The court has been informed that the UK government is facing an exceptional lawsuit for damages amounting to $1 billion. This claim has been filed by a mining company that has received financial backing from Russian banks, which have been subjected to sanctions.
ENRC, the UK-based arm of a global mining conglomerate belonging to oligarchs, is seeking compensation for losses it claims it suffered as a result of a decade-long Serious Fraud Office (SFO) investigation that was dropped last year, according to court documents.
In December, a judge declared that the inquiry into fraud and corruption was initiated due to the SFO’s misconduct, leading to unnecessary expenses for the mining company.
The SFO is requesting approval to challenge the ruling. In a submission to the superior court on Monday, the anti-corruption agency stated that ENRC is expected to argue that losses were approximately $1 billion, a sum that the agency considers to be exceptionally high.
The amount of $1 billion is greater than ten times the yearly budget of the SFO and would greatly exceed the total amount of compensation given to post office operators.
The SFO assertion is based on ENRC saying in legal correspondence that it incurred higher borrowing costs of more than $90m annually as a result of the 10-year investigation. ENRC has not yet formally said how much it is seeking in damages.
An upcoming trial will determine the amount and responsible party for any damages owed. The SFO contends that ENRC’s previous attorneys should contribute to the final damages amount. However, the possibility of a substantial claim is a major setback for the agency.
ENRC’s latest accounts, filed last September, name the state-owned Russian banks Sberbank and VTB as “major lenders” to ENRC’s Luxembourg-based parent company. Both banks are controlled by Vladimir Putin’s regime. They were placed under UK and other sanctions after his full-scale invasion of Ukraine in 2022.
According to the accounts, ENRC’s parent company plans to make payments to Sberbank and VTB in 2024 while adhering to all relevant laws and regulations. A spokesperson for ENRC stated that the company does not owe any debts to these banks and as far as they know, neither does their parent company.
The company that owns ENRC has stated that they have no intention of making payments to these institutions. The representative did not answer inquiries regarding whether the conglomerate has paid off its Russian debts, and if so, how they were able to do so while following sanctions. They emphasized that the company strictly abides by sanctions laws.
Established by three wealthy individuals from the former Soviet Union, referred to as “the Trio”, ENRC went public in London in 2007 and reached a value of £20 billion at its highest point, securing a spot on the FTSE-100 index of the UK’s most valuable businesses.
ENRC’s conflict with the SFO originated from a disagreement between the company and its previous legal team. In 2010, ENRC enlisted the help of a lawyer from the City, Neil Gerrard, to carry out an internal probe into claims of misconduct and bribery in Kazakhstan and Africa.
Gerrard discovered a harmful act that could have resulted in legal action by the SFO. ENRC attempted to negotiate with the SFO to avoid prosecution through a settlement, but when these discussions ended in 2013, the SFO opened a criminal investigation.
In 2017, ENRC terminated Gerrard’s employment and filed a lawsuit against him and his firm, Dechert. They claimed that he had covertly leaked information to the SFO and leveraged the possibility of an SFO investigation to profit millions in fees. Two years later, ENRC also took legal action against the SFO, alleging that they had colluded with Gerrard and Dechert in hopes of achieving a victory after a series of embarrassing defeats.
In the year 2022, Mr Justice Waksman, a judge, stated that the SFO engaged in “bad faith opportunism” when dealing with Gerrard. The SFO director at the time, Richard Alderman, deliberately and severely violated his duties, according to Waksman. Waksman anticipates providing ENRC with a significant amount of compensation and ruling in their favor over the SFO.
Following the commencement of a criminal investigation by the SFO, the Trio repurchased the ENRC shares they had previously sold on the London Stock Exchange and made the company private. They relocated the corporate headquarters to Luxembourg and merged ENRC with their new company, Eurasian Resources Group.
The members of the Trio and their businesses have consistently refuted any accusations of fraud and corruption.
Source: theguardian.com
