Legal challenges mount for Glencore
Glencore announced after market on Friday it was being
investigated in its home country for failing to have organisational measures in
place to prevent alleged corruption in the Democratic Republic of Congo.
The Swiss investigation adds to those being carried out by
the United States' Department of Justice and Commodities Futures Trading
Commission investigation, as well as the UK's Serious Fraud Office.
Edward Sterck, an analyst at Canadian bank BMO, said the
Swiss probe "does not really change Glencore's reputational risk profile,
in our opinion, [it] just increases the potential fine in the event Glencore is
found guilty".
However, Sterck said the additional financial risk was
"relatively low" compared to fines handed out previously by the DOJ
and SFO to other companies.
Tyler Broda, an analyst at RBC Capital, was of a similar
view.
"We don't see this changing the outlook too much with
legal issues already discounting the shares," said Broda.
Glencore shares were trading at just below 169p late morning
on Monday, down 2% from Friday's closing price, capitalising the company at
£22.46 billion. Both BMO and RBC Capital rate the company as "market
perform", although RBC's gives a price target of 190p, above that of BMO's
180p.
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