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ENRC WINS DECHERT AND SERIOUS FRAUD OFFICE LITIGATION
High Court makes unprecedented findings of deliberate wrongdoing and dishonest evidence by both Dechert and sfo
- Neil Gerrard repeatedly and deliberately acted unlawfully, engaging in “appalling” and “egregious” conduct against the interests of his own client.
- Three former SFO officers (including former Director Richard Alderman) acted in “bad faith” and actively induced many of Mr Gerrard’s breaches of duty.
- Mr Gerrard instigated multiple leaks of confidential & privileged material to the press, and consistently gave false advice in order to expand the scope of Dechert’s work.
- Mr Gerrard and two SFO witnesses (including former SFO Interim Director Mark Thompson) lied under oath in an attempt to cover up their wrongdoing.
16 May 2022
In a judgment made public today following a 47-day trial between May and September 2021, the High Court has made unprecedented findings of “extraordinary” (§279) and “almost unimaginable” (§432) misconduct by ENRC’s former solicitor, Neil Gerrard, and three former SFO officers. Determined to “kick start” (§269) more lucrative work for Dechert, Mr Gerrard leaked privileged material to the press and gave ENRC advice that was “completely exaggerated” and no more than “scaremongering” (§997). Despite knowing full well that he could not possibly have been acting properly, the SFO’s former Director, Richard Alderman, and former Interim Director, Mark Thompson, repeatedly engaged in “conspiratorial whispers” (§573) with Mr Gerrard, encouraging ENRC’s own lawyer to provide “intelligence” (§600), behind ENRC’s back.
Mr Gerrard “lied continuously” (§433), and two SFO officers including Mr Thompson were equally prepared to give dishonest evidence, in an effort to avoid the truth coming to light.
Today’s judgment follows years of bitterly contested litigation of ENRC’s claims against Dechert and the SFO, which were case managed and tried together. The litigation will now continue to consider issues of causation and loss, including the circumstances that led to the opening of the SFO’s investigation (now in its 10th year without charges) in April 2013.
Both Dechert and the SFO rejected multiple invitations by ENRC to resolve the claims without the need for litigation. The SFO was previously ordered to pay ENRC £1.6 million in costs following its unsuccessful privilege challenge. ENRC will now be seeking costs orders against both Dechert and the SFO.
Dechert’s management has consistently maintained that ENRC’s allegations were a work of “fiction, not to say fantasy”, and the SFO Director, Lisa Osofsky, argued that the claims were “hopeless” and “should never have been pleaded”. In reality, ENRC was the victim of the most serious wrongdoing, including “gross and deliberate breach of duty” (§§485-486) on the part of the Defendants. The unlawful conduct of the SFO, Dechert and Mr Gerrard has caused ENRC immense reputational and financial damage over the course of the past decade.
Michael Roberts, the Partner at Hogan Lovells International LLP with conduct of the proceedings on behalf of ENRC, said:
“Sadly, it is now clear that ENRC was betrayed and exploited as Dechert sought to maximise its own billings, even to the extent of leaking privileged material in order to prompt action by the SFO. Far from the integrity and fairness to be expected of a government law enforcement agency, the SFO was itself complicit in Dechert’s dishonest conduct.”
A spokesperson for ENRC said:
“We repeatedly urged both Dechert and the SFO to examine the evidence, and to draw the obvious conclusions. At every turn, we were rebuffed, and both Dechert's and the SFO's leadership chose, at great expense, to defend the indefensible. As much as ENRC welcomes today's judgment, it is also profoundly concerned by the very serious implications for other Dechert clients and other subjects of SFO investigations.”
Key findings against Dechert and Mr Gerrard
Mr Gerrard, formerly a member of Dechert’s senior management body (the so-called “Policy Committee”), emerges from the judgment as a thoroughly dishonest, opportunistic and exploitative individual. He is revealed as a “volatile” and unsavoury character who “could and did use words like ‘fuckers’” (including to describe his own clients), and was even capable of describing himself as being “in rape mode” (§409) as he sought to maximise billings on the ENRC matter.
