Glencore gets U.S. subpoena on compliance with money-laundering laws

By Julia Payne and Zandi Shabalala

LONDON (Reuters) - U.S. authorities have demanded the U.S. arm of Glencore Plc hand over documents relating to its business in Nigeria, the Democratic Republic of Congo and Venezuela, sending shares in the parent company down more than 10 percent.

The Swiss-based commodities trader and miner received a subpoena from the U.S. Department of Justice requesting documents and records on compliance with the Foreign Corrupt Practices Act and U.S. money-laundering statutes.

Shares in Glencore, a major exporter of Nigerian and Venezuelan crude oil, dropped as much as 13 percent, their biggest one-day fall in more than two years. They recouped most of the loss to trade down 4 percent at 334.65 pence by 1354 GMT.

The documents requested from subsidiary Glencore Ltd relate to the group's business in the three countries from 2007 to present, Glencore said, adding it was reviewing the subpoena.

The U.S. Foreign Corrupt Practices Act makes it a crime for companies to bribe overseas officials to win business.

Analysts at Barclays and Credit Suisse viewed the share price drop as steeper than warranted.

"From our perspective, while it is clearly a risk factor, we stress that these types of requests are more common than perhaps the aggressive drop in the Glencore share price today suggests," a note from Credit Suisse said.

Jefferies lowered its target price for Glencore but maintained its buy rating.

"The news today regarding a subpoena from the U.S. increases the geopolitical overhang on Glencore shares, even if there are no charges against the company in the end," analysts at the financial services company wrote.

Glencore accounts for more than a quarter of the world's cobalt output, most of it from Congo, which itself is the source of around 60 percent of global supplies.

Congo accounts for about 25 percent of Glencore's net present value, Jefferies said, while analysts said Venezuela's contribution to the bottom line was smaller.

Washington slapped sanctions on 13 "human rights abusers and corrupt actors" in December last year, including Israeli billionaire Dan Gertler, who was Glencore's former partner in the DRC and is a close friend of Congo's president.

Glencore said last month that it had agreed to pay Gertler royalties it still owed in euros instead of U.S. dollars after litigation threats.

In May, Bloomberg reported that Britain's Serious Fraud Office was preparing to open a formal investigation into Glencore's activities in the DRC.

Separately, the U.S. Department of Justice has been investigating suspected bribery plots involving payments to Venezuela's state oil firm PDVSA and charged five individuals last year.

Washington has also been progressively adding individuals close to Venezuelan President Nicolas Maduro to its sanctions list and has weighed broader penalties to hit the OPEC country's oil industry.

On the Nigerian side, the United States has been looking into the country's former oil minister Diezani Alison-Madueke, who was briefly arrested in London in October 2015, and her associates. She has denied to Reuters any wrongdoing and is yet to be charged by British authorities.

The U.S. Department of Justice issued a claim last year for assets that it alleged to be the proceeds of corruption belonging to Alison-Madueke and two of her associates.

In its claim, the department says Glencore bought more than 7 million barrels of crude from one of the companies used as a vehicle for alleged corruption. It was not immediately clear whether the subpoena concerned that case.

Glencore declined to comment on the Nigerian crude liftings.

Glencore's founder, Marc Rich, was indicted in 1983 for exploiting the U.S. embargo against Iran, tax evasion, fraud and racketeering. He fled to Switzerland, where he remained a fugitive pursued by the Department of Justice until he was pardoned by then-president Bill Clinton in 2001.

(Reporting by Julia Payne and Zandile Shabalala; Additional reporting by Arathy Nair in Bengaluru; Editing by Dale Hudson)