ENRC wins right to ap­peal over SFO or­der to dis­close doc­u­ments

The Daily Telegraph - Business - - Business - By Christopher Wil­liams

THE for­mer FTSE 100 min­ing gi­ant ENRC has scored a vic­tory in its bat­tle to keep the de­tails of in­ter­nal cor­rup­tion in­ves­ti­ga­tions out of the hands of fraud au­thor­i­ties.

The Se­ri­ous Fraud Of­fice (SFO) is prob­ing ENRC over its ac­tiv­i­ties in Kaza­khstan and Africa, and in May won a land­mark civil or­der re­quir­ing dis­clo­sure of doc­u­ments re­lat­ing to an in­ves­ti­ga­tion by an out­side law firm.

In a High Court de­ci­sion handed down this week the com­pany has won the right to ap­peal against the con­tro­ver­sial or­der, which drew crit­i­cism from the Law So­ci­ety over con­cerns it will erode the abil­ity of clients to have priv­i­leged dis­cus­sions with lawyers.

Lord Jus­tice Floyd gave ENRC per­mis­sion to ap­peal be­cause “the grounds of ap­peal have a real prospect of suc­cess”. A spokesman for the com­pany claimed the or­der was a threat to its in­ter­nal anti-cor­rup­tion ef­forts.

He said: “This was a de­ci­sion which in our view seems to pe­nalise ENRC for re­spon­si­bly tak­ing steps to thor­oughly in­ves­ti­gate the al­le­ga­tions so that it could prop­erly un­der­stand what had hap­pened and what should be done.

“It cer­tainly would not seem to en­cour­age cor­po­rate trans­parency and good gov­er­nance go­ing for­ward.” The SFO de­clined to com­ment. It launched an in­ves­ti­ga­tion into ENRC more than four years ago af­ter los­ing pa­tience with the com­pany’s own ef­forts. A whistle­blower had come for­ward al­leg­ing cor­rup­tion around the ac­qui­si­tion of min­ing rights. In May

‘[Forced dis­clo­sure] would not seem to en­cour­age cor­po­rate trans­parency and good gov­er­nance …’

the High Court or­dered ENRC to hand over the re­sults of in­ves­ti­ga­tions it had promised to give to the SFO “but then changed its mind”.

The de­ci­sion was viewed as a ma­jor vic­tory by the SFO in its at­tempt to en­cour­age more com­pa­nies to self-report wrong­do­ing and strike plea bar­gains known as De­ferred Pros­e­cu­tion Agree­ments. Rolls-Royce agreed to pay the SFO £500m in such a deal over wide­spread in­ter­na­tional bribery in its busi­ness span­ning three decades.

The cor­rup­tion al­le­ga­tions sur­round­ing ENRC were part of the com­pany’s down­fall in 2013. It crashed out of the FTSE 100 amid di­rec­tor res­ig­na­tions over “Soviet” cor­po­rate gov­er­nance and ten­sions be­tween the board and the com­pany’s founders. ENRC was floated in 2008 by a trio of Kazakh oli­garchs, Alexan­der Mashke­vich, Ali­jan Ibrag­i­mov and Pa­tokh Chodiev. They took the com­pany pri­vate again and re­named it Eurasian Re­sources Group in a deal backed by the Kazakh gov­ern­ment. As well as bat­tling against dis­clo­sure to the SFO, the com­pany is pur­su­ing one of the law firms it drafted in to in­ves­ti­gate cor­rup­tion al­le­ga­tions, claim­ing over­charg­ing in its £16m bill.

Fol­low­ing a court rul­ing this year that the fees were based on “highly un­re­al­is­tic” as­sump­tions, the bill is now be­ing re­duced.

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