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ENRC investigated for bribery in Africa and Kazakhstan ENRC investigated for bribery in Africa and Kazakhstan
(5 months later)
Allegations of cash payments to African presidents are to be investigated as part of the Serious Fraud Office inquiry into corruption at Eurasian Natural Resources Corporation, the FTSE-listed mining firm.Allegations of cash payments to African presidents are to be investigated as part of the Serious Fraud Office inquiry into corruption at Eurasian Natural Resources Corporation, the FTSE-listed mining firm.
The financial watchdog last week launched a criminal investigation into ENRC, at the same time as the resignation of Mehmet Dalman, the chairman brought in to clean up the company, and the sacking of a legal firm which had spent more than two years looking into the miner's operations in Kazakhstan and Africa.The financial watchdog last week launched a criminal investigation into ENRC, at the same time as the resignation of Mehmet Dalman, the chairman brought in to clean up the company, and the sacking of a legal firm which had spent more than two years looking into the miner's operations in Kazakhstan and Africa.
In an eight-page letter sent to ENRC following its sacking, seen by the Sunday Times, legal firm Dechert claims to have found "documentary evidence regarding the making of cash payments to African presidents" in connection with the purchase of a copper smelter in Zambia.In an eight-page letter sent to ENRC following its sacking, seen by the Sunday Times, legal firm Dechert claims to have found "documentary evidence regarding the making of cash payments to African presidents" in connection with the purchase of a copper smelter in Zambia.
While looking into the acquisition of a copper mine in the Democratic Republic of Congo, the firm also found "evidence that documents had been falsified, the CFO of ENRC had been misled, and that $35m [£22.6m] had been misappropriated".While looking into the acquisition of a copper mine in the Democratic Republic of Congo, the firm also found "evidence that documents had been falsified, the CFO of ENRC had been misled, and that $35m [£22.6m] had been misappropriated".
A spokeswoman for ENRC said: "There is no evidence to substantiate these allegations."A spokeswoman for ENRC said: "There is no evidence to substantiate these allegations."
Dechert has been served with a Section 2 notice, meaning documents gathered during its inquiry into ENRC's African operations must be handed over to SFO investigators. The firm has already handed over its report on the Kazakh operations, examining more the $100m of payments to offshore accounts held in the British Virgin Islands, Latvia and Hong Kong.Dechert has been served with a Section 2 notice, meaning documents gathered during its inquiry into ENRC's African operations must be handed over to SFO investigators. The firm has already handed over its report on the Kazakh operations, examining more the $100m of payments to offshore accounts held in the British Virgin Islands, Latvia and Hong Kong.
In 2012, ENRC's bill for external advisers including lawyers rose by $51m to $143m, including payments for advice on acquisitions. Dechert declined to comment.In 2012, ENRC's bill for external advisers including lawyers rose by $51m to $143m, including payments for advice on acquisitions. Dechert declined to comment.
ENRC originally appointed lawyers to conduct an independent investigation when a whistleblower made allegations against the company.ENRC originally appointed lawyers to conduct an independent investigation when a whistleblower made allegations against the company.
In a statement last week the SFO said: "ENRC [has been accepted] for criminal investigation. The focus of the investigation will be fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa."In a statement last week the SFO said: "ENRC [has been accepted] for criminal investigation. The focus of the investigation will be fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa."
ENRC said: "ENRC confirms that it is assisting and co-operating fully with the SFO. ENRC is committed to a full and transparent investigation of its procedures and conduct."ENRC said: "ENRC confirms that it is assisting and co-operating fully with the SFO. ENRC is committed to a full and transparent investigation of its procedures and conduct."
Alexander Machkevitch, one of three co-founders of ENRC who control the company, announced on 19 April that he was working with the Kazakh government and fellow shareholders Patokh Chodiev and Alijan Ibragimov on making an offer for the company. The three men control 44% of ENRC between them.Alexander Machkevitch, one of three co-founders of ENRC who control the company, announced on 19 April that he was working with the Kazakh government and fellow shareholders Patokh Chodiev and Alijan Ibragimov on making an offer for the company. The three men control 44% of ENRC between them.
The company listed on the London Stock Exchange in 2006, hoping a combination of respectable British corporate governance and access to natural resources from far-flung regions would attract investors. In 2011 the former chairman, Sir Richard Sykes, and an independent director, Ken Olisa, were ousted in a boardroom coup backed by the founding directors. At the time Olisa described ENRC'S behaviour as "more Soviet than City".The company listed on the London Stock Exchange in 2006, hoping a combination of respectable British corporate governance and access to natural resources from far-flung regions would attract investors. In 2011 the former chairman, Sir Richard Sykes, and an independent director, Ken Olisa, were ousted in a boardroom coup backed by the founding directors. At the time Olisa described ENRC'S behaviour as "more Soviet than City".
As well as Dalman, recent resignations from ENRC include the company secretary, head of human resources and the chief commercial officer. Dieter Ameling and Sir Paul Judge have also announced that they will not be standing for re-election as directors at the group's annual meeting in June.As well as Dalman, recent resignations from ENRC include the company secretary, head of human resources and the chief commercial officer. Dieter Ameling and Sir Paul Judge have also announced that they will not be standing for re-election as directors at the group's annual meeting in June.
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