Mr Justice Waksman found Mr Gerrard to be “a highly unreliable” (§251) witness who is variously described as “obviously lying” (§462), “plainly lying” (§251, §977), and to have “lied continuously” (§433) on the key issues before the Court. When caught out during his cross-examination by the late emergence of text messages proving he had given false evidence under oath, Mr Gerrard resorted to desperate claims of “global amnesia” (§235) (which were dismissed by the Court).
Mr Justice Waksman found that Mr Gerrard instigated and/or perpetrated leaks of ENRC’s confidential and privileged information to the press on three separate occasions and, in a final act of vengeance, even leaked documents to the SFO after Dechert’s retainer was eventually terminated. In circumstances where Mr Gerrard was under significant pressure to generate fees and to meet his billing target, the Judge was clear that Mr Gerrard had “a motive and inclination to “kick-start” more substantial work” (§269) by soliciting an approach to ENRC from the SFO.
The judgment condemns Dechert’s actual advice to ENRC in almost every respect. This is despite no fewer than 12 Dechert partners having worked on the ENRC retainer, and two key members of Mr Gerrard’s team, Caroline Black and Karen Coppens, remaining partners at the firm to this day. Both individuals face criticism in today’s judgment (including, in Ms Coppens’ case, for giving “unsatisfactory and incorrect” (§1702) evidence).
Mr Justice Waksman is highly critical of the way in which Dechert conducted the process of engagement with the SFO, finding that it was “inappropriate and unnecessary” (§1014) and “unstructured and ever expanding” (§1010). The Judge found that Dechert’s advice to ENRC – to the effect that it was at risk of being raided by the SFO – was “scaremongering” and “completely exaggerated” (§997). There was “no foundation in fact” (§1046) for Dechert’s advice on ENRC’s purported exposure to SFO intervention, with “no rational basis… at all” for possible fines mentioned by Mr Gerrard which were simply “thrown” about for “dramatic effect”(§1043). Rather than the product of mere incompetence, this false advice was contrived in order to meet Dechert’s own ends: Mr Gerrard’s “concern was to keep the process going by scaremongering” (§1070).
- With respect to Dechert’s investigation into ENRC’s Kazakh operations, the Judge found (whilst noting that the final report “did not identify any criminality by ENRC” (§1217)) that “no reasonable specialist solicitor… would have allowed the exercise to become as unwieldy and large as it ultimately did” (§1243).
- These findings are echoed in the Judge’s assessment of Dechert’s investigation into ENRC’s African transactions, which he noted had originally been the subject of extensive due diligence, including by other highly reputable law firms. Mr Gerrard “lost any sense of proportion in the Africa investigation… there simply appeared to be no limits to what Dechert thought should be done… he simply did not care whether he was acting within reasonable bounds or not” (§1322).
The deliberate and calculated nature of Mr Gerrard’s breaches is underlined throughout the judgment: Mr Justice Waksman describes Mr Gerrard’s actions and language as “extraordinary” (§279), “shocking” (§409), “conspiratorial” (§573), “obviously appalling” (§409), “almost unimaginable” (§432) and “egregious” (§637).
Key findings against the SFO
The core of ENRC’s case, namely that the SFO knowingly induced Mr Gerrard’s breaches over the course of numerous secretive and “conspiratorial” (§573) meetings, has been overwhelmingly accepted by the Judge. Three former SFO officers (Richard Alderman, Mark Thompson and Dick Gould) repeatedly and knowingly acted unlawfully and, where they gave evidence in these proceedings, they deliberately lied in an attempt to hide their wrongdoing.
On as many as 15 separate occasions (in the words of the Judge, “again and again” (§895)), senior SFO officers actively engaged with Mr Gerrard despite knowing that what he said “could not possibly have been authorised by his clients” (§823). The Judge found that, in “encouraging” (§882) and inducing Mr Gerrard’s breaches of duty, the SFO was motivated by “bad faith opportunism” (§893) and that “they were prepared to receive the information which he should not have given them on the basis that it might prove useful intelligence in going forward” (§893). These contacts were then concealed from ENRC by the SFO.
The judgment dwells on the example of a letter, dated 18 June 2012, that Mr Gerrard requested be sent by the SFO, a request which Mr Thompson was willing to oblige. The Judge found that the “terms of the letter itself are disingenuous” (§746) and that Mr Thompson wrote it in order to “help… Mr Gerrard (albeit wrongfully) to exert pressure on his client” (§747).
