London Launches Fraud Probe Over Resource Giant’s Business in Kazakhstan
The United Kingdom’s Serious Fraud Office (SFO) has launched a criminal investigation into alleged corruption at a London-listed natural resources giant with strong links to Kazakhstan, British media report.The SFO probe targets the Eurasian Natural Resources Corporation (ENRC), a company with interests in the energy and mining sectors mainly in Kazakhstan but also in China, Brazil and some African states. It is partially owned by three oligarchs believed to have powerful connections in Kazakhstan. The Kazakh government also holds a stake. “The focus of the investigation will be fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa,” The Guardian newspaper quoted the SFO – an arm of the British government – as saying in an April 25 statement. ENRC, which is listed on the London Stock Exchange, said in a statement the same day that it “is assisting and cooperating fully with the SFO” and “is committed to a full and transparent investigation of its procedures and conduct.” The news follows a troubled period for ENRC, whose chairman Mehmet Dalman resigned on April 23, less than two weeks after a law firm appointed by ENRC to pursue an internal inquiry into the corruption allegations – first made by a whistleblower – was abruptly replaced.That shake-up came two years after another game of boardroom musical chairs in which chairman Sir Richard Sykes and independent director Ken Olisa were ousted, leading Olisa to dub the corporate culture at ENRC “more Soviet than City [of London].” The three oligarchs who founded ENRC – Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov – own 44 percent of the company between them in equal shares of 14.56 percent each. The Kazakhmys copper company owns 26 percent, and the Kazakh government owns 11.65 percent. Last week Machkevitch said he was considering forming a consortium with Chodiev, Ibragimov and the Kazakh government to bid for the 45 percent of shares they do not own between them. Amid all the drama, ENRC last year suffered pre-tax losses of $550 million and paid no final dividend to shareholders.