Mining and commodities trader Glencore (LSE: GLEN) is facing a criminal investigation in its home country for failing to have organizational measures in place to prevent alleged corruption in the Democratic Republic of Congo (DRC).
The probe by the Swiss Attorney General, announced after market close on June 19, adds to the list of multiple, but separate alleged corruption and bribery investigations targeting the miner.
The Swiss Federal Prosecutor’s office said the move was the result of a wide-ranging investigation by law enforcement agencies opened in May. They are looking into the activities of commodity traders based in the country, and Glencore is the first company to be specifically targeted as a result of the process.
The company issued a statement that it was aware of the criminal investigation and that it “will cooperate.”
The Swiss probe is likely to increase pressure on CEO Ivan Glasenberg. He told investors in February to prepare for more leadership changes and hinted that his own departure may come sooner than previously anticipated.
A month later, Glencore said it had found certain facts that “may be relevant” to the probes it’s facing, adding that it had shared them with regulators.
BMO Metals and Mining analyst Edward Sterck believes the Swiss probe does not change Glencore’s reputational risk profile. “In our opinion, [it] just increases the potential fine in the event Glencore is found guilty,” he said in a research note to investors.
Sterck said the additional financial risk was “relatively low” compared to fines handed out previously by the U.S. Department of Justice (DOJ) and the U.K. Serious Fraud Office (SFO) to other companies.
More ongoing investigations in the U.K., the U.S. and Brazil, have scared investors and shaken the company over the past two years.
The DOJ launched its investigation into Glencore’s activities in Congo, Nigeria and Venezuela in July 2018.
The U.S. Commodity Futures Trading Commission (CFTC) initiated a probe in April 2019, looking at whether Glencore had fallen foul of certain provisions of the Commodity Exchange Act and engaged in “corrupt practices in connection with commodities.”
At the end of 2019, the SFO opened its own bribery probe into the mining company and some of its executives, as well as employees and agents.
Glencore is a leading miner and the biggest western company operating in DRC, Africa’s largest copper producer, and the source of more than half the world’s cobalt.
The firm is just one of a few top resource companies facing probes into possible corruption and bribery. Rio Tinto (NYSE: RIO; LSE:RIO) is also under investigation by the DOJ and the SFO over a questionable US$10.5 million payment it made to a French consultant. That person allegedly helped the company win the rights to the giant Simandou iron ore deposit in Guinea.
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