ENRC knew about lawyer's 'corruption' claims to SFO, says agency
31 Jul 2019 12:00 am by Martin Coyle
Eurasian Resources Group's UK unit “knew” that its former lawyer disclosed suspected criminality at the Kazakh miner to the Serious Fraud Office, the agency said in its defense against a 70 million-pound civil claim ($86 million).
Eurasian Natural Resources Corporation was aware that its former Dechert lawyer had told then-SFO head Richard Alderman in November 2011 about possible “red flags” in the company’s African operations, the SFO said in a court filing obtained by MLex.
The lawyer told the SFO about payments to tax inspectors that didn’t “look right” and that tests on the company’s bribery controls had raised concerns. There were also concerns about ENRC’s documents, while there was “a Soviet-style culture in Kazakhstan.”
The SFO is fighting a claim brought by ENRC that it induced ENRC’s former lawyer at Dechert, Neil Gerrard, to breach its fiduciary duty toward the company. ENRC further claims that the SFO, which has been investigating ENRC for suspected bribery since 2013, didn’t act independently when investigating the company. ENRC denies claims of corruption.
Gerrard told the SFO about a “potential problem” in Russia and a suspected fraud on senior ENRC officials, and gave officials details of “unusual payments” to intermediaries; all in the presence of a senior company official, the papers say. The SFO was also told about a “corrupt payment” made to the son of a police chief and approved by ENRC’s UK head, the SFO alleges.
In 2012, Gerrard told the SFO, in the presence of ENRC officials, that the “majority of information” the company had supplied to Dechert to aid its probe into corruption in Kazakhstan was “falsified.” There were “various red flags” about the company’s operations in Africa, the SFO said in its defense.
Gerrard also told the SFO that “key emails” supplied by ENRC weren’t credible and that the company’s former head of procurement had concerns about 34 intermediaries used by the miner. The lawyer also spoke about issues connected with payments made by ENRC to buy African subsidiaries.
In a 2013 report compiled by Dechert, the law firm said it had found evidence of corrupt payments made by a Kazakh subsidiary, and that the company had used a “specialist deletion” tool to doctor computer material. The subsidiary paid “significant” sums to intermediaries, raising concerns of money laundering and corruption, the SFO said.
ENRC officials didn’t raise objections when Gerrard “repeatedly” told the SFO about criminal wrongdoing at the company, said the SFO. It was in ENRC’s interests to build a rapport with the SFO and to be “full and frank,” the SFO said.
ENRC has previously claimed that communication the law firm had with the SFO was inappropriate.
“There is, and would have been, a very strong presumption that a solicitor is acting in accordance with his client’s instructions. The SFO had no reason to believe Mr Gerrard was not so acting,” the SFO filing said.
Gerrard had a wide-ranging authority to act on the company’s behalf, the SFO said.
ENRC claims that the SFO officials had deliberately destroyed a notebook belonging to a former official detailing his investigation into the company. The notebook was likely to have been accidentally removed or lost, rather than being deliberately destroyed, the SFO said.
ENRC has lodged a separate claim against Dechert and Gerrard, claiming that both behaved negligently toward it. In a counterclaim, the firm alleges that it was “too successful” in uncovering corrupt payments made by ENRC.
05 Jan 2021 12:00 am by Robert ThomasonProposed US cryptocurrency regulations for virtual currencies has generated comments from users who say they're impractical and an assault on their rights.
Canada’s export credit agency, provided a credit facility of up to $135 million to help finance a deal where Bombardier allegedly paid bribes to win business in Indonesia.
04 Nov 2020 10:18 am by Martin CoyleThe marathon Italian prosecution of Royal Dutch Shell & Eni on charges of paying $1 billion in bribes in Nigeria is now finally in the home stretch.