Opinion
23 Aug 2019 09:41am

ENRC and the SFO: the saga continues

In the latest instalment of the ongoing dispute between Kazakh mining group ENRC and the Serious Fraud Office (SFO), ENRC has applied to the High Court for judicial review

SFO sign
Caption: ENRC also wants the SFO barred from bringing corruption charges

The company is seeking to force the SFO to reinstate the independent inquiry into its handling of the corruption investigation against the mining company. The independent inquiry was initiated following allegations that the SFO had improperly gathered evidence during its investigation into ENRC regarding "allegations of fraud, bribery and corruption around the acquisition of substantial mineral assets". ENRC has also applied to the High Court for an order barring the SFO from bringing corruption charges until the findings of the independent inquiry are delivered.

The SFO halted the independent inquiry in June 2019, which was being conducted by retired High Court judge David Calvert-Smith, after ENRC sued the agency for £70m to compensate it for its legal costs resulting from the original SFO investigation. ENRC alleged in its £70m claim that the SFO failed to act objectively, independently and in good faith and to preserve evidence. It also alleged that the SFO failed to respect ENRC's right to legal professional privilege. The SFO subsequently claimed that, while these civil proceedings continued, it would be an unwarranted use of public resources to conduct a parallel independent inquiry.

This is the most recent addition to the myriad legal proceedings that ENRC has initiated, and allegations that ENRC has made, against the SFO and others, including former deputy prime minister Nick Clegg.

Earlier this year, an application for discovery made by ENRC alleged that Clegg requested a briefing on a probe into ENRC whilst he was deputy prime minister, only a few weeks before his wife's then law firm became involved in work with the company. According to the application, ENRC wanted to establish whether a partner at that firm had abused his alleged relationship with Clegg with respect to ENRC.

Then in July, ENRC brought proceedings against the former prime minister of Kazakhstan, Akezhan Kazhegeldin. ENRC accused him of obtaining confidential and privileged information about ENRC and leaking it to the company's adversaries, including litigation opponents and the SFO. In particular, it was alleged that in 2012 Kazhegeldin met with a computer forensics expert who had previously contracted with ENRC for IT security and forensic data collection projects.

Allegedly, in the course of that engagement the expert obtained substantial amounts of confidential information from the mining company's computers but illegally retained it after the engagement had ceased. It is also alleged that Kazhegeldin helped encouraged the SFO to pursue its probe into ENRC.

It is unsurprising that ENRC has responded aggressively to the cessation of the independent inquiry – in June, shortly after the SFO dropped the inquiry, ENRC's lawyers wrote to the SFO saying that their client was "driven back into judicial review". The SFO would therefore no doubt have been expecting an application for judicial review, or something like it, from ENRC in response.

It seems that there is no end in sight for this saga, as ENRC ties up SFO resources in dealing with the various allegations against it. No doubt this is one investigation the director of the SFO, Lisa Osofsky, will be looking to resolve appropriately as soon as possible.

Chris Roberts is counsel and Dan Cook is a senior associate in the Compliance and Investigations team of Mayer Brown's London office.

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