Glencore subsidiary Katanga Mining will pay the Ontario Securities Commission $30 million as part of a settlement agreement following the OSC’s investigation into Katanga’s accounting practices.

The OSC’s investigation found that Katanga, which is listed on the Toronto Stock Exchange, overstated its total copper production by incorrectly recording contained copper from 2012 to 2014, misstated its copper cathode production in 2014 and 2015 and its contained copper in 2015. The company also improperly capitalized impaired and overstated inventory, according to the OSC.

“This resulted in Katanga making materially misleading disclosure in its annual and interim financial statements and MD&As during [those years],” the OSC wrote in its decision.

Seven current and former members of management, including CEO Johnny Blizzard, billionaire shareholder Aristotelis Mistakidis and two other Katanga board members nominated by Glencore, were named in statements of allegations published by the OSC on Monday. Mistakidis was slapped with a $2.45-million fine and a four-year ban on working as a director on a company board.

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The OSC found that the seven “were responsible for establishing and enforcing a culture of compliance, and that their conduct undermined Katanga’s corporate governance and internal controls. Their failure to discharge their obligation contributed to a culture in which staff of Katanga failed to adhere to policies and overrode internal controls,” according to the reasons for the settlement published by the OSC.

“Glencore is disappointed by the conduct that has led to today's settlement,” Glencore said in a statement. “Glencore is working with Katanga to implement the various changes to improve its reporting and control functions and to address the cultural failures that led to this conduct.”

Beginning in 2007, Katanga entered an agreement with Glencore to sell 100 per cent of its copper and cobalt produce for the life of the mine during its operation in the DRC. In the summer of 2017, an internal review of Katanga’s finances found that its annual and interim financial statements for the period Q4 2014 to Q1 2017 “should not be relied upon.” On Aug. 15, 2017, the OSC issued a Management Cease Trade Order against the directors and officers of Katanga, which is still in effect today. Katanga released a statement in November 2017 announcing the restatement of its 2016 annual filings and Q1 2017 interim filings, and that the review process had come to an end.

Katanga operates in the DRC, where it owns copper and cobalt mines. Glencore, which has an 86 per cent stake in Katanga, acquired the company in 2009.