Glencore subsidiary Katanga Mining has reportedly reached an agreement with Canada’s stock market regulator to settle allegations of hiding the risks of doing business in the Democratic Republic of the Congo (DRC).
Katanga Mining and some of its current and former executives have agreed to pay over $22m to the Ontario Securities Commission (OSC), the Wall Street Journal reported.
The Toronto-listed company and its executives are facing allegations of hiding the risks of doing business with an Israeli diamond merchant, Dan Gertler, who is perceived to have close ties with Congolese President Joseph Kabila.
Gertler is said to have first invested in Katanga alongside Glencore in 2008. He was sanctioned by the US Government in December over alleged human rights abuses and corruption.
The OSC has been carrying out investigations to ascertain whether Katanga made materially misleading statements, according to Financial Post.
The scope of the investigation includes whether the company had first overstated and then understated its production and inventories.
Another key focus area of the investigations has been whether the company hid risks related to international bribery, government payment, and anti-corruption laws.
Glencore’s Congo operations have been under scrutiny by the US Department of Justice. In the wake of ongoing investigations, Glencore copper trading head Aristotelis Mistakidis is set to leave the company by the end of the year.
The WSJ report stated that the expected settlement is related to Katanga’s operations in the African nation between 2014 and 2016.
In the settlement, the regulator is expected to allege that the company overstated copper production, understated mining costs, and does not have sufficient internal financial controls.
According to a Bloomberg report, OSC made certain allegations in a document, which read: “Katanga relied upon and paid associates of Gertler to maintain relations with the DRC Government and for a variety of other services, which required interactions with DRC Government officials to represent Katanga’s interests.”
In a statement, Katanga has confirmed that the regulator will convene a hearing on 18 December to consider the approval of the settlement agreement.