Yahoo Finance 'Serious breach' piles more pressure on embattled SFO
Senior officials at the Serious Fraud Office (SFO) were in “serious breach” of their duties during an investigation into a Kazakh mining company, according to a High Court ruling that piles fresh pressure on the embattled agency.
Judge David Waksman found that Neil Gerrard, a former partner at City law firm Dechert, leaked material about his then-client ENRC to the SFO in breach of his own duty of care.
The Kazakh miner hired Mr Gerrard in 2011 to investigate corruption allegations at the company, but later accused him of handing documents to the anti-fraud agency to help prosecutors expand their investigation into the miner and boost his legal fees.
The ruling said that former senior SFO officials induced Mr Gerrard to act against his client’s interests in what the judge concluded was an act of "bad faith opportunism" on the part of the white collar crime agency.
Mr Gerrard said: "After over 30 untainted years as a solicitor, I remain sure of the appropriateness of my actions, of my advice in relation to my former client and of my personal and professional integrity.
"I gave evidence to the best of my ability and believed I was telling the truth at all times. I would like to thank Dechert for their support."
The judgment will come as a further blow to the SFO, which is currently under investigation for “serious failures” in a separate case that led to the quashing of bribery convictions.
The Court of Appeal overturned convictions of former oil and gas executives following backroom talks Lisa Osofsky, director of the SFO, held with a "fixer". The ENRC allegations precede Ms Osofsky's time at the SFO.
In the ENRC case, the judge said: "The allegations against both sets of defendants are of the most serious kind.”
Judge Waksman found that Mr Gerrard engaged with the SFO without authority and that former senior SFO officials, including then-director Richard Alderman, communicated with him when they should not have.
However, allegations of misfeasance in public office, brought by ENRC against the SFO, failed.
ENRC kicked off proceedings against the SFO after the agency launched a criminal investigation into the miner over allegations of fraud, bribery and corruption.
No charges have been brought against ENRC. The SFO’s investigation is ongoing.
A spokesman for the SFO said: “We welcome that the judge found against ENRC for the majority of its allegations against the SFO. We are considering the implications of this lengthy and complex judgment for the SFO and other law enforcement authorities.”
Despite the ruling, campaigners believe it does not represent a fatal blow to the SFO’s investigation of the miner.
George Havenhand, a senior legal researcher at Spotlight on Corruption, a non-profit campaigning group, said: "[The ruling] has not fundamentally undermined the SFO’s investigation into ENRC.
"For too long, scarce public resources have had to be expended by the agency on defending itself against the legal challenges brought by ENRC. It is now vital that the SFO moves swiftly to bring its investigation, announced ten years ago, to its conclusion."
A spokesman for Dechert said: “We recognise fully the seriousness of the judge’s findings in relation to Mr. Gerrard’s conduct. We are considering the judgment to see what we should learn from it. Trust among partners is integral to any partnership, and throughout this litigation, Dechert has always acted in good faith in reliance on the assurances given to us by our former partner.”
A spokesman for ENRC said: "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."
ENRC will now seek costs from both the SFO and Dechert at a separate hearing.
