SFO widely cleared of wrongdoing after UK legal battle with ENRC

The UK’s Serious Fraud Office was largely cleared by a court on Monday after a three-year legal battle with ENRC, which sued the agency for handling a lengthy investigation into allegations of corruption at the mining group Kazakh.

In his nearly 400-page decision, Judge Waksman rejected the company’s claim that the SFO had been wrongful in carrying out its public duties during its investigation into ENRC, which began in 2013.

The judge, however, found that the agency encouraged Neil Gerrard, a Dechert lawyer who advised ENRC, to commit a series of breaches of his contract and fiduciary duties.

The £70m lawsuit put the SFO’s ongoing investigation into ENRC on hold. The agency spent nine years investigating allegations of what it called “fraud, bribery and corruption surrounding the acquisition of significant mining assets”. The agency has only obtained one minor conviction so far and is still considering bringing further charges.

George Havenhand, senior legal researcher at Spotlight on Corruption, said: “This partial victory will be a welcome relief for the SFO. He added that this had “not fundamentally undermined” the agency’s investigation into ENRC, which he urged the agency to bring “quickly” to a conclusion.

The judge rejected most of ENRC’s allegations against the SFO. But the court ruled the agency had “seriously failed in its own duties” by accepting confidential information from Gerrard that ENRC had failed to volunteer in a series of private meetings. Waksman added that the SFO had taken information from Gerrard “that was manifestly unauthorized and contrary to his client’s interests.”

But he rejected ENRC’s request to bar the SFO from using documents Gerrard provided during the corruption probe or to remove any agency staff who had seen the information. team investigating the minor.

ENRC had accused Gerrard, who had been hired to conduct an internal investigation into allegations of bribery at the miner, of hatching a plan with the SFO to expand the investigation to generate more legal fees for himself and his family. business.

The SFO has been found to have encouraged Dechert’s Neil Gerrard to commit a series of breaches of his contract and fiduciary duties

The judge also found that Gerrard, who retired two years ago, was behind three leaks to the press and gave “bad advice” to ENRC and failed to protect professional secrecy.

ENRC, which was founded by three Kazakh oligarchs, was listed on the FTSE 100 until it was taken private in 2013 following corruption allegations.

In its nine years of investigation, the SFO has obtained only 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 £981 fine 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 claims”, adding that it was “considering the implications of this lengthy and complex judgment for the SFO and other enforcement authorities. law enforcement”.

Gerrard said he was “devastated” by the judgment and said he remained “sure of the relevance of my actions, my advice to my former client and my personal and professional integrity”.

Dechert said he had “always acted in good faith relying on the assurances given to us by our former partner”, adding that Gerrard’s conduct was “completely at odds” with his values.

Michael Roberts, a lawyer acting for ENRC, said it was “now clear that ENRC had been betrayed and exploited” by Dechert and that the ruling had found the SFO “accomplicated in Dechert’s dishonest conduct”.

The court will determine the award of damages at a later date.

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