(Bloomberg) -- Two weeks after the Paradise Papers leak brought a wave of scrutiny over Glencore's dealings in the Democratic Republic of Congo, the company is facing another scandal.
The issues stem from Katanga Mining Ltd., a Congolese copper producer owned by Glencore. The African company restated financial statements and is under investigation by Canadian regulators for its corporate governance and accounting practices.
In a major sign of how toxic the problem has become for the Swiss commodities giant, three executives including billionaire Aristotelis Mistakidis resigned from the board of Katanga.
Mistakidis is a key part of Glencore. Among management, he's the third-biggest shareholder and longtime lieutenant to Chief Executive Office Ivan Glasenberg. He helped lead the company's ascent from a scrappy trader to a commodities giant and world's third-biggest copper miner.
While Katanga is financially a small part of Glencore's overall business, it faces an ongoing headache over the past relationship with controversial Israeli billionaire Dan Gertler.
An internal review found among other problems that Katanga had failed to disclose compensation paid to some executives and overstated copper output in 2014. In some cases, senior management and executive directors were responsible for overriding control processes.
Canada's Ontario Securities Commission is also investigating the accuracy of Katanga's financial reporting, corporate governance and the conduct of some directors and officers. It's also reviewing disclosures related to bribery and anti-corruption laws.
Read more: Glencore's role in Paradise Papers: What you need to know
Glencore nominated three new directors to the Katanga board, including Chief Financial Officer Steven Kalmin. It will strengthen controls across its copper division, Glencore said in a statement.
Katanga's business dealings in Congo and Canadian disclosures have been questioned before. In March, Global Witness said more than $100 million in payments due to state-owned Gecamines were instead paid to a firm controlled by Gertler. The payments were not clearly described in Katanga's reporting, according to the London-based advocacy group.
In filings between 2013 and 2015, Katanga either said the payments went to Gecamines or didn't specify the recipients.
At the time, Glencore said it made the payments to Gertler's Africa Horizons Investments Ltd. at Gecamines's request, and complied with all Canadian disclosure rules.
Glencore owns about 86 percent of Toronto-listed Katanga Mining. It began investing in the business a decade ago through the merger of Katanga and Nikanor Plc, in which Gertler also held shares. In February, Glencore cut ties with Gertler and bought out his stake in Katanga.
Katanga will be one of Glencore's biggest copper mines when it restarts production. It suspended mining in 2015 to invest in new processing facilities, but will produce as much as 300,000 tons of copper and 20,000 tons of cobalt a year from the unit by 2019.
Glencore shares were little changed at 359.90 pence as of 10:05 a.m. in London.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.
To contact the reporter on this story: Tom Wilson in London at twilson128@bloomberg.net.
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin
©2017 Bloomberg L.P.
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