Sun, 19 Jan 2020

Glencore is being investigated for bribery by UK authorities, deepening the legal troubles that threaten the world's biggest commodities trader. The shares fell as much as 8.6% to a three-year low.

The move by the Serious Fraud Office adds to ongoing corruption probes that Glencore is facing in the US and Brazil, which have scared investors and shaken the company over the past two years. The SFO cast a wide net, saying it's looking into suspicions of bribery by the company, its employees, agents and associated persons.

"This is an obvious negative for the Glencore investment case," said Tyler Broda, an analyst at RBC Capital Markets. "We believe this clearly will hamper sentiment in what remains a complex investment case for investors."

The language of the UK's investigation, albeit with limited detail, suggests it could be wider in scope, Broda wrote in a research note. That potentially raises the penalty, if Glencore is found guilty or reaches a settlement, he said.

The new probe also ramps up pressure on Glencore's billionaire Chief Executive Officer Ivan Glasenberg. He told investors earlier this week to prepare for more leadership changes and hinted that his own departure may come sooner than previously anticipated.

'Whacked Again'

While the SFO didn't specify what part of the business it was looking at, Bloomberg reported last year that the agency was preparing to open an investigation into Glencore and its work with Israeli billionaire Dan Gertler and former Democratic Republic of Congo President Joseph Kabila.

In response to the DoJ investigation, which the company also says it's cooperating with, Glencore set up a board committee to respond to a U.S. probe, that included chairman and former BP Plc Chief Executive Officer Tony Hayward.

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