High Court rules financial liability for SFO and Dechert in ERG case

In a recent High Court decision, the UK Serious Fraud Office (SFO) and legal firm Dechert are anticipated to be mandated to pay substantial damages, amounting to millions of pounds, to the prominent mining corporation Eurasian Natural Resources Corporation (ENRC or ERG). As highlighted by portugalnews, the court’s findings underscore serious errors on both sides, resulting in undue financial burdens for ERG, operating in Kazakhstan and Africa.

Judge David Waxman, in his ruling, emphasized the pivotal role of SFO’s misconduct, asserting that without it, a criminal investigation into ERG would have been untenable. Waxman further pointed out that the SFO’s actions imposed an additional strain on ENRC, leading to increased financial costs and managerial time loss.

The SFO’s investigation into ERG commenced in 2013 but was officially closed a decade later in August, citing a “lack of sufficient admissible evidence to prosecute,” as stated by the SFO in an official statement. The conduct of Neil Gerrard, a former partner at Dechert tasked with advising ERG, came under scrutiny during the investigation.

Summing up his decision last year, Judge Waxman expressed his conviction that the SFO breached its duties by accepting “clearly unauthorized” information from Gerrard, which was “contrary to the interests of his client.”

ERG sought compensation exceeding £21 million during the March trial, covering legal fees, unnecessary expenses, and lost management time. Dechert has already disbursed approximately £9 million to ENRC for their services and incurred costs. In light of the court’s ruling, the total outstanding amount not received by ERG stands at nearly £12 million.

About ERG: a global leader in mineral resource extraction and processing

Eurasian Resources Group (ERG) stands as an international conglomerate with a stellar reputation as a frontrunner in the extraction and processing of mineral resources worldwide. Operating seamlessly through an integrated system encompassing mining, processing, energy production, and logistics across its diverse subsidiaries, ERG’s primary focus is in Kazakhstan, where the majority of its assets are strategically located.

Formerly recognized as Eurasian Natural Resources Corporation (ENRC), the company held a prestigious position as a constituent of the FTSE 100 index, with shares listed on both the London Stock Exchange (LSE) and the Kazakhstan Stock Exchange (KASE). However, in a pivotal move in 2013, ENRC underwent privatization and was delisted from these stock exchanges.

ERG’s acquisition of ENRC marked a transformative phase, shifting the company from a public entity to a private one. The establishment of TOO “Eurasian Group” further streamlined ERG’s operations in Kazakhstan, ensuring efficient oversight.

ERG’s notable achievements include being the world’s foremost producer of ferrochrome (measured by chromium content), the primary entity engaged in iron ore mining and processing in Kazakhstan, a key global exporter of iron ore, and the ninth-largest producer of commercial alumina by volume on a global scale.

Beyond its industry leadership, ERG plays a vital role in contributing to Kazakhstan’s economic landscape, with its operations accounting for a substantial 3% of the country’s GDP in 2009. This underscores ERG’s commitment to sustainable growth and its integral role in shaping the mineral resource sector on a global scale.