UK’s Serious Fraud Office should cover ENRC’s £21m costs in corruption investigation, London’s High Court hears
Kazakh mining company ENRC today said the UK’s Serious Fraud Office (SFO) should, alongside US law firm Dechert, cover extra costs it accrued because of ex-City lawyer Neil Gerrard’s decision to leak company information to the fraud investigator, leading to the launch of a 10-year probe into the former FTSE 100 firm.
At the opening of a high stakes trial, ENRC is today seeking to argue the SFO should be forced to pay it millions of pounds in damages over claims the fraud agency induced ex-Dechert lawyer Gerrard into breaching his duties, court documents show.
High Court judge David Waksman previously ruled Gerrard, Dechert’s former head of white-collar crime, leaked ENRC’s confidential information to the SFO and three British newspapers with a view to maximizing his fee income, while carrying out an internal investigation inside the Kazakh firm.
The SFO subsequently launched a criminal investigation into ENRC in relation to fraud, corruption and bribery allegations surrounding its activities in Kazakhstan and Africa in 2013.
ENRC claims Gerrard’s actions caused the firm to spend millions more on its own internal investigations than it would have otherwise by driving it to pay out millions in fees to top consultancies including PwC and KPMG.
The mining firm claims SFO officials induced Gerrard into breaching his duties and that the fraud agency is therefore liable, alongside Gerrard’s former employer Dechert, for the extra costs it accrued. ENRC is also seeking damages from Dechert through the trial.
The SFO is instead blaming Dechert for ENRC’s extra costs, arguing it is not responsible for the ex-lawyer’s actions.
ENRC will also call on the High Court to decide whether the SFO would have launched its investigation if Gerrard had not leaked ENRC’s information to the British government agency.
The SFO claims it would have opened its criminal investigation regardless of receiving the information from Gerrard, arguing its decision to launch the probe was driven by complaints from others including Global Witness and former Falkirk West MP Eric Joyce.
The British fraud investigator is also seeking to argue that Gerrard would have leaked ENRC’s information to the fraud investigator anyway – even if no inducement on the part of its officials had taken place.
The SFO will claim Gerrard started seeking to maximise his workload and fee income well before he made contact with the fraud investigator’s officials, arguing the ex-lawyer said he was planning to “screw” ENRC out of millions as early as 2011.
An SFO spokesperson said: “Our criminal investigation into ENRC remains ongoing. We deny any liability to ENRC.”
A Dechert spokesperson said: “The firm is taking an appropriate, reasonable, and pragmatic approach to the issues of causation and damages.”
ENRC was approached by City A.M. for comment.