These covert and unlawful dealings between the SFO and Mr Gerrard “contributed significantly to the SFO taking a jaundiced - or more jaundiced - view of ENRC” (§1092). Indeed, the Judge found that “the only possible reason why the termination of [Dechert’s] retainer could have caused the SFO to start the criminal investigation (if it did) is because Mr Gerrard had primed the SFO with references to the need for him to resign… and what he had said in other unauthorised disclosures”(§1695). In fact, the Judge found that ENRC had entirely legitimate reasons for dismissing Dechert. Nine years later, the criminal investigation remains ongoing without a single charge against the company or any of its current or former directors or employees.
The judgment is scathing in its assessment of Mr Alderman and his tenure as Director of the SFO when, as his successor Sir David Green noted in his evidence, it was known colloquially as “Nightmare on Elm Street” and the “Serious Farce Office” (§304). The Judge found that Mr Alderman’s approach to observing legal standards “could be wanting to say the least”, that he would “ride roughshod over proper procedures”, and was “capable of providing misleading information” (§323). The Judge found that Mr Alderman even met with Mr Gerrard and discussed ENRC prior to the SFO’s first approach to the company. By doing so, Mr Alderman “acted in gross and deliberate breach” (§485) of duty.
The Judge stressed that the allegations against Mr Alderman were especially serious because he “was himself the head of a state organisation whose very function is to investigate and, where appropriate, prosecute or otherwise resolve instances of serious wrongdoing” (§285).
The Judge determined that Messrs Thompson and Gould gave dishonest evidence at trial about their state of mind at the time. In relation to Mr Thompson, the Judge found that “his evidence simply did not stack up in my view and was implausible” (§493); with respect to Mr Gould, the Judge found that his “particular problem… was that he got far too close to Mr Gerrard” (§494). The Judge concludes “The upshot of all of this is that in rejecting their accounts I consider that they were lying.” (§496) It bears emphasis that the former Interim Director of the SFO was prepared to give dishonest evidence in an effort to cover-up the illicit dealings with Mr Gerrard.
The Judge also found that the SFO accepted legally privileged information in the course of an interview with ENRC's former compliance officer, and that Mr Thompson had been “thoughtless (and negligent)” (§703) in failing to consider privilege in that context. The Judge also found that there was a “strong case of negligence” (§1536) in relation to the SFO’s handling of privileged material that Mr Gerrard provided in a brown envelope to the SFO in June 2013, following Dechert’s dismissal, and which was retained by the SFO until as late as 2018.
The manner in which the litigation was conducted
One of the most remarkable features of this litigation has been the lengths to which the current management of Dechert and the SFO have gone to defend the indefensible, including by putting forward witnesses whose evidence the Court has found to have been deliberately untruthful. Both parties refused multiple entreaties by ENRC to investigate the historic misconduct of their own former staff, which would have avoided the need for protracted and costly litigation.
Instead, Dechert has insisted that ENRC’s allegations were a work of “fiction, not to say fantasy”, and has spent in excess of £38 million in legal fees defending Mr Gerrard’s “egregious” (§637) conduct.
Dechert’s response to these proceedings was to attack its own former client – informing the press that it would use the proceedings to “expose the inner workings and conduct of ENRC” – and threaten one of ENRC’s witnesses, whom it accused of perjury. But it is the inner workings of Dechert, and lies under oath by one of its most senior partners, that have been exposed. Dechert’s attempts to deflect blame onto ENRC for allegedly ‘obstructing’ its investigation were comprehensively abandoned and/or rejected by the Court.
It is a damning indictment of Dechert’s senior leadership (then as now including its Chair, Andrew Levander) that they wilfully ignored a “prescient” (§260) warning, delivered by one of Dechert’s own partners before Mr Gerrard was hired, that Mr Gerrard gave advice that was “unduly negative” and “scaremongering” (§259) in order to increase fees. At no stage, even once Mr Gerrard was revealed at trial to have given false evidence on oath, has there been a hint of remorse, let alone an apology, from Dechert.
