ENRC wins right of appeal in bid to keep corruption investigation secret

ENRC wins right of appeal in bid to keep corruption investigation secret

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 the ENRC over its activities in Kazakhstan and the Democratic Republic of Congo, 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, which denies wrongdoing, claimed the order was a threat to 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.

The watchdog launched a criminal 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 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 2007 by a trio of Kazakh oligarchs: Alexander Mashkevich, Alijan Ibragimov and Patokh Chodiev. They took the company private again as it faced crisis six years later 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. A court heard claims that a white-collar crime specialist at Dechert had said he was in “rape mode” on fees. Dechert denies the claims.

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

by Christopher Williams, chief business correspondent
Telegraph Media Group

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