Glasenberg’s Legacy Is Marred by So Many Corruption Probes

(Bloomberg) -- As Glencore Plc’s billionaire boss Ivan Glasenberg prepares to retire from a career spanning two decades atop the most powerful commodities trader, his final years will be marred by corruption probes around the world.

The Swiss trading house is already facing investigations in the U.S. and Brazil, and the U.K. joined the fray when the Serious Fraud Office announced on Thursday that it’s looking into suspicions of bribery. While the news was, as one analyst put it “more of the same,” it gave investors a hard reminder that the FTSE 100 blue-chip company faces steep legal risks. Glencore shares tumbled to a three-year low.

Under Glasenberg’s stewardship, Glencore has been seen as a daredevil trader and miner that could operate -- and make profits -- where few others would dare. It did deals in the Democratic Republic of Congo, with Israeli billionaire Dan Gertler, who has been sanctioned by U.S. authorities, dug for oil in Chad and cut deals across Russia and Kazakhstan.

In recent years, as investor and regulatory pressure grew, Glencore pulled back from many of its riskier practices, cutting its use of third-party agents and ending ties with Gertler, though it must pay him royalties from it mines in Congo.

On Friday, the U.K.’s SFO said it opened the investigation in June.

“Until the investigations are over, Glencore will continue to be perceived as a very high-risk company,” said Christopher LaFemina, an analyst at Jefferies.

Glencore fell 0.7% on Friday, adding to a 9% plunge that was the biggest since March 2016.

Wealth Hit

The legal troubles have wiped out a large part of Glasenberg’s personal fortune, which comes from owning 9.1% of Glencore. When Glencore went public in 2011, he was one of five executives to hold stakes valued at more than $1 billion, earning the company a reputation as a billionaire-minting machine.

Today, only two other of the executives from the time -- Daniel Mate and Aristotelis Mistakidis, who retired last year -- hold 10-figure stakes. Together, the trio have lost about $2 billion this year, according to the Bloomberg Billionaires Index.

Glasenberg’s wealth is now about $4 billion, down from as much as $7.3 billion in 2014. On Thursday, he dropped off Bloomberg’s ranking of the world’s 500 biggest fortunes.

Succession Question

Glasenberg will face tough questions about his leadership and how much longer he’ll stay at the company. The investigations could also make it harder for him to pick a successor to take what increasingly looks like a difficult job.

Institutional investors have also announced a lawsuit against Glencore in connection with losses suffered. Boies Schiller Flexner has secured litigation funding for a claim that has been several months in the making and is likely “to run into the billions,” said Managing Partner Natasha Harrison.

Glencore Investors to Sue for Billions Over Probes, Boies Says

A spokesman for Glencore declined to comment on the lawsuit.

The shares have plummeted 35% in two years and the company is struggling with falling profits and operational problems. Glencore missed a rally in iron ore -- which it doesn’t mine -- and has come under environmental scrutiny for its vast coal operations.

During a call this week, Glasenberg, 62, told investors to prepare for more leadership changes, hinting that his own departure may come sooner than previously anticipated.

Glencore CEO Glasenberg Hints He May Leave Sooner Than Expected

RBC Capital Markets has said he may step down in 12 to 18 months. Previously, Glasenberg said he would leave in three to five years.

--With assistance from Franz Wild.

To contact the reporters on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net;Ben Stupples in London at bstupples@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill

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