 billion.  While the US has not made any accusations against the company yet, Maximilian Hess, AKE International senior political risk analyst, believes Glencore’s drop in market value is higher than any settlement or fine the US could impose, hinting that US investigators have concerns about what the investigation could potentially uncover.

In the midst of Glencore’s multiple investigations from various countries, such as Britain’s bribery investigation into the company and its activities with Dan Gertler, an Israeli billionaire and close friend of Joseph Kabila, the President of the Republic of Congo, Ivan Glasenberg, CEO of Glencore, has attempted to keep the company out of trouble and away from sanctions.  In April 2018, Glasenberg stepped down from his position as board member of United Co. Ruscal, one of Glencore’s aluminium suppliers, after one of the owners Oleg Deripaska, was heavily sanctioned by the US. In addition, after a review of operations discovered concerns about accounting and management practices, Glencore repressed the power of Aristotelis Mistakidis, the company’s head of copper.

In the past Glencore has found itself in legal trouble before when Marc Rich, Glencore’s founder, was indicted for trading oil with Iran while sanctioned, earning him the nickname “King of Oil.”  In 2015, Alex Beard, Glencore’s head of oil, was involved in a lawsuit by a former Nigerian representative.  Christopher LaFemina, Jefferies LLC analyst warns that if issues and investigations continue to persist, in the long run, Glencore’s shares will be drastically affected.


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