Most remarkably, it emerged during the trial that Mr Gerrard had no fewer than 19 mobile devices over just a two-year period (using them, in effect, as ‘burner’ phones) and that, despite Dechert having maintained that his use of text messages was “extremely limited” and that no back-ups existed, the firm in fact retained copies of over 600 text messages sent or received by Mr Gerrard. It remains unclear how this could have been allowed to happen in a major international law firm.
For its part, the SFO has spent over £9 million in taxpayers’ money defending the regime of its former Director, Mr Alderman, whom Mr Justice Waksman described as having “acted in gross and deliberate breach” (§485) of duty. The SFO even tried to block ENRC’s attempt to vindicate its rights on the basis that it amounted to an “abuse of process”, an argument dismissed by the Judge as “hopeless” (§914). More generally, the SFO maintained that ENRC’s claims should never have been brought; in fact, they should never have been defended, still less at the taxpayer’s expense.
Depending on the outcome of further phases of the litigation, the SFO could face damages running to well in excess of US$100 million (including indirect losses caused by the criminal investigation). The SFO previously paid ENRC £1.6 million in costs following its misconceived attempt to challenge ENRC’s fundamental right to legal professional privilege.
Today’s judgment necessarily gives only limited insight in relation to other Dechert clients and other subjects of SFO investigations, although a number are mentioned in passing. It is, however, difficult to imagine that ENRC was the only one, out of Mr Gerrard's various clients, to have been affected by his “entirely casual approach to the question of criminal liability” (§946), or the fact that the way in which he framed his advice was “so scattergun that I think he did not really care whether it was accurate or not” (§1056).
So far as the SFO is concerned, the High Court’s findings have striking parallels with its SFO’s handling of the Unaoil investigation, which is now the subject of an independent review by Sir David Calvert-Smith, a retired High Court judge and former Director of Public Prosecutions. As the Justice Select Committee identified at a hearing on 29 March 2022 at which SFO Director Lisa Osofsky gave evidence, the SFO faces systemic issues including “basic failings” of disclosure and “inappropriate relationships” with third parties.
In this regard, Mr Justice Waksman found that the SFO should have disclosed (but failed to disclose) important documents to ENRC in the context of the previous proceedings relating to legal professional privilege. The Judge also noted that, on at least one occasion, there was “an element of sanitisation” (§595) in the SFO’s records of its dealings with Mr Gerrard (whereby Mr Gerrard’s most damaging comments were omitted from the formal typed file note of the meeting).
Mr Justice Waksman’s finding that Messrs Alderman, Gould and Thompson’s illicit dealings with Mr Gerrard were motivated by “bad faith opportunism” (§893) likewise has unfortunate echoes in Director Osofsky’s more recent dealings with David Tinsley (described by the Court of Appeal as “wholly inappropriate”), who was a "fixer" for the individuals controlling Unaoil.
It is to be hoped that many of these issues can finally be addressed by Sir David Calvert-Smith’s review. Sir David’s appointment is particularly notable as he was previously tasked with conducting an independent review into the ENRC case, but that review was unfortunately suspended by the SFO before reaching any findings. Had that review been allowed to run its course, it may have been possible to draw a line under these issues at a much earlier stage.
Mr Justice Waksman also found that “Mr Alderman was probably prepared to make judicious leaks to the press when it suited him” (§479). That finding is particularly concerning in light of more recent press articles relating to the SFO’s investigation of ENRC that appear on their face to be based on leaks emanating from within the SFO. ENRC’s separate proceedings against the SFO relating to press leaks remain ongoing.
Finally, today’s judgment comprehensively answers criticisms that ENRC has faced from various third parties. In his book “Kleptopia”, Tom Burgis dubbed ENRC’s allegations as “alternative facts”, and praised Mr Gerrard as having “a reputation as one of the premier white-collar lawyers in London”. It has also been suggested that ENRC (and/or its advisers) should be censured on the basis that the claim against the SFO constitutes ‘strategic litigation against public participation’ (a so-called “SLAPP”). Taken to its logical conclusion, that suggestion amounts to a plea that one of the UK’s leading law enforcement agencies should be entitled to act unlawfully without any accountability. If that suggestion had any merit, it would have devastating implications for the integrity of the English justice system.
