Glencore slumps as US orders documents in corruption probe

Bloomberg

Glencore Plc tumbled the most in two years after US authorities demanded documents relating to possible corruption and money laundering.
The world’s biggest commodity trader said on Tuesday that it’s been subpoenaed by the US Department of Justice to hand over documents related to the Foreign Corrupt Practices Act and US 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 13 percent, knocking more than 5.5 billion pounds ($7.3 billion) off Glencore’s market value, about half the $14.8 billion of profit the company made last year.
It’s been a tumultuous year for Glencore, mostly due to challenges linked to its business in the Congo, where it operates giant copper and cobalt mines.
The Swiss trader and miner is already facing the possibility of a bribery investigation by UK prosecutors over its work with Dan Gertler, an Israeli billionaire and close friend of Congo President Joseph Kabila, people familiar with the situation said in May.
Glencore said it’s reviewing the subpoena and will provide further information as appropriate. The shares dropped to the lowest in almost a year and were down 12 percent by 10:29 am in London.
The DOJ usually issues subpoenas when it is investigating a company. In December, a Swiss court ordered companies controlled by Gertler to hand over bank documents to US Federal prosecutors.
“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.”
The biggest US penalty for foreign corruption was a $965 million payment imposed on Sweden’s telecoms company Telia Company AB after it accepted that it paid hundreds of millions of dollars in bribes to a government official in Uzbekistan.