GLNCY Glencore Plc (PK)

By Scott Patterson 

Canada's main stock-market regulator issued a record $21.3 million fine to a Glencore PLC-controlled copper-mining company to settle allegations that it misled investors.

Regulators also fined several of the company's executives and former directors to settle allegations that the company misstated production figures and hid from investors the risks associated with its reliance on Israeli businessman Dan Gertler in the Democratic Republic of Congo.

The Ontario Securities Commission said Glencore's Katanga Mining Ltd. relied upon, and paid associates of, Mr. Gertler to "maintain relations" with the Congolese government, including legal, tax and customs clearing services.

The OSC fined Katanga Mining 28.5 million Canadian dollars (US$21.3 million), the largest amount paid to settle allegations of misleading disclosures by a Toronto-listed company, according to a spokeswoman for the commission. The total amount of fines levied against Katanga and its executives and former directors is C$34.4 million, which excludes about C$1.9 million in costs they must pay.

Katanga Mining Chairman Hugh Stoyell said in a written statement the company "takes full responsibility for failing to meet its disclosure obligations and to maintain effective internal controls."

Glencore said in a written statement that the company is "disappointed by the conduct that has led to today's settlement" and that it has "taken appropriate remedial actions in response to this conduct."

The OSC also levied fines against several of Glencore's former representatives on Katanga's board, including Aristotelis Mistakidis, one of Glencore's most senior executives, and two other Glencore executives, Liam Gallagher and Tim Henderson. Mr. Mistakidis was fined about C$2.5 million for authorizing and permitting misleading statements about Katanga's copper production, among other things.

Glencore said earlier this month Mr. Mistakidis, who at one point ran its copper operations in Congo and elsewhere, will leave the Swiss commodity giant at the end of the year. Mr. Mistakidis didn't immediately respond to a request for comment.

All three stepped down from the board in November 2017 after Glencore and Katanga confirmed the Canadian investigation. The probe was first reported by The Wall Street Journal.

The Journal first reported Sunday that Katanga and several of its executives and former directors had agreed to settle the allegations, which also include claims that the company overstated copper production over the course of several years.

Glencore owns about 86% of Katanga after buying out Mr. Gertler's stake in the mining company in 2017.

A spokesman for Fleurette Group, Mr. Gertler's main company in Congo, said it "has always acted appropriately and with integrity in the DRC. Nothing has ever been proven against the company or its executives in a court of law." Mr. Gertler has denied wrongdoing.

Glencore said in July that it had received a subpoena from the U.S. Justice Department demanding records related to its compliance with American antibribery and money-laundering laws in Congo, Nigeria and Venezuela. The Journal reported that a focus of the probe is Glencore's ties to Mr. Gertler.

Write to Scott Patterson at scott.patterson@wsj.com

(END) Dow Jones Newswires

December 18, 2018 13:24 ET (18:24 GMT)

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