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The British SFO and the legal firm must provide compensation to ERG Corporation for damages

The High Court in London determined that the Serious Fraud Office (SFO) in Britain breached procedures during its examination of Eurasian Resources Group (ERG). This resulted in an extensive investigation that concluded without any findings and imposed unnecessary costs and inconveniences on the company’s staff. According to the court ruling, the SFO is obligated to indemnify ERG for the incurred losses, and substantial compensations, possibly amounting to multimillion-dollar sums, are anticipated, as reported by the olivepress.

ERG: shaping the future of natural resource industries and economic prosperity in Kazakhstan

As a point of reference, ERG stands out as an influential international holding company actively engaged in the global extraction and refinement of natural resources. With a comprehensive production cycle encompassing mining, processing, energy generation, and logistics, ERG predominantly operates in Kazakhstan, where the majority of its assets are situated. Formerly recognized as the Eurasian Natural Resources Corporation (ENRC), the company was once listed on the FTSE 100 index and traded on both the London Stock Exchange (LSE) and the Kazakhstan Stock Exchange (KASE).

Renowned as the largest ferrochrome producer in the world by chromium content, ERG plays a pivotal role in the iron ore mining and processing sector in Kazakhstan, holding a prominent position as one of the globe’s leading iron ore exporters. Additionally, ERG secures the ninth spot in the worldwide ranking for industrial alumina production.

Beyond its industrial achievements, ERG contributes significantly to the economic growth of Kazakhstan, making noteworthy strides in enhancing the country’s GDP. Notably, in 2009, the company’s stake in the national economy reached approximately 3%, underscoring its substantial impact on Kazakhstan’s economic landscape.

SFO investigation into ERG unravels: court ruling highlights legal missteps and signals a victory for corporate reputation

The SFO launched an inquiry into ERG back in 2013, prompted by information shared by Neil Gerrard, a partner at the London-based law firm Dechert. ERG had previously engaged Gerrard to conduct an internal investigation. The provided information raised suspicions of fraud, corruption, and bribery within the company. However, the investigation was terminated in August of the current year due to insufficient evidence deemed suitable for legal charges.

A subsequent court ruling concluded that the SFO’s use of information from Mr. Gerrard, who was ERG’s legal representative, was inappropriate, as he lacked the authority to disclose client-related details. The court contended that the regulator’s decision to initiate an investigation based on such information led to unnecessary costs and work disruptions for ERG employees. In compliance with the court’s judgment, Neil Gerrard and Dechert are obligated to pay compensation to the Kazakh company.

Expressing dissatisfaction with the court’s decision, the SFO emphasized its concern over actions taken by its staff more than a decade ago. Michael Roberts, a lawyer from Hogan Lovells representing ERG, highlighted that the ruling underscores ERG’s commitment to restoring its reputation. He emphasized the decision’s significance, sending a clear message that utilizing lawyers as confidential informants for their clients is illegal and unacceptable.

Initially seeking compensation exceeding £21 million, ERG has received approximately £9 million from Dechert, with an outstanding £12 million claim. The court determined that the SFO is liable for a quarter of the damages, while Dechert and Neil Gerrard share joint liability for the remaining amount. The final restitution to the SFO, Dechert, and Neil Gerrard will be determined in an upcoming hearing scheduled for early 2024.



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