European Investment Bank stops lending to Glencore
01 Jun 2011
A week after its record float on the London Stock Exchange (LSE) and its entry into the FTSE 100 on Day 1 of trading with record market cap of £30 billion, the European Investment Bank (EIB) has barred the commodity giant from taking loans from it.
The EIB stopped lending to Glencore following what it said "serious concerns" about the company's corporate governance.
"Due to serious concerns about Glencore's governance which have been brought to light recently and which go far beyond the Mopani investment, the president of the EIB has instructed the services to decline any further financing request from this company or one of its subsidiaries," EIB said in its Mopani report.
EIB said it has informed the European anti-fraud office (Olaf) and has also launched its own investigation and that any further action would depend on the outcome of EIB's independent investigation.
The EIB move, follows investigations into a £30 million ($50 million) EIB loan to Glencore's mining subsidiary in Zambia as far back as in 2005. The loan was meant to help Mopani renovate a smelter to reduce sulphur dioxide emissions.
Mopani Copper Mines, 73 per cent owned by Glencore, has since been embroilled in a tax evasion case and was under investigation by the Zambian authorities.
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