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UK fraud office preparing formal probe into Glencore, Gertler dealings in DRC


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UK fraud office preparing formal probe into Glencore, Gertler dealings in DRC

The U.K.'s Serious Fraud Office, or SFO, is preparing a formal bribery probe into Glencore PLC's dealings with Israeli billionaire Dan Gertler and Democratic Republic of the Congo President Joseph Kabila, Bloomberg News reported May 18, citing anonymous sources.

As Glencore is based in Switzerland, the prosecutor will be required to establish its jurisdiction because the company's shares are traded in London.

"We are ready to take all the blows and we are ready to fight back," a DRC government spokesperson said. Meanwhile, representatives for the SFO, Glencore and Gertler declined the newswire's requests for comment.

Gertler and Kabila have been previously subject to investigations in the U.K. and U.S. In late 2017, the U.S. government sanctioned Gertler for using his relationship with Kabila to act as a middleman for mining deals in the country.

The SFO's interest comes from a six-year probe into whether Kazakh miner ENRC Ltd., an affiliate of Eurasian Resources Group Sàrl, and Gertler bribed DRC officials, the sources added.

U.S.-based hedge fund manager Och-Ziff Capital Management Group LLC, which funded some of Gertler's projects in the DRC, admitted in 2016 to having conspired to pay off Congolese officials with the aid of an unidentified Israeli businessman. Gertler denied any wrongdoing in this regard and was not charged.

Glencore was previously implicated in the Paradise Papers leak in November 2017. According to the documents, it allegedly loaned Gertler US$45 million as the company recruited him to secure a mining agreement over the Katanga copper project in the DRC.

The mining major's Katanga Mining Ltd. subsidiary was also under investigation by the Ontario Securities Commission in July 2017 over US$100 million paid to a company owned by Gertler.

Glencore is presently in talks with Gertler to reach an out of court settlement associated with a royalties dispute in the DRC. The businessman is seeking US$2.28 billion in damages and unpaid royalties from the commodities trader, which it ceased to pay after he was sanctioned by the U.S.

The company is involved in another legal battle as its DRC-based joint venture partner Gecamines SA initiated capital deficiency proceedings to dissolve Katanga's 75%-owned unit Kamoto Copper Co. SARL

Glencore's shares were down about 4.4% at the market close in London on May 18, according to the newswire.