Claims against top City law firm Dechert ‘the stuff of conspiracy theories’
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Allegations that a top City lawyer leaked confidential information about a Kazakh mining giant under investigation for alleged corruption are “the stuff of conspiracy theories”, the High Court has heard.
Eurasian Natural Resources Corporation (ENRC) is suing its former lawyers and the Serious Fraud Office over an SFO investigation into claims of bribery, corruption and fraud at the former FTSE 100 company.
Former policeman turned white-collar crime lawyer Neil Gerrard was hired by ENRC to investigate allegations of bribery and corruption at one of its subsidiaries in Kazakhstan, made by an anonymous whistleblower in 2010.
Gerrard and his law firm Dechert’s investigation later expanded to cover further allegations, including claims ENRC’s subsidiary paid for a Kazakh police chief’s son’s university education and breached sanctions by trading with Iran.
Several ENRC acquisitions in Africa, which it was claimed involved a “soft” loan of £70m to the Zimbabwean government and cash payments to three former Zambian presidents, were also investigated.
SFO investigation
In April 2013, just weeks after Dechert was sacked as the company’s lawyers, the SFO opened a formal criminal investigation into ENRC, which is ongoing and has not led to any criminal charges.
ENRC claims Dechert provided negligent advice while the “Machiavellian” Gerrard used the company as a “cash cow”, leaking information to the press and the SFO to prolong the investigation in order to make more money.
It also claims the SFO encouraged Gerrard to leak confidential information about ENRC, which is suing the watchdog for around £70m in damages.
Andrew Onslow QC, opening Dechert and Gerrard’s case on Tuesday, said ENRC’s allegations are “the stuff of conspiracy theories”, based on “bits of documents, some circumstantial so-called evidence and speculation”.
Gerrard “did his very best for his client, ENRC, from start to finish of his involvement”, Onslow said, adding: “He did not conspire with the SFO to bring them ENRC’s skull.
“He did not deliberately initiate, expand or prolong the investigation… he is not a greedy, dishonest, corrupt, incompetent charlatan.”
He added: “The reality is that ENRC found itself facing a criminal investigation in April 2013 not because they fired Gerrard (and) Dechert and followed his and his team’s advice… but because they fired them.”
In written submissions, Onslow said Dechert “uncovered evidence of endemic fraud and corruption in relation to ENRC’s operations in Kazakhstan”, as well as “serious wrongdoing and criminality” by senior employees in Africa.
‘Kingpin’
The decision to sack the firm came a day after senior ENRC staff were advised that Victor Hanna – the “kingpin of ENRC’s Africa operation”, now the son-in-law of one of the company’s founding shareholders, Patokh Chodiev – should be suspended, Onslow told the court.
Dechert and Gerrard’s lawyers say that “ENRC’s real complaint is that the defendants were too successful uncovering wrongdoing”.
Earlier on Tuesday, ENRC’s barrister Nathan Pillow QC told the court Gerrard “effectively threw his client under the bus” when he realised in early 2012 that the ENRC “cash cow was running out of milk”.
ENRC claims Gerrard “bullied” the company into taking his advice by threatening that the SFO would raid directors’ homes, go through “your wife’s underwear” and “find all your porn”.
He is also said to have told colleagues he was “in rape mode” and was going “screw these f****** for £25 million” after celebrating leaking confidential documents to a national newspaper with a steak and champagne dinner.
Dechert and Gerrard’s lawyers say ENRC’s two witnesses to those alleged comments are “thoroughly deceitful and discreditable”, and argue that “the sheer nastiness of the attack on Gerrard smacks of vendetta”.
The SFO says the claim against it is “hopeless” and it is due to begin making its opening submissions on Wednesday afternoon.
After the SFO’s opening submissions conclude on Thursday, the trial will resume in person at the Royal Courts of Justice in London for the start of live witness evidence in June and is expected to finish in September.