ENRC issues legal proceedings against Serious Fraud Office and former case controller John Gibson for systematic leaking
The company says that SFO has deliberately fuelled malicious and false rumours to boost public interest and Treasury funding in the struggling case
29 January, 2021 – Eurasian Natural Resources Corporation ltd (ENRC) has launched legal proceedings against both the Serious Fraud Office (SFO) and former SFO Case Controller John Gibson in the Commercial Court in London for what it calls an “endemic culture” of leaking and covert briefings to media on ongoing investigations.
An ENRC spokesperson commented: “ENRC’s claim presents clear evidence of systematic leaking by the SFO on the ENRC investigation over a number of years. We have made formal requests to the SFO over many years to investigate the matter, but instead, the agency has embarked over the last 12 months on a campaign to promote absurd and groundless allegations, which include links to murders of former employees and alleged poisoning of an SFO case controller. Despite the SFO’s attempts to prejudice ENRC, we are also concerned that the campaign is a vendetta against the company for a number of legal actions ENRC has taken to resist SFO wrongdoings during its investigation.”
The claim demonstrates that over a number of years, since the beginning of the investigation into ENRC and continuing up to the present day, inside sources at the SFO were providing covert briefings to journalists and unlawfully leaking confidential information about the ongoing investigation into ENRC. The company says that this information was damaging and prejudicial to receiving a fair and independent investigation.
The intention of the leaks, according to ENRC, were to promote a false and favourable SFO narrative that the ongoing criminal investigation had made meaningful and worthwhile progress and that it justified additional requests for ‘blockbuster’ funding from HM Treasury. Moreover, the agency was also motivated by a desire to turn the tide on damaging media coverage caused by the setbacks on the ENRC investigation including the civil misfeasance claim and the Court of Appeal loss on privilege in September 2018. ENRC claims that the SFO encouraged further hostile coverage in the media in order to bring pressure to bear on ENRC and its officers.
ENRC is currently pursuing a civil claim against the Director of the Serious Fraud Office for serious breaches of duty including misfeasance in public office, with the eight-week trial set to commence in the Commercial Court on 7 June 2021 (Claim No: CL-2019-000644).
SFO history of leaks and covert media briefings
The claim brought against the SFO and Gibson details a history of examples where information about the investigation is known to have been misused and covertly leaked to the media by the SFO.
One of the figures at the centre of the leaks was Mark Hollingsworth, a freelance author and intelligence operative. ENRC’s claim makes clear that Hollingsworth is just one example of a known conduit for SFO employees and officers to pass sensitive information to the media.
There are over a dozen instances outlined in ENRC’s claim where Hollingsworth refers to having “an inside track on the ENRC investigation”, and “an inside source at the SFO who is briefing me off-the-record on their investigation into ENRC…”. Over the years ENRC says that many leaks have been generated by the SFO to Hollingsworth, through various SFO officers including someone known as Tony P. These leaks have taken place over five years, and the company says they have been done consciously and deliberately by the SFO.
A number of these leaks were published while John Gibson was the investigation’s Case Controller and concerned sensitive operational developments in that investigation for which he had direct responsibility.
The claim comes as Gibson, currently a Partner at Cohen & Gresser LLP has admitted to clandestine meetings with investigative journalist Tom Burgis to provide him with information on the eve of a 5000 word article about ENRC.
Gibson’s tenure as ENRC Case Controller was widely criticised for pursuing a high-profile battle against ENRC on legal privilege, which resulted in a loss for the SFO in the Court of Appeal and a waste of approximately £3-4m of taxpayer’s money. Shortly after the Court of Appeal loss, the SFO “discovered” and returned other privileged documents belonging to ENRC that were previously unacknowledged and had been secretly sent by Neil Gerrard (ENRC's former solicitor) to the SFO in June 2013 after Gerrard was fired by ENRC.
During the privilege proceedings Gibson claimed in a signed witness statement that the SFO had reviewed the notebooks of the former SFO's former Chief Investigator Keith McCarthy covering the period 21 July 2011 to 30 November 2011. The company says that evidence was false.
ENRC is concerned that despite its multiple requests to investigate Mr Gibson, the SFO never took any meaningful steps to address its concerns. The only review the SFO had agreed to by retired High Court Judge Sir David Calvert-Smith was abandoned after only a few months, leaving many campaigners concerned about potential wrongdoing the SFO had uncovered.
