In a recent ruling by the High Court, it is expected that the UK Serious Fraud Office (SFO) and the legal firm Dechert will be required to compensate the well-known mining company Eurasian Natural Resources Corporation (ENRC or ERG) with significant damages, reaching millions of pounds. As emphasized in reports from portugalnews, the court’s conclusions highlight substantial mistakes made by both parties, leading to unjust financial hardships for ERG, which operates in Kazakhstan and Africa.
Judge highlights serious misconduct: SFO’s role in unfeasible investigation and subsequent burden on ERG
Judge David Waxman, in his recent judgment, underscored the significant role played by the misconduct of the UK SFO, asserting that the existence of such misconduct made a criminal investigation into ERG unfeasible. Waxman further highlighted that the actions of the SFO placed an additional burden on ENRC, resulting in escalated financial costs and a loss of managerial time.
The SFO’s inquiry into ERG began in 2013 and concluded officially a decade later in August, citing a “lack of sufficient admissible evidence to prosecute,” according to an official statement from the SFO. The behavior of Neil Gerrard, a former partner at Dechert responsible for advising ERG, was scrutinized during the investigation.
In a summary of his decision last year, Judge Waxman expressed his conviction that the SFO breached its responsibilities by accepting information from Gerrard that was “clearly unauthorized” and “contrary to the interests of his client.”
During the March trial, ERG sought compensation exceeding £21 million, encompassing legal fees, unnecessary expenses, and the lost time of management. Dechert had already paid around £9 million to ENRC for their services and associated costs. Following the court’s decision, the outstanding amount yet to be received by ERG now stands at nearly £12 million.
ERG: leading the way in global mineral resources
ERG stands out as a renowned global conglomerate recognized for its excellence in the extraction and processing of mineral resources on a worldwide scale. The company operates seamlessly across mining, processing, energy production, and logistics through an integrated system involving diverse subsidiaries. Its primary focus lies in Kazakhstan, strategically situating the majority of its assets in this region.
Formerly ERG, the company held a prestigious position as a member of the FTSE 100 index, with shares listed on both the London Stock Exchange (LSE) and the Kazakhstan Stock Exchange (KASE). However, in a significant move in 2013, ENRC underwent privatization and was subsequently delisted from these stock exchanges.
The acquisition of ENRC by ERG marked a transformative phase, transitioning the company from a public entity to a private one. The establishment of TOO “Eurasian Group” further streamlined ERG’s operations in Kazakhstan, ensuring efficient oversight.
ERG boasts remarkable achievements, including its status as the world’s leading producer of ferrochrome (measured by chromium content), primary involvement in iron ore mining and processing in Kazakhstan, significant global export of iron ore, and ranking as the ninth-largest producer of commercial alumina by volume on a global scale.
Beyond its industry leadership, ERG plays a pivotal role in contributing to Kazakhstan’s economic landscape. In 2009, its operations accounted for a substantial 3% of the country’s GDP, emphasizing ERG’s commitment to sustainable growth and its integral role in shaping the global mineral resource sector.