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London - Two weeks after the Paradise Papers leak brought a wave of scrutiny over Glencore’s dealings in the Democratic Republic of Congo, the company is facing another scandal.
The issues stem from Katanga Mining, a Congolese copper producer owned by Glencore. The African company restated financial statements and is under investigation by Canadian regulators for its corporate governance and accounting practices.
In a major sign of how toxic the problem has become for the Swiss commodities giant, three executives including billionaire Aristotelis Mistakidis resigned from the board of Katanga.
Mistakidis is a key part of Glencore. Among management, he’s the third-biggest shareholder and longtime lieutenant to Chief Executive Office Ivan Glasenberg. He helped lead the company’s ascent from a scrappy trader to a commodities giant and world’s third-biggest copper miner.
While Katanga is financially a small part of Glencore’s overall business, it faces an ongoing headache over the past relationship with controversial Israeli billionaire Dan Gertler.
An internal review found among other problems that Katanga had failed to disclose compensation paid to some executives and overstated copper output in 2014. In some cases, senior management and executive directors were responsible for overriding control processes.
Canada’s Ontario Securities Commission is also investigating the accuracy of Katanga’s financial reporting, corporate governance and the conduct of some directors and officers. It’s also reviewing disclosures related to bribery and anti-corruption laws.
Glencore nominated three new directors to the Katanga board, including Chief Financial Officer Steven Kalmin. It will strengthen controls across its copper division, Glencore said in a statement.
