The Glencore PLC (LON: GLEN) share price dropped 5.35% after almost 200 investment funds filed claims against the company with the UK High Court alleging that they suffered material losses from the company’s untrue statement in its prospectus used during its 2011 IPO and 2013 merger with Xstrata.
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Investors' adverse reaction to the news was expected since the new cases could result in Glencore paying billions to compensate the 197 funds named claimants. The cases come after Glencore admitted widespread corruption in some of its overseas operations, including in Brazil, the US, and Africa.
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The current litigation comes from Glencore’s admission of guilt in bribery and market manipulation cases last year, which saw it pay $1bn in fines and forfeitures in the US, £280mn in the UK and $40mn in Brazil. It remains to be seen how the cases shall unfold since Glencore has not filed its response yet.
The cases were filed between October last year and this Spring. However, the claimants' filed a joint “particulars of claim” detailing a common set of allegations covering six related legal cases in June this year.
The claims allege that, between 2006 and 2019, companies within the Glencore Group engaged in “widespread bribery, corruption and fraud”. The “particulars of claim” span nearly 200 pages and focus on three examples of alleged unlawful conduct.
The group’s unlawful conduct claims relate to alleged bribery about copper and cobalt acquisitions in the DRC and bribery schemes within Glencore’s oil trading business in West Africa, Brazil, South Sudan and Venezuela. Lastly, there was the manipulation of the fuel oil prices scheme in the US.
Glencore’s former CEO Ivan Glasenberg, former CFO Steven Kalmin, and former board chairman Tony Hayward are all defendants in some of the claims, but not all. The three are also yet to respond to the claims.
Some funds participating in the lawsuit include sovereign wealth funds such as Norges Bank, GIC, Mubadala, Kuwait Investment Authority, Aabar Holdings, and the Oman Investment Authority. We also have multiple pension funds in the lawsuit, including the Shell and BP Pension funds, Ontario Pension Board and Scottish Widows.
Glencore share price.
The Glencore share price dropped 5.35% to trade at 414.75p, from Wednesday’s closing price of 438.18p.
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