LONDON (Within the Law)- Mining giant ENRC has accused the UK's SFO of 'inducing a disgruntled employee' to circumvent the Kazakh mining group's legal privilege. It’s the latest round of a near eight-year battle between the mining giant and the British regulator.
Circumventing privilege
According to the filing in the High Court, Mark Thompson, the head of the SFO’s proceeds of crime unit interviewed ENRC’s former head of compliance, Cary Depel, without authorisation. Depel, they say, anonymously texted the SFO and set up a meeting where he discussed allegations of bribery.
Depel, ENRC claim, was a disgruntled former employee with an axe to grind against the company. Their filings say the SFO should have known the information was confidential or at least was ‘reckless as to the need to protect ENRC’s legal privilege.’
Thompson also highlighted the issue of legal privilege at the time. These he said ‘would undoubtedly be immediately raised to try and prevent sight of key reports etc.” This, he said, was a ‘risk and an obstacle’.
ENRC’s response, therefore, will not come as much of a surprise, but its ferocity might. Given their growing feeling of injustice, ENRC has now launched a string of legal claims against former SFO staff and former legal representatives for their clandestine involvement in the investigation and alleged leaking of private information.
Two weeks earlier the mining company sued a former SFO lawyer and now partner at Cohen & Gresser, alleging information was leaked to the Financial Times. This was, they say, part of a systematic campaign of leaking against the company, which ultimately led to its de-listing on the London Stock Exchange.
ENRC have also launched legal action against law firm Dechert and their former head of white collar crime Neil Gerrard on similar allegations. They claim that, while working for ENRC, Dechert leaked information to the SFO in an attempt to maximise his costs from the company. They also accuse an SFO insider of leaking information to the press. They show that in court documents the journalist referred to a ‘source within the SFO who is briefing me off the record about their investigation into ENRC.’
So far, ENRC is suing the SFO for $93 million and Dechert for £25 million over claims that Gerrard leaked information about the company.
At the same time ENRC continues to face an SFO investigation into allegations of fraud and corruption. The regulator opened a criminal investigation into the company in 2013, ENRC denied any wrongdoing, and no charges have, as yet, been brought. Which is a potential source of anger for the company, given long saga it feels it has been unfairly subjected to.
The cost of investigations
The case has enormous implications about the way in which corporate investigations are managed and how subjects of investigations may respond. ENRC has defended themselves by launching a fierce offensive defense strategy against the SFO.
The regulator, meanwhile, will weigh the risks of litigation against the costs of continuing to press the investigation. Austerity has hindered the ability of official regulators to undertake long and costly investigations. It has long been underfunded, conducting investigations with a relatively small team considering the scale and complexities of the companies they often go up against. With companies possessing the financial resources to fight long and expensive cases, investigators must be wary about how they undertake investigations in the future and should consider the tax payer when it comes to making these commitments, in particular if the evidence available does not meet a certain threshold.
The regulator has also come in for criticism about the duration of many investigations and the failure of some high-profile cases. They have also faced repeated threats to their history with the Conservatives considering merging the SFO into the National Crime Agency. The organisation is also currently conducting an investigation into itself after its head Lisa Osofsky was criticised in court after a judge had strongly admonished her links to an agent acting for potential suspects in an investigation of alleged corruption by employees of Monaco-based oil and gas consultancy Unaoil. But, even this is not without controversy with opposition politicians and anti-corruption groups criticising the UK attorney-general, Suella Braverman, for staying out of the investigation.
At the same time, Neil Gerrard and his wifes case againt Diligence and ENRC should serve as a warning for the corporate intelligence industries to ensure all actions they undertake comply with the law, and evolving data protection regulations. All cases are ongoing with the SFO facing a trial in June over its alleged collusion with Neil Gerrard. All parties deny any wrongdoing.
(Written by Tom Cropper, edited by Michael O'Sullivan)