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This is not the first time critics queuing to suggest that Glencore is on the ropes, but close to the wind as the trader often navigates, the company is going probably find solutions to its current challenges. as they are
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and do not minimize the challenges that the company faces. The US Department of Justice is investigating the company's business in the Democratic Republic of Congo, Venezuela, and Nigeria as part of a corruption investigation, reports Reuters.
If a wrongdoing is proven, Glencore and his executives might have speculated that the DoJ's action was triggered by Glencore's announcement that he would settle a mining debt deal with Dan Gertler – a billionaire mining on a list of US sanctions – in euros to avoid sanctions, which prohibit payments in dollars. It is suggested that the authorities would have had a negative view of circumventing sanctions by changing currency, even though Glencore claims to have sought advice from the relevant authorities.
Source: Financial Times
Unsurprisingly, the stock price reacted negatively to the news, down 12% and suffering its worst day in more than two years after the announcement of the badignment this week.
The stock price is down about 18% this year and hovered near one year the price continues to underperform peers despite healthy earnings production and the reduction of its debts. The company responded by announcing a $ 1 billion stock repurchase. Some critics saw this as a pride, but the announcement helped the stock price to recover (at least in the short term).
In the long run, investors will want to see a lower risk profile, but in life you can rarely have your cake and eat it too. Much of Glencore's success and phenomenal growth has been in successfully managing a high-risk profile, operating in unstable regions of the world and dealing with less scrupulous regimes in the process. This does not make Glencore themselves unscrupulous, but it opens them to the attention of authorities wishing to ensure that such a company behaves responsibly.
The suggestions that this survey is the beginning of Glencore's end are exaggerated, but the survey will prove long, will absorb management time and will have the potential to unearth links and transactions whose Company might not be conscious (guilty by badociation, if you prefer)
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Still, Glencore has already been here and he will no doubt withstand this storm as she l? has already done.
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