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London - Three Glencore [JSE:GLN] executives stepped down as directors of the Swiss trader’s copper and cobalt unit, Katanga Mining, in the Democratic Republic of Congo after an internal review found "material weaknesses" in financial reporting controls at the operation.
Questions about the "appropriateness" of some of Katanga’s accounting practices arose during the course of an investigation by the Ontario Securities Commission (OSC), the company said.
The OSC is investigating, among other things, the accuracy of Katanga’s financial reporting, the adequacy of its corporate governance practices and the conduct of some of its directors and officers. It is also reviewing the compliance of its disclosures with international bribery, government payment and anti-corruption laws, the company said.
The investigation led to an internal review of the company’s activities, after which Glencore’s head of copper, Aristotelis Mistakidis, and executives Liam Gallagher and Tim Henderson offered to step down, Katanga Mining said in a statement. Katanga Mining’s chief financial officer Jacques Lubbe has also reigned.
Glencore has nominated three new directors to the Katanga board, including the group’s CFO Steven Kalmin. The diversified mining group will also strengthen controls across its copper department to enhance its financial, corporate governance and control processes, Glencore said in a statement.
Katanga is one of two giant copper projects operated by Glencore in Congo. The Swiss trader suspended production at the mine in 2015 to invest in new processing facilities but plans to produce as much as 300 000 metric tonnes of copper and 20 000 tonnes of cobalt a year from the unit by 2019.
Glencore owns about 86% of Toronto-listed Katanga Mining. It began investing in the business a decade ago through the merger of Katanga and London-listed Nikanor, in which Israeli billionaire Dan Gertler also held shares.
Gertler was a shareholder in Katanga until February, when he sold his 10% stake in the company to Glencore for $38m. The sale was part of a near $1bn dollar deal, through which Glencore ended its decade-long partnership with Gertler in Congo.
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