An ENRC spokesperson said: “We have evidence of Gibson meeting journalists including Burgis, even on occasion at the SFO offices. Gibson and the SFO will have to explain the reason for these meetings.”
One of the most recent interactions between Gibson and Burgis was a covert meeting on 29 September 2020, first in an underground car park and then at Mr Gibson’s house.
Two days after that meeting, Burgis published a 5000 word article in the FT headlined “Silent witnesses: what do three corpses have to do with a corruption case?” whereby he alleged that ENRC had played a role in the deaths of three former employees and that it had potentially poisoned former ENRC Case Controller Jonathan Mack, something the company strongly refutes. Throughout the article and the Kleptopia book, Burgis consistently refers to a “source” close to the ENRC investigation, which the company strongly believes to be Gibson.
Gibson has told ENRC that he was asked by Burgis about the ENRC investigation but made no attendance note or record of this meeting. Burgis also admitted that he met with Mr Burgis at his house again in late 2020 and communicated with him using the highly private Signal messenger platform. The messages between the pair have now all been deleted, according to Gibson.
ENRC says that Gibson had a personal incentive for his covert briefings with Burgis and others. The company maintains that Gibson wished to embellish his own personal profile as a “chipper barrister with a twinkling delight for legal duelling” (Burgis’ own description of Gibson in Kleptopia) and deflect away from his own controversial record as Case Controller on the ENRC investigation (see above).
ENRC claims that the SFO is liable to compensate ENRC for the losses suffered as a result of the misfeasance in public office committed by SFO officers, including Gibson, Tony P and anybody else found to have unlawfully disclosed confidential information. In addition, ENRC says that Gibson is also personally liable for his own misfeasance during his time as an SFO Officer.
SFO wider culture of leaking
This is not the first time ENRC has raised concerns of leaking inside the SFO and the agency’s wilful disregard of and failure to investigate or follow-up on serious allegations.
The SFO is aware that its own internal policies make clear that it is to take prompt steps to investigate any unauthorised disclosures made by SFO officers including John Gibson, Tony P or anybody else. ENRC’s claim references a number of letters sent by its solicitors throughout 2016-2019 to various SFO senior officers about the provenance of sensitive case material in media articles. The SFO, including John Gibson, Jonathan Mack, Sir David Green, and Raymond Emson dismissed ENRC’s concerns out of hand and refused to investigate the matter further, something, which ENRC says put the agency in breach of its Independence Duties and constituted a serious security breach.
A spokesperson for ENRC commented: “ENRC has demonstrated that this problem goes far beyond just one or two rogue individuals – the SFO leaks are systematic and extremely damaging. Clearly leaking is an endemic feature of the SFO’s culture done with the tacit approval from the top, whereby damaging briefings to the press are used to justify additional blockbuster funding and harass potential witnesses as well as to make irreversible prejudice to ENRC. ENRC vigorously opposes this covert media campaign by the SFO and strongly denies all wrongdoing.
In light of the failure of the SFO's Director to investigate the issue of press leaks, ENRC calls on the Attorney General to exercise her legal responsibility to superintend the SFO by commissioning an independent review into the SFO's handling of these matters and refer the individuals complicit in this wrongdoing to the police.”
ENRC WINS LANDMARK COURT OF APPEAL PRIVILEGE CASE AGAINST SFO
- Court of Appeal finds that documents prepared by ENRC during an internal investigation are protected by privilege, overturning a controversial High Court ruling last year.
- ENRC continues legal proceedings against Neil Gerrard and Dechert LLP for breach of contract and fiduciary duties including intentionally leaking privileged and highly confidential information to the press in order to trigger the SFO investigation.
5 September 2018 (10:30 GMT) London, The Court of Appeal has today overturned a controversial ruling by the High Court from May 2017, which threatened to have significant implications for companies carrying out internal investigations.
At issue were documents generated during an internal investigation conducted by Dechert LLP, led by partner Neil Gerrard, that was first triggered by a whistleblower email. In a thorough vindication of ENRC's position, the Court of Appeal has overturned the original judgment and upheld ENRC's claim to privilege in respect of the overwhelming majority of the documents, including witness interview notes prepared by Dechert as well as a "books and records" review undertaken by forensic accountants.
