Kazakh mining co seeks up to $46 mln damages from Dechert, UK fraud watchdog

A general view shows the Kazakh mining company Eurasian Resources Group's (ERG) Aluminium of Kazakhstan JSC factory in Pavlodar
REUTERS/Shamil Zhumatov
  • ENRC will seek up to 41 million pounds at March 2023 trial
  • But London's High Court hears of 'constructive' settlement talks

(Reuters) - Kazakh mining company Eurasian Natural Resources Corporation (ENRC) told a London court on Thursday that it is seeking damages of more than 41 million pounds ($46 million) from its former legal adviser Dechert and the UK’s fraud watchdog ahead of a trial scheduled for March 2023.

But ENRC’s lawyers also reported to Judge David Waksman that the former FTSE 100 company has had “constructive” talks with Dechert and the Serious Fraud Office (SFO) about a settlement, after the judge called on the parties to mediate in August.

Following a first trial, Waksman had ruled in May that former Dechert partner Neil Gerrard – who represented ENRC between 2011 and 2013 and has since retired from Dechert – breached his duty to the company by leaking its privileged information to the media and the SFO.

Waksman found Gerrard was “negligent and for the most part reckless” in unnecessarily expanding his internal investigation into ENRC’s operations, which ENRC said was because he wanted to milk the company for hefty fees.

The judge also found that senior SFO officers induced Gerrard to breach his duties to ENRC out of “bad faith opportunism”, though he dismissed ENRC’s other allegations against the SFO.

The court will be asked to decide if the breaches found by Waksman caused any loss to ENRC at the second trial in ENRC’s lawsuit scheduled for next March.

The lawsuit concerns events that led to a now 10-year criminal investigation the SFO opened into allegations of fraud, bribery and corruption made against ENRC. No charges have been brought against ENRC or any individuals, and the company denies wrongdoing.

ENRC says the actions of Dechert, Gerrard and the SFO caused it to incur millions in unnecessary fees, but Dechert’s lawyers argued on Thursday that ENRC has not provided enough information about how any wrongdoing caused it any losses.

The company is yet to formally file its written case ahead of the second trial and Dechert, Gerrard and the SFO have until later this year to file their written defences.

Gerrard said in May that he remained convinced of the appropriateness of his actions, his advice to his former client and his personal and professional integrity. He was not represented at Thursday’s hearing and his solicitor declined to comment.

Dechert, meanwhile, has previously said it acted “in good faith in reliance on the assurances given to us by Mr Gerrard”.

The SFO said after May’s ruling that it welcomed the news that Waksman had found against ENRC for the majority of its allegations.

For ENRC: Nathan Pillow KC and Alyssa Stansbury of Essex Court Chambers, Anna Boase KC and Freddie Popplewell of One Essex Court, and Hogan Lovells.

For Dechert: Richard Millet KC of Essex Court Chambers, Michael Bools KC of Brick Court Chambers, and Clyde & Co.

For Gerrard: no appearance.

For the SFO: Simon Colton KC of One Essex Court, George Molyneaux of Blackstone Chambers, and Eversheds Sutherland.

Read more:

Law firm Dechert, SFO to learn lessons after stinging ENRC judgment

Consider mediation, London judge tells Kazakh miner ENRC, Dechert and Fraud Office

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