Serious Fraud Office seeks arrest of mining boss
Chief executive of former blue-chip Kazakh miner ERG failed to turn up for questioning
THE Serious Fraud Office has taken the unusual step of issuing an arrest warrant for the boss of a Kazakhstan-based mining company.
The SFO said that Benedikt Sobotka, chief executive of Eurasian Resources Group (ERG), failed to turn up for questioning in London last month, prompting it to take the “rare but necessary” action of issuing a warrant.
ERG is the successor company to ENRC, the miner that was listed on the London Stock Exchange between 2007 and 2013, before returning to private hands following a string of corruption allegations and boardroom battles over “Soviet-style” corporate governance.
The SFO launched its investigation the same year after a whistleblower came forward alleging corruption around the acquisition of mining rights.
Failure to comply with a direction from the SFO to appear in court can result in a prison sentence of up to six months and an unlimited fine. The agency noted that Mr Sobotka is not a suspect in its corruption investigation, which is focused on the period before he took charge of the company in 2013. Mr Sobotka’s lawyer, Kevin Roberts of Morrison & Foerster, slammed the SFO’S move as an “unprecedented and extraordinary attempt to intimidate a CEO of a multinational group”, adding the arrest warrant was a “surprise” and that his client had always been prepared to co-operate.
“The prosecutor has continuously and inexplicably refused to clarify whether Mr Sobotka would appear in his personal capacity or as a corporate representative of ERG, in which case – as the SFO knows – he would require approval from ERG’S board, as per his professional and fiduciary obligations,” Mr Roberts said.
“The SFO’S actions have trapped Mr Sobotka into potentially breaching his obligations to his employer, which is unacceptable.”
Mr Roberts insisted that ERG was a “different corporate entity not under investigation” and that Mr Sobotka was employed three years after the period being investigated by the SFO.
ENRC, now a subsidiary entity within ERG, attacked the SFO for its “gratuitous decision” to publicise the arrest warrant and accused it of “intimidating” Mr Sobotka. It is calling for an independent inquiry into the SFO’S activities.
ERG mines and produces chrome, bauxite, iron ore and copper, principally in Kazakhstan. It also digs up copper and cobalt in the Democratic Republic of Congo, one of the world’s poorest nations, which is thought to be the focus of the SFO probe. The company has always denied any wrongdoing under its former guise as ENRC.
ERG is still 60pc owned by its three founders, including oligarch Alexander Machkevitch, its chairman. The remaining 40pc is held by the Kazakh government, which was instrumental in securing its delisting from London. ERG is now headquartered in Luxembourg, though it retains a UK limited company with a base in St James’s, London. The controversy around ENRC hit boiling point in 2011 when its Kazakh founders succeeded in ousting two of the company’s independent directors, Sir Richard Sykes and Ken Olisa. Mr Olisa, now Sir Ken, famously attacked the move as “more Soviet than City”.
German-born Mr Sobotka, 37, was previously an adviser to companies in the mining sector.