Investment Bank puts freeze on Glencore

The European Investment Bank has frozen all new loans to Swiss-based commodities firm Glencore and its subsidiaries, citing "serious concerns" over corporate governance.

The EIB, the European Union’s lending institution, provided a $50 million (SFr42 million) loan in 2005 to Mopani Copper Mines, a Zambian subsidiary of Zug-based Glencore, to help pay for modernisation work.

But Mopani has since been accused by some non-governmental organisations – most recently campaign groups in an open letter signed by a group of European parliamentarians – of tax evasion and of causing widespread pollution.

                                   

Glencore has denied the allegations, which stem from a leaked version of a pilot audit report commissioned by the Zambian tax authorities. The EIB has commissioned its own independent probe into the matter.

                                   

“We welcome the EIB taking a close look at Mopani, since we are confident that we will be completely exonerated,” a spokesman for Glencore said on Wednesday.

                                  

Glencore, the world’s largest diversified commodities trader, listed on the London stock exchange in May in a record-breaking market debut. The initial public offering raised some $10 billion.

                                 

Mopani, in which Canada’s First Quantum owns a minority stake, has generated over $380 million in tax payments to the Zambian government since its privatisation in 2000, through royalties, duties and income taxes.