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Sheikh Mansour’s firm is fighting a legal battle Glencore: After the major miner was ordered to pay £281m in a bribery case, the city’s firms decided to sue for billions.
- Mubadala Investment Company is following Glencore in the joint venture
- Experts believe the wave of legal claims could add up to billions of pounds
- Allegations are believed to be related to losses suffered by shareholders for investigations
Court action: the mayor of Manchester, Sheikh Mansour
An investment group backed by Sheikh Mansour – the owner of Manchester City – has joined a powerful financial group to sue FTSE100 group Glencore following a scandalous case.
Mubadala Investment Company, a leading property fund of Abu Dhabi in which the Sheikh is on the board, is following the Anglo-Swiss multinational commodity trading and mining company in a joint venture with some other major institutions, including HSBC and Standard Life.
Glencore was last week ordered to pay £281million by a London court. The Serious Fraud Office (SFO) said the group Glencore Energy UK managed to pay millions of dollars to officials in five African countries.
Prosecutors said Glencore employees and officers used private jets to transfer money to pay off the loans.
Hopes of drawing a line under the crisis have been dashed after documents seen by the Mail on Sunday revealed a wave of legal claims coming against Glencore, which it believes experts can add up to a billion pounds.
Fears that a multi-year lawsuit against Glencore could embarrass former and current board members, including former CEO Ivan Glasenberg and current non-executive director Peter Coates .
The bribery case involves $26million (£23million) paid to officials of oil companies in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea and South Sudan from 2011 to 2016.
A judge said the case revealed ‘not only corruption but a sophisticated device to hide it’, adding that corruption was a “death” among Glencore’s traders.
Claimants include Mubadala – where Mansour is deputy chairman – pension fund British Airways, investment giant Abrdn and Wirral Council. Other sovereign wealth funds include the Kuwait Investment Authority and Norway’s Norges Bank. The allegations are believed to relate to losses suffered by shareholders following bribery and corruption. The claimants are expected to argue that reports of the investigations resulted in billions of pounds being wiped from Glencore’s value.
Southwark Crown Court recently fined Glencore £183 million – cut from £274million after the company’s appeal was made. A £93.5 million confiscation order was also made, of which £4.6 million must be paid in SFO costs. Earlier this year, Glencore reached a £957million settlement with the US Department of Justice.
Iskander Fernandez, a criminal lawyer in the city, said the new civil case would cast a ‘huge cloud’ over the business.
He said: ‘It’s fair to say that the company has been scuttled and moved and there has been a root and branch change in management, but now it’s back in the limelight.’
The lawsuit could lead to Glencore releasing historical evidence and could lead to scrutiny of Glencore’s top executives.
Current chairman Kalidas Madhavpeddi described the bribery as “irreparable” and said the agency “does its best to work transparently”.
Giuseppe Bivona – venture capitalist at Bluebell Capital – said the situation at Glencore had become ‘unsustainable’. He added that there was a ‘huge cultural problem at the company’.
Chief executive Gary Nagle defended the firm in a recent statement, saying ‘this type of behavior has no place in the group’.
Glencore is currently worth more than £65 billion. The value of the stock did not decrease when the claims were filed.
Ben Lewis, a mining expert at Liberum Capital, said: ‘The challenges for Glencore are more in their hindsight, rather than worrying about what lies ahead.’
Glencore and legal representatives of the claimants declined to comment.
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