(Reuters) – Glencore-controlled (GLEN.L) Katanga Mining (KAT.TO) said on Tuesday it had agreed to pay more than $22 million to settle Canadian allegations of inadequate historical disclosures of its finances and activities in the Democratic Republic of Congo.
FILE PHOTO: The logo of commodities trader Glencore is pictured in front of the company’s headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann/File Photo
Johnny Blizzard, chief executive officer of the Toronto-listed company, will resign and step down from its board, the miner said in a filing on Tuesday. Its board will change to include three new directors, it said.
Katanga’s shares were up 3.51 percent at 59 Canadian cents at 1:39 p.m. ET, compared with the local stock benchmark’s .GSPTSE 0.9 percent gain. It is down 68 percent this year.
Shares of Glencore, which owns 87 percent of Katanga, closed down 1.6 percent at 288.20 pounds in London. It is the worst-performing stock among major miners in London this year, in part because of geopolitical risk.
Last year, after an internal review identified weaknesses in Katanga’s financial reporting controls, three Glencore executives stepped down from Katanga’s board.
“Glencore is disappointed by the conduct that has led to today’s settlement,” the company said in a separate statement on Tuesday, adding it is working with Katanga to improve reporting.
Katanga said it will pay the Ontario Securities Commission (OSC) C$28.5 million ($21.22 million) and another C$1.5 million to reimburse costs.
It acknowledged it had misstated its financial position and failed to meet Ontario’s disclosure laws. It also admitted some directors and its CEO had gone along with or authorized that non-compliance. A Katanga spokesman said the CEO was not available for comment.
The company added it had failed to disclose risks in Congo, including its relationship with Israeli billionaire businessman Dan Gertler.
Gertler is accused by Washington of using his friendship with Congolese President Joseph Kabila to secure sweetheart mining deals. He denies any wrongdoing.
Katanga said it will enter into a management agreement with Glencore to manage its operations more effectively.
“This ruling is a welcome first step towards holding Katanga Mining to account, but the payment made by the company is relatively small for the mega-rich Glencore group,” Peter Jones, who heads corruption investigations at non-governmental organization Global Witness, said in an emailed statement. He called for the United Kingdom’s Serious Fraud Office to also investigate Glencore’s activities in Congo.
Glencore’s activities in the African nation have faced a series of legal problems. Congo is home to almost 60 percent of the world’s supply of cobalt, a mineral expected to be in increasing demand for batteries used in electric vehicles.
($1 = 1.3430 Canadian dollars)
Reporting by Nichola Saminather in Toronto and Shashwat Awasthi in Bengaluru; Additional reporting by Barbara Lewis in London; Editing by Alistair Bell and Phil Berlowitz