THE former chairman of Glaxo Smith Kline, Sir Richard Sykes, faces the possibility of being “blackballed” by the City in a row over a disputed African mining deal.
Several investors are believed to be angry with Sykes over his role as senior independent director of Eurasian Natural Resources (ENRC). One City insider said there were a lot of questions over the deal and they were not happy with the answers they were getting. “Sykes will never do anything in the City again if he keeps this up. He will be blackballed,” a source told a Sunday newspaper.
Shareholders are angry at ENRC’s decision to buy the mine in the Democratic Republic of Congo, which is at the heart of an international legal dispute. The Kolwezi mine was repossessed last year by the Congolese government from London-listed mining company, First Quantum. The seizure is currently the subject of an investigation by the International Chamber of Commerce (ICC) based in Paris.
Last month, the ICC forbade the Congolese government from selling the mine until the matter was resolved. However, the following day ENRC announced it had acquired the exploration rights to the mine for $175m along with several other concessions from a third party, which itself had bought the mine at a knockdown price.
Last week, one of Britain’s largest fund managers ordered its traders to dump ENRC positions after a tempestuous meeting with Sykes. A number of other big investors are believed to be unhappy with the deal and have apparently written to the board of ENRC demanding an explanation.
Meanwhile, First Quantum has filed a lawsuit seeking billions of dollars in damages from ENRC and its subsidiaries over the deal. First Quantum spent $700m (£448m) developing the Kolwezi mine before it was repossessed by the government.
ENRC will release a shareholder statement this morning clarifying its position on the deal. In the letter ENRC will say the grounds for First Quantum’s law suit are “groundless” and that “it is regrettable” the firm has issued proceedings rather than enter into dialogue.