A total of 197 funds are seeking damages from Swiss mining giant Glencore over allegations that the company made misleading or untrue statements in its prospectuses to cover up corrupt activities.
The claimants, which include funds managed by Abrdn, Fidelity, HSBC, Invesco, Legal & General and Vanguard, have alleged that they suffered financial losses as a direct result of “untrue statements” and omissions in Glencore’s 2011 prospectus for its listing on the London Stock Exchange. They are also suing for misleading information in the company’s 2013 prospectus relating to its merger with Anglo-Swiss mining company Xstrata.
The long list of claimants includes sovereign wealth funds such as GIC, Norges Bank, Aabar Holdings and Kuwait Investment Authority. Major pension funds have also joined the lawsuit, including Scottish Widows, BP and Shell pension funds.
The allegations against Glencore state that senior management “knew of, or were reckless as to the existence of”, some or all of this “bribery, corruption and fraud”. Instances of bribery relate to copper and cobalt acquisitions in the Democratic Republic of Congo, oil trading in West Africa, South Sudan, Brazil and Venezuela, and fuel oil price manipulation in the US.
Currently, the group of investors have cumulative holdings in Glencore worth more than $4.7bn, according to the Financial Times. The case will be heard in London’s High Court. It follows admissions of guilt by the company last year over accusations of corruption. To settle probes into bribery and market manipulation, the company agreed to pay up to $1.5bn in penalties; $1bn in the US, $355m in the UK and $40m in Brazil.
In the US, Glencore was accused of violating the Foreign Corrupt Practices Act and commuting a multi-year scheme for manipulating commodity prices at two major shipping ports.
In the UK, the company was charged by the UK Serious Fraud Office (SFO) with seven counts of profit-driven bribery and corruption relating to its oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. According to the SFO, Glencore agents made bribes worth more than $25m in order to gain preferential access to oil in the regions.
Glencore CEO Gary Nagle said at the time: “We acknowledge the misconduct identified in these investigations and have cooperated with the authorities. This type of behaviour has no place in Glencore, and the board, management team and I are very clear about the culture that we want and our commitment to be a responsible and ethical operator wherever we work.
“We have taken significant action towards building and implementing a world-class Ethics and Compliance Programme to ensure that our core controls are entrenched and effective in every corner of our business.”
Glencore has not yet filed its defence and did not immediately respond to request for comment regarding the latest allegations.