LONDON, April 30 UK authorities are
investigating whether Kazakh miner ENRC breached
Britain's rules for listed companies, specifically with
acquisitions made in the Democratic Republic of Congo and a 2012
sale in Kazakhstan, it said in its annual report released on
London-listed ENRC is already facing a formal corruption
probe led by Britain's Serious Fraud Office - announced last
week - following internal investigations and whistleblower
allegations concerning both Kazakhstan and assets in Africa.
ENRC listed in London in 2007, but has become a cautionary
tale for London investors, prompting calls for listing rules to
be revised as its shares languish at close to their lowest point
since 2008 - hit by a cooling global economy, corruption probes,
long-running questions over governance and bitter boardroom
PIRC, the shareholder advisory firm, said on Tuesday that
ENRC and embattled coal mining rival Bumi Plc, which
has also fed the debate over listing rules, should have "raised
more red flags than a May Day parade in North Korea".
ENRC also said in its annual report that it had separately
been contacted by the UK Listing Authority (UKLA) last April
over compliance with rules on disclosure, and rules on deals
with related parties - deals linked to company insiders or key
The UKLA, it said, had ordered a "diagnostic review" of its
acquisitions in Congo, including a 2010 acquisition that handed
it control of copper mines held by rival First Quantum Minerals
Ltd until they were seized by the Congolese government.
ENRC was first questioned by the SFO, a separate authority,
on that deal in the summer of 2011, and it said on Tuesday that
that meeting was followed by its internal investigations.
ENRC's internal probe into Congo is ongoing, while a second,
on Kazakhstan, has been completed and handed to the SFO.
The company also said in the annual report that it had been
notified of an inquiry by the UKLA into the sale of railway line
repair company Zhol Zhondeushi last year to Prime Residential
County LLP, a company connected to the family of one of the
A company spokesman said on Tuesday that the sale of Zhol
Zhondeushi was in line with its strategy of "disposing of the
group's unprofitable and non-core assets", adding the
transaction valuation was provided by an independent audit firm.
He declined to comment further.
"The UKLA has not presently referred these matters to an
enforcement team," ENRC said in the report. But it added the
diagnostic review's conclusions and those of the UK listing
authority on the company's wider compliance with listing rules
"may result in enforcement action against the company".
ENRC's three founders said earlier this month they were
considering a buyout of minority shareholders in the group,
taking the opportunity to buy shares at their lowest level since
2008 and sidestepping new rules for UK-listed companies which
will require more shares to be available for sale.
Currently, ENRC has a freefloat of 18 percent. The remaining
shares are held by the founders, the Kazakh government and rival
miner Kazakhmys Plc.