The UK Serious Fraud Office was largely cleared of wrongdoing by a court on Monday after a three-year legal battle with ENRC, which had sued the agency over its handling of a long-running probe into alleged corruption at the Kazakh mining group.
In his almost 400-page ruling, Mr Justice Waksman dismissed the company’s claim that the SFO had committed misfeasance in public office during the course of its investigation into ENRC, which began in 2013.
The judge, however, did find that the agency had encouraged Neil Gerrard, a lawyer at Dechert who was advising ENRC, to commit a series of breaches of his contract and his fiduciary duties.
The £70mn lawsuit has hung over the SFO’s ongoing probe of ENRC. The agency has spent nine years investigating allegations of what it termed “fraud, bribery and corruption around the acquisition of substantial mineral assets”. The agency has only secured one minor conviction so far and is still considering whether to bring further charges.
George Havenhand, senior legal researcher at Spotlight on Corruption, said: “This partial victory will be a welcome relief to the SFO.” He added that it had “not fundamentally undermined” the agency’s probe of ENRC, which he urged the agency to “swiftly” bring to a conclusion.
The judge rejected most of ENRC’s allegations against the SFO. But the court ruled that the agency was “in serious breach of its own duties” by accepting confidential information from Gerrard that ENRC had not volunteered in a series of private meetings. Waksman added that the SFO had taken information from Gerrard “which was plainly unauthorised and against his client’s interests”.
But he dismissed ENRC’s request to bar the SFO from using materials Gerrard had provided during the corruption probe or to remove any of the agency’s staff who had seen the information from the team investigating the miner.
ENRC had accused Gerrard, who was hired to run an internal investigation into allegations of corruption at the miner, of cooking up a plan with the SFO to expand the investigation to generate more in legal fees for himself and his firm.
The judge also found that Gerrard, who retired two years ago, was behind three leaks to the press and had given “wrong advice” to ENRC and failed to protect client privilege.
ENRC, which was founded by three Kazakh oligarchs, was listed on the FTSE 100 until it was taken private in 2013 following the allegations of corruption.
During the course of its nine-year probe, the SFO has only secured one criminal conviction related to the case. In January 2020, Anna Machkevitch, the daughter of one of ENRC’s founders, was ordered to pay a fine of £981 after a magistrate found her guilty of withholding evidence about her father.
The SFO said it welcomed the court’s findings “against ENRC for the majority of its allegations”, adding that it was “considering the implications of this lengthy and complex judgment for the SFO and other law enforcement authorities”.
Gerrard said he was “devastated” by the judgment and said he remained “sure of the appropriateness of my actions, of my advice in relation to my former client and of my personal and professional integrity”.
Dechert said it had “always acted in good faith in reliance on the assurances given to us by our former partner”, adding that Gerrard’s conduct was “completely at odds” with its values.
Michael Roberts, a lawyer acting for ENRC, said it was “now clear that ENRC was betrayed and exploited” by Dechert and that the ruling had found the SFO “complicit in Dechert’s dishonest conduct”.
The court will establish the award of any damages at a later date.
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