Glencore tycoon humiliated over accounts fiasco
Glencore billionaire Telis Mistakidis was dealt a humiliating blow on Monday as he resigned from one the commodities’ giant’s key divisions over lax financial controls at a controversial mine in the Congo.
Mistakidis has stepped down from the board of Katanga Mining, the Canada-listed firm 86% owned by Glencore which produces copper and cobalt from mines in the Katanga province of the Democratic Republic of Congo, after “material weaknesses identified in internal controls over financial reporting”.
The Katanga mine featured in recent Paradise Papers revelations.
The Glencore copper chief’s vast wealth comes from his 3% stake in Glencore worth more than £1.5 billion, allowing him to splash out £46 million on a luxury London flat two years ago. But he resigned along with two other directors, Liam Gallagher and Tim Henderson, following an internal review by independent directors.
The review found Katanga had incorrectly reported copper production in 2014 when it overstated output by 6650 tonnes while understating production the following year.
Although the FTSE 100 miner said the mis-statements do not hit its financial position, Canada’s Ontario Securities Commission is investigating whether Katanga’s previous financial statements “are misleading in a material respect”.
The OSC is also probing the firm’s corporate governance and the adequacy of Katanga’s risk disclosures to investors under bribery, government payment and anti-corruption laws. The review found previously undisclosed payments to Katanga management in cash and Glencore shares, totalling $5.5 million (£4.2 million) over five years.
Glencore said it is “committed to ensuring the weaknesses identified in the review are addressed and do not reoccur”. It has parachuted in three new directors to the board of Katanga to get a grip on the business, including the miner’s chief financial officer Steven Kalmin. Kalmin’s assistant Tony Moser also joins, alongside copper smelting and refining chief Mike Circillo. The company will put in place “various structural and control changes across its copper department in order to enhance and strengthen its financial processes and procedures”.
Sources said Mistakidis is likely to remain with Glencore despite the embarrassing blow.
Katanga featured in the Paradise Papers after leaks revealed it secretly loaned Israeli billionaire Dan Gertler $45 million in 2009 to help secure mining rights in the Congo, although Gertler and Glencore deny any wrongdoing.
