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Dozens of the world’s biggest asset managers have accused the trading house Glencore of lying in past share prospectuses to cover up corrupt activities, escalating a far-reaching action in London’s High Court that could have significant ramifications for the natural resources industry.
Nearly 200 funds — including some managed by Fidelity, Vanguard, Legal & General, HSBC, Abrdn and Invesco — are seeking damages from Glencore over allegations that the company and its senior leadership made misleading statements that covered up corrupt activities.
The claimants, whose current holdings in the mining company total more than £3.7bn, alleged they “suffered loss” as a result of “untrue statements” and omissions in Glencore’s 2011 prospectus for its listing on the London Stock Exchange and the later, 2013 prospectus for its merger with Xstrata.
The action in London’s High Court follows Glencore’s admission of bribery and market manipulation last year. After a co-ordinated international investigation, the Swiss company agreed to plead guilty to a series of charges in return for paying $1bn in fines and forfeitures in the US, £280mn in the UK and $40mn in Brazil.
The existence of the investor actions was made public last year, but neither the particulars of the allegations nor the names of some of the growing number of investors participating have previously been made public.
The Swiss miner and trading house has sought to move past the corruption cases, and enhanced its ethics and compliance programme. This year it has been pursuing big investments including a $23bn effort to acquire Teck Resources, the Canadian miner.
The long list of claimants includes sovereign wealth funds such as GIC, Norges Bank, Mubadala, Aabar Holdings, Kuwait Investment Authority, and Oman Investment Authority.
Dozens of pension funds have also joined, including Scottish Widows, Ontario Pension Board, and BP and Shell pension funds.
The 197 funds listed as claimants alleged they suffered losses because of “untrue and misleading statements” that covered up corrupt practices within the company.
The claimants all purchased shares in Glencore at the time of the company’s listing on the London Stock Exchange or the merger or both, and they alleged the prospectuses contained “numerous untrue and misleading statements”.
The claims alleged these misstatements arose from “Glencore’s failure to disclose that bribery, corruption and fraud was prevalent in the business activities of key operating subsidiaries”.
Glencore, which has not yet filed its defence in the case, declined to comment.
In previous statements related to the corruption investigations by government authorities, the company has said that Glencore today is “not the company it was” when the “unacceptable” practices behind the misconduct occurred.
Glencore’s former chief executive Ivan Glasenberg, chief financial officer Steven Kalmin and former board chair Tony Hayward are also named as defendants for some, but not all, of the claims. None of the three responded to requests for comment.
The investor claims were lodged in the High Court between October of last year and this spring. In June the claimants filed a joint “particulars of claim” detailing a common set of allegations covering six related legal cases.
The claims alleged that, between 2006 and 2019, companies within the Glencore Group engaged in “widespread bribery, corruption and fraud”.
They go on to say that senior management “knew of, or were reckless as to the existence of”, some or all of this “bribery, corruption and fraud”.
The particulars of claim run to nearly 200 pages and centre on three examples of alleged unlawful conduct.
These include alleged bribery related to copper and cobalt acquisitions in the Democratic Republic of Congo; bribery schemes in Glencore’s oil trading business in West Africa, South Sudan, Brazil and Venezuela; and a fuel oil price manipulation scheme in the US.
Glencore last year pleaded guilty to the last two of these as part of its settlement of government investigations.
City law firms including Stewarts, Pallas Partners, Quinn Emanuel Urquhart & Sullivan, and Bryan Cave Leighton Paisner were all involved in drawing up claims. Glencore is represented by Wilmer Cutler Pickering Hale and Dorr.