Kazakh mining group ENRC asked a judge in London on Monday to award it more than £21mn to cover legal costs it incurred just prior to the UK’s Serious Fraud Office launching an ongoing probe a decade ago into claims of fraud and corruption.
The court was asked to find the SFO, law firm Dechert and one of its former partners Neil Gerrard liable for the fees and cost of “unnecessary work” paid by ENRC for two years up to 2013 when the SFO launched its probe into claims of alleged fraud and corruption.
The move follows a partial legal victory in May last year by the company over the way the agency handled the investigation. At the time, the court ruled that the SFO had breached its duties by accepting information that Gerrard, a lawyer at Dechert who had been hired by ENRC to run an internal investigation into corruption allegations, was not authorised to give.
Mr Justice David Waksman found that the SFO had also induced Gerrard to breach his own duties to his client. The judge, however, cleared the SFO of other wider wrongdoing, including misfeasance in public office.
The £21mn claim by ENRC is part of a wider £70mn lawsuit over the SFO’s probe into the company. The company plans to pursue the remainder of its claim for damages at a separate hearing.
At the start of Monday’s hearing to determine liability for damages, ENRC argued that the SFO would not have opened the criminal probe had it not breached its duties by accepting confidential information from a “dishonest” lawyer.
ENRC’s barrister Nathan Pillow said “unauthorised” meetings between Gerrard and the SFO caused the agency to become “jaundiced” towards ENRC.
The SFO denies causing any loss to ENRC and argued that it would have opened a criminal probe whether or not it had accepted unauthorised information from Gerrard.
The agency argued in its court filings that evidence, including that handed over by ENRC and complaints raised by non-profit group Global Witness “provided ample basis for opening a criminal investigation”. It added that any losses incurred by ENRC were “solely and exclusively” caused by Gerrard and Dechert.
In skeleton arguments, Dechert urged the judge to consider the “ramifications of the SFO’s conduct in this affair” when considering how to apportion blame between it and the agency. Dechert said it had already paid ENRC £8.9mn in damages.
In his filing, Gerrard said he adopted “Dechert’s position as against both ENRC and the SFO”.
The two-week hearing will determine what loss, if any, the conduct of the agency, Dechert and Gerrard caused ENRC, and set the level of any damages. The trial continues.
