The UK’s Serious Fraud Office (SFO) and law firm Dechert are compelled to reimburse the expenses incurred by the Eurasian Resources Group (ERG) in relation to an extensive criminal case. The corporation faced these financial burdens during the prolonged investigation. In August 2023, the SFO concluded its decade-long inquiry into ERG, acknowledging a lack of sufficient evidence suitable for court proceedings.
SFO faces substantial damages as ERG legal battle unfolds in High Court
The litigation initiated by the SFO subjected ERG to a series of legal proceedings, resulting in substantial financial expenses and the consumption of valuable management resources. This revelation was made by Judge David Waxman of the London High Court. The court determined that the SFO’s unlawful actions were pivotal, and without them, the criminal investigation would have lacked a legitimate basis. As reported by the Novinite, the court’s decision suggests that ERG could potentially face damages amounting to tens of millions of pounds in connection with the SFO and its affiliates.
As for ERG, it is a global corporation deeply involved in the extraction and processing of mineral resources. Operating with integrated capabilities such as mining, processing, energy generation, and logistics, ERG holds the title of the world’s largest ferrochrome producer by chromium content. Additionally, it stands as the largest company in iron ore mining and processing in Kazakhstan, ranking among the top iron ore exporters globally. Notably, ERG secures the ninth position in the world for industrial alumina production.
Primarily concentrated in Kazakhstan, the company was formerly recognized as Eurasian Natural Resources Corporation (ENRC).
Litigation update: SFO, Dechert, and ERG in a struggle for compensation and the defeat of an unlawful investigation
In 2013, the SFO initiated an investigation into ERG, a process that spanned a decade before its closure in August 2023. The SFO attributed the closure to a lack of sufficient evidence for pursuing a criminal case.
These prolonged legal proceedings have cast a shadow over the conduct of Neil Gerrard, a former partner at the Dechert law firm, who was enlisted to advise ERG. Judge Waxman, in his summary last year, emphasized that the SFO had failed in its duties. The breach revolved around the SFO accepting information from Gerrard that was “manifestly unauthorized” and “contrary to the interests of his client.”
ERG had initially engaged Neil Gerrard in 2010 to conduct an internal investigation into corrupt practices within the organization. However, the corporation later accused Gerrard of exploiting confidential information for personal gain and transmitting it to the SFO, potentially inflating the investigation’s scope and leading to escalated legal costs. Neil Gerrard’s representative declined to comment, as reported by the Wall Street Journal on December 21, 2023. Despite the accusations, Gerrard maintains the legality of his actions in previous statements.
Consequently, ERG is pursuing compensation exceeding £21 million to cover legal costs, unnecessary work, expenses, and lost management time linked to the protracted litigation.
Dechert, the law firm implicated in this legal saga, has already disbursed approximately £9 million to ERG for services and expenses. This brings ERG’s total outstanding compensation to just under £12 million, as per the court’s ruling.