Glencore shares drop on reports of looming SFO probe

Glencore’s shares were well into the red on Friday afternoon, as reports emerged that the Serious Fraud Office was making preparations to open a formal investigation into the company, over its work with the leader of the Democratic Republic of the Congo and Israeli billionaire Dan Gertler.

Citing “two people with knowledge of the matter”, Bloomberg reported that SFO investigators were set to seek approval for a full-scale probe of Glencore’s operations in the DRC.

The SFO would need to overcome the obstacle of Glencore being headquartered in Switzerland, proving it has jurisdiction given the shares are traded in London.

“We are ready to take all the blows and we are ready to fight back,” DRC government spokesman Lambert Mende reportedly told the newswire on Friday, adding that the administration there was “absolutely calm” over the matter.

It would not be the first time Dan Gertler and DRC president Joseph Kabila - apparently close friends - are implicated in a British or American bribery investigation.

The Serious Fraud Office has spent some years looking into the pair’s relationship with Kazakh mining company ENRC and sanctions were handed down on Gertler by the US in December, over allegations he used his friendship with Kabila to amass his fortune in corrupt ways.

Officials in the DRC described the sanctions as unfair, but Gertler has not made any public statement on them.

US hedge fund manager Och-Ziff Capital Management also previously admitted to conspiring to bribe DRC officials in 2016, with the assistance of an unidentified businessman from Israel.

Gertler was not charged in connection with that case, and he has denied any wrongdoing.

According to Bloomberg, Glencore severed ties with Gertler and bought him out of their joint ventures not long after Och-Ziff settled over the matter.

As at 1527 BST, shares in Glencore were down 5.43% at 376.25p.

Analysts at RBC Capital Markets said, although clearly not a welcome development, the initial share price reaction "seems completely overdone", noting the potential for an SFO investigation "has been around for years".

"Secondly, any investigation, if it does proceed, will potentially take years, as can be seen by the ENRC/Gertler SFO investigation that started in 2014 or the Rio Tinto Simandou bribery investigation that began in 2017."