SFO Wins Bid to Force ENRC to Hand Over Documents in Probe

Updated on
  • U.K. prosecutors opened probe into mining company in 2013
  • ENRC claimed legal privilege protected documents wanted by SFO

The U.K. Serious Fraud Office won a bid to force Eurasian Natural Resources Corp. to hand over documents the mining company claims are subject to legal privilege, in a triumph for the prosecutor that may have big implications for future cases.

The majority of files sought by the SFO aren’t subject to legal privilege, a London judge ruled Monday, and ENRC must give them to the agency. Legal privilege protects communications containing confidential advice between a client and attorney -- and other materials prepared for possible litigation -- from being disclosed. Three of four categories of documents sought by the SFO must be turned over, the court said.

The judgment is significant for the SFO, which has faced a number of challenges from targets of investigations over privilege but never had the matter resolved by a court. The ruling will set a precedent and should help smooth the way for the prosecutor in future disputes on the issue. Barclays Plc ended a long-running battle with the SFO last year by opting to give documents relating to its 2008 Qatar fundraising it previously claimed were covered by privilege just weeks before a court hearing on the issue.

"There is a recognized public interest in the SFO being able to go about its business of investigating and prosecuting crime," Judge Geraldine Andrews said in her ruling. ENRC promised to give "its internal investigations to the SFO, but then changed its mind. If the documents are not privileged, there is no reason why the court should exercise its discretion in a manner that would enable ENRC to escape compliance with those promises."

The SFO opened an investigation officially into ENRC in 2013, after two years of back and forth about the possibility of the company self-reporting, over allegations bribes were paid to win business relating to the acquisition of mineral assets in Kazakhstan and Africa. The company has since delisted from the London Stock Exchange and changed its name to ERG.

The judgment provides a rare insight into the six-year probe, which has involved multiple law firms and parallel litigation. ENRC is also in the midst of a suit against its previous legal adviser, Dechert LLP, over claims the law firm overcharged it with a 16 million-pound ($21 million) bill for conducting internal investigations into the allegations.

The ruling was released Tuesday after the judge lifted reporting restrictions. The company said it will appeal despite being denied leave to do so by Judge Andrews. This means ENRC must seek permission from a higher court to pursue it.

"This is unprincipled and illogical," Graham Huntley, a lawyer for ENRC said in a statement. This means "that genuine attempts by clients to investigate allegations will have to be embarked upon knowing that privilege will not cover whatever is produced."

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