As the trial judge had found, ENRC took all the steps that might be expected of a responsible corporation in response to the whistleblower. Crucially, however, the Court of Appeal recognised that the dialogue with the SFO did not preclude the investigation from being privileged. Contrary to the SFO's case, ENRC had never intended or agreed to share materials from the internal investigation with the SFO, and the SFO had never even run an argument based on waiver of privilege.
ENRC maintains that the SFO's approach was fundamentally misconceived and that the proceedings, which have resulted in wholly unnecessary costs (both to ENRC and the taxpayer), should never have been brought. ENRC will now be seeking recovery of millions in fees from the SFO.
Michael Roberts, Partner at Hogan Lovells representing ENRC commented: “This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing. It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers' work product."
ENRC also continues to pursue related legal proceedings against Dechert LLP and Neil Gerrard (the global co-head of Dechert's white collar and securities litigation practice), who conducted the internal investigation and advised on ENRC’s engagement with the SFO between 2011-13.
In the Particulars of Claim, which can be requested through this website, ENRC claims (amongst other things) that Neil Gerrard deliberately leaked privileged and confidential documents to the press in July 2011 in order to "kick start" an expansion of the investigation. Mr Gerrard arranged for an envelope of confidential and privileged documents to be collected from Dechert's reception. Those documents subsequently formed the basis of an article published in The Times on 9 August 2011, which directly led to the initial approach from the SFO to ENRC the very next day.
Mr Gerrard then described himself as being in "rape mode" and that he wanted to "screw" ENRC for millions of pounds in fees. True to his word, Mr Gerrard went on to bill ENRC over £16 million in fees.
Separately, ENRC has launched disclosure proceedings against the SFO premised on ENRC having civil claims against the SFO for misfeasance in public office as a result of its unlawful collusion with Mr Gerrard, involving numerous unauthorised (and unfounded) disclosures by Mr Gerrard, covert (and subsequently deleted) text messages, and private meetings in "out of the way" places. One internal SFO document even acknowledged at the time that Mr Gerrard might be "up to no good".
Mr Gerrard was also the subject of an anonymous whistleblower letter to David Green QC in July 2012 which raised serious concerns about the unhealthy relationship between Mr Gerrard and a senior official at the SFO. The SFO has now admitted that it failed to take proper steps to investigate the allegations.
Further significant evidence continues to come to light and to support ENRC's claims against both Dechert and the SFO.
ENRC issues court proceedings against Serious Fraud Office and Dechert LLP after leak of whistleblower letter
14 June 2018 (updated 19 June 2018)
- ENRC has filed an application seeking pre-action disclosure from the SFO, premised on civil proceedings against the SFO for a number of claims including misfeasance in public office.
- Whistle-blower letter in July 2012 flagged “serious concerns” over conduct of senior SFO staff, including former Director. Same whistle-blower letter also claimed that the SFO staff had leaked confidential information about ongoing investigations to Neil Gerrard, a Partner at U.S law firm Dechert LLP.
- SFO admits it carried out an internal investigation at the time, but that “no written record of the investigation or findings were kept”; there is “no record of what policy or procedure was followed in conducting the investigation (if any)”; and “[n]o disciplinary action was taken”.
- ENRC has filed a claim against Dechert LLP for breach of contract and fiduciary duties including intentionally leaking privileged and highly confidential information to the press, multiple unauthorised disclosures to the SFO and overcharging.
- Update: Following media enquiries into last week’s news release, ENRC has updated its media website to help better inform readers of the current legal action against Dechert and the SFO after the leak of a whistle-blower letter, and responded to the SFO’s statement. (See below).
Eurasian Natural Resources Company Ltd (‘ENRC’) has today called for an independent inquiry into the ongoing criminal investigation by the Serious Fraud Office (‘SFO’), after the agency admitted that in 2012 it received but failed to properly investigate a whistle-blower letter.
The company has also filed an application in the High Court of Justice, London, seeking pre-action disclosure from the SFO, premised on civil proceedings against the SFO for a number of claims including misfeasance in public office.
