Glencore investigated over '€120m tax-evasion'

Glencore has confirmed that it is being investigated by Italian financial police over tax evasion allegations involving its Sardinian subsidiary, the metals producer Portovesme.

The financial police said yesterday they had discovered tax evasion worth more than €120m (£102m) at a metals producer on the island of Sardinia. Although the police did not name the Anglo-Swiss commodities giant, they said that the tax evasion had been arranged through a system of "transfer pricing", with the Italian company buying raw materials at an inflated price from its Swiss parent, which Reuters identified as Glencore.

The Italian company has never declared a profit – only tax losses – since its inception, the police added. Glencore said: "All transactions were conducted in accordance with applicable Italian tax laws and on an arm's length basis between Portovesme and the Glencore Group," adding that it was working with the tax authorities to ensure a swift resolution to the review.