Glencore, the majority owners of Mopani Mines has been ordered to hand over documents and records to US regulators related to its operations in Nigeria, the Democratic Republic of Congo and Venezuela dating as far back as 2007, sending its shares tumbling 12 per cent.
The Swiss-based mining and trading group led by billionaire Ivan Glasenberg said on Tuesday that it had received a subpoena from the US Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and US money laundering statutes.
The records related to the company’s activities in Nigeria, Venezuela and the DRC.
“Glencore is reviewing the subpoena and will provide further information in due course as appropriate,” the company said.
Glencore is the world’s biggest commodities trader, shifting millions of tonnes of metals, minerals and oil across the globe.
The company prides itself on operating in jurisdictions where many of its rivals fear to tread such as the DRC, Africa’s biggest copper producer and home to significant deposits of cobalt.
Traders noted that the DoJ subpoena comes just weeks after Glencore settled a dispute with Dan Gertler, its former business partner in the DRC.
Glencore said it would pay Mr Gertler in Euros so as to not fall foul of US sanctions, which were placed on the Israeli billionaire last year for his “opaque and corrupt mining deals” in the DRC.
At the time Glencore said it did not believe it was necessary to apply for a licence from the US government to pay Mr Gertler because no US person or the US financial system would be involved in the transactions.
It also claimed it has discussed the royalty payments, which it stopped paying in December, with the appropriate authorities in US and Switzerland, where the company has its headquarters.
However, the move unnerved investors and analysts who said the deal would test Washington’s resolve over sanctioned individuals. On the same day Glencore announced its deal with Mr Gertler, the US Treasury department placed sanctions on 14 companies with ties to the Israeli businessman, including the vehicle that will receive the royalty payments from Glencore.
The DoJ subpoena is the latest in a string of problems to hit Glencore this year.
In addition to its legal fight with Mr Gertler, it also agreed to write off $5.6bn of debt in a joint venture with Gecamines, the DRC’s state mining, to end another legal dispute.
The company could also face a bribery probe by the UK’s Serious Fraud Office over its ties to Mr Gertler.
Global Witness, a campaign group, said: “Holding Glencore accountable is a huge step in global accountability more generally. It would set a precedent for companies all over the world who, in many cases, are able to act with impunity in regards to the world’s mineral wealth.”
In early trading on Tuesday, Glencore shares were down 12 per cent to 303p, wiping more than £5bn off its market capitalisation, which now stands at £45bn.
“There is not enough detail in the release to understand exactly what the investigation holds, however with the subpoena covering multiple countries, this would indicate that there is a relatively thorough investigation at hand,” said Tyler Broda, analyst at RBC Capital Markets.
“The Foreign Corrupt Practices Act appears at first investigation to provide subject to sanctions, fines and penalties up to $25m or twice the gain or loss caused by the violation and imprisonment for up to 5 years per occurrence,” added Mr Broda.