Whistle-blower letter and pre-action disclosure application against the SFO
The whistle-blower letter from July 2012 raised serious concerns about the unhealthy relationship between the SFO and Neil Gerrard, a Partner of Dechert LLP, including the ‘leaking’ of confidential information by the senior SFO officers with the “tacit agreement” of the former SFO Director and the former Attorney General. This letter, addressed to former SFO Director David Green, and other correspondence directly relate to the SFO’s current investigation into ENRC, which has been ongoing since April 2013.
ENRC’s solicitors, Hogan Lovells International LLP, wrote to the SFO with a Freedom of Information request, asking for among other things, details of the steps the SFO took to investigate the allegations raised in the letter.
The SFO’s response, in March 2018, admitted that its investigation consisted of no more than a “senior member of staff” speaking to the “person believed to be the subject of the allegation”, that “no written record of the investigation or its findings” were kept, and there is “no record of what policy or procedure was followed in conducting the investigation (if any)”.
It appears that the SFO did not follow its own complaints procedure, which, at the time, specified that, if a complaint was of a “more serious nature (for example if criminality is alleged) the Director will appoint an independent reviewer (external to the SFO)”. ENRC believes there is a strong public interest in an independent inquiry into properly investigate these matters.
The company has also filed an application seeking pre-action disclosure from the SFO, premised on civil proceedings against the SFO for a number of claims including misfeasance in public office. The application seeks disclosure of, among other things, the notebooks of the SFO’s former Chief Investigator, which the SFO inexplicably failed to disclose in previous proceedings between the SFO and ENRC.
Current proceedings against Dechert LLP
ENRC has also issued claims in the High Court of Justice, London, against Dechert LLP and Neil Gerrard, who advised principally on ENRC’s engagement with the SFO between 2011-13. In the Particulars of Claim, which are publicly available, ENRC claims that Dechert and Neil Gerrard acted “negligently”, “in breach of contract” and/or “in breach of fiduciary duties” causing “loss and damage” to ENRC.
These proceedings are separate from the costs proceedings filed by ENRC against Dechert LLP in October 2013, in which Master Rowley found that there was an “order of magnitude” of Dechert’s extraordinary fees which was “impossible to ignore” and which justified a line-by-line assessment of the costs by the Court.
The new Claim relates to the period of August 2011 until April 2013, when ENRC was listed on the London Stock Exchange. According to the Particulars of Claim, this work lasted for over two years, during which Dechert charged over £16 million in legal fees. ENRC has outlined in the Claim that the alleged “wrong advice” and “reckless conduct” of Dechert and Neil Gerrard had the result of increasing the quantity of work carried out leading to inflated fees, and extensive unnecessary disruption to ENRC’s business.
The Claim also alleges that Mr Gerrard deliberately leaked privileged and confidential documents to the press in 2011 and again in 2013. It alleges that in July 2011, Mr Gerrard wanted to “kick start” an expansion of the investigation, and arranged for an envelope of confidential and privileged documents to be collected from Dechert’s reception. The Claim alleges that the leaked documents formed the basis of an article published in The Times on 9 August 2011, and that the SFO first contacted ENRC the very next day.
A spokesperson for ENRC said: “This new evidence raises serious concerns about the SFO, the unethical behaviour of senior members of staff, and the procedures it did – or did not – follow. We have tried to meet with the SFO to discuss these claims but have so far been refused. We hope this disclosure will force the SFO to answer these important questions.”
Update, 19 June 2018: In response to last week’s release, the SFO made the following statement: “We see no merit in the application issued by ENRC. Before they made this application for a narrow range of additional information, we told ENRC that we will be able to provide it if it exists (emphasis added). We remain satisfied that the issue was handled appropriately.”
Following careful consideration, ENRC has today again expressed severe doubts whether in fact the issue was handled appropriately. Clearly by its own admission, the SFO is currently unsure what evidence it has or does not have relating to an ongoing important investigation over five years old. This is clearly of concern, especially considering that in previous legal proceedings the SFO claimed it had disclosed all relevant documents pertaining to the ENRC investigation.
If it transpires that the SFO does in fact have some of this key evidence, but chose to withhold it from previous proceedings, there will be serious consequences for the investigation.
A spokesperson for ENRC said: “We are disappointed by the SFO response. It seems to be that the SFO doesn’t know what evidence exists in this investigation, or that it is withholding evidence, both of which are deeply worrying”.