Mining and commodities trader Glencore (LON: 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 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 Swiss probe is likely to increase pressure on chief executive officer Ivan Glasenberg. He told investors in February to prepare for more leadership changes and hinted that his own departure may come sooner than anticipated.
A month later, Glencore said it had found certain facts that “may be relevant” to the probes it’s facing, adding 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 note to investors.
Sterck noted the additional financial risk was “relatively low” compared to fines handed out previously by the US Department of Justice (DOJ) and the UK Serious Fraud Office (SFO) to other companies.
More ongoing investigations in the UK, the US and Brazil, have concerned investors and shaken the company up over the past two years.
The DOJ launched its investigation into Glencore’s activities in Congo, Nigeria and Venezuela in July 2018.
The US Commodity Futures Trading Commission (CFTC) initiated a probe in April last year, looking at whether Glencore had fallen afoul of certain provisions of the Commodity Exchange Act and engaged in “corrupt practices in connection with commodities.”
In December 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 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 (ASX, LON: RIO) is also under investigation by the DOJ and the SFO over a questionable $10.5 million payment it made to a French consultant. That person reportedly helped the company win the rights to the giant Simandou iron ore deposit in Guinea.