SFO vs ENRC vs Dechert vs Gerrard: The Saga Continues

An investigation into fraudulent activity within a mining firm has raised questions about ethics among investigators and the serious fraud office. With lawsuits flying back and forth untangling this issue will be no easy matter.


The Serious Fraud Office website seen through a magnifying glass. Contributor: Louisa Svensson / Alamy Stock Photo
The Serious Fraud Office website seen through a magnifying glass. Contributor: Louisa Svensson / Alamy Stock Photo

At the beginning of May a high court judge told the Serious Fraud Office to disclose how much unauthorised evidence it used in its fraud investigation into Kazakh mining company ENRC. 

The company has been the subject of an ongoing dispute with the SFO since 2010 when a whistle blower contacted it about allegations of fraud and bribery in its Kazakh and African operations. 

The company responded by hiring law firm Dechert to look into the matter. The Serious Fraud Office began taking an interest in 2011 and launched a formal criminal investigation in 2013. 

However, the ENRC has since launched legal action against Dechert claiming that a partner at the firm, Neil Gerrard, leaked confidential information to the SFO. ENRC is also suing the SFO for £70 million over wrongdoings during the course of the investigation. Meanwhile, Gerrard himself is suing ENRC, after he claims the company hired a corporate espionage firm, Diligence,  to spy on him. However, Gerrard faced a setback when the High Court recently refused to stay the case against Diligence. Gerrard had hoped to simplify the complex and tangled multi-fronted legal battle, but the Master of the Queen’s Bench Division ruled against Gerrard on Tuesday, denying granting a stay.

The High Court’s decision is the latest twist in the ongoing battle between Dechert and ENRC. ENRC claims that, by leaking the information, Dechert prompted the SFO to launch a bribery investigation against it in order to increase its fees. ENRC proposed that the court should consider the degree to which the SFO used the leaked information as it reinforced their claim that the SFO supported a breach of duty by Gerrard. 

Wakeman agreed with ENRC and said that, in principle, the SFO should disclose how much of the information it used as part of its investigation. However, he narrowed the scope to notes taken during 26 different meetings and communications between Gerrard and the SFO.

Acting for the SFO, Simon Colton QC said that the agency received the information innocently and that the SFO’s use of the materials was covered by litigation privilege. It would be difficult, they said, to go through every piece of information provided by Gerrard and Dechert. 

ENRC’s claim against Gerrard has been heard virtually during the pandemic. The trial between ENRC, the SFO and Dechert is scheduled to begin in June 2021. 

 

(Written by Tom Cropper, edited by Michael O'Sullivan)

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