European Investment Bank freezes lending to Glencore

2nd June 2011

The European Union's financing institution, which has provided loans for Glencore's projects in Africa, said on Wednesday it would decline any further financing request until it finishes an internal investigation.

The European Investment Bank had loaned $50m (£30m) to FTSE 100-listed commodities company Glencore's Zambian subsidiary Mopani Copper Mines. This was for the renovation and modernisation of the Mufulira copper smelter in 2005, according to the Independent. But Mopani has since been accused by some campaign groups of tax evasion and of causing widespread pollution.

The EIB is conducting an internal investigation into allegations of tax irregularities at Mopani stemming from a leaked draft of an audit report by the accountancy firm Grant Thornton and Econ Poyry. It said that, as well as launching its own investigation, it had informed Olaf, the European anti-fraud office.

Commodities trading giant Glencore denied the allegations. "We welcome the EIB taking a close look at Mopani since we are confident that we will be completely exonerated," the company was quoted as saying in the Independent. "The allegations are based on an incomplete, draft desktop study that was circulated in Zambia several months ago. We publicly refuted the draft 'conclusions' of this document at the time."

The BBC reports the statements, which said: "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."

A Glencore spokesman said: "We welcome the EIB taking a close look at Mopani, since we are confident that we will be completely exonerated

"The allegations are based on an incomplete, draft desktop study that was circulated in Zambia several months ago. We publicly refuted the draft conclusions of this document at the time."

The BBC adds that in afternoon trading on Wednesday, its shares were down 2.1% at 519.7p.

To receive our free weekly email sign up here.

Leave a Reply

Your email address will not be published. Required fields are marked *