UK fraud squad opens official probe into ENRC

Marion Dakers
THE SERIOUS Fraud Office yesterday opened an official investigation into embattled miner ENRC, just days after the firm’s founding shareholders said they might take the company private.

ENRC, a FTSE 100 component, is under scrutiny for allegations of fraud, bribery and corruption at its subsidiaries in Kazakhstan and Africa, the fraud agency said yesterday.

The decision to launch a formal probe follows two internal investigations. The results of one have been handed over to the SFO.

ENRC said it is assisting and co-operating fully with the agency. It hired lawyers at Dechert to conduct the internal investigation, but last month replaced the firm.

The SFO probe, while expected, is just one in a string of setbacks to hit the company this week. Chairman Mehmet Dalman resigned on Wednesday amid corporate governance concerns, along with two other directors.

Ratings agency Moody’s yesterday cut its rating on the firm from Baa3 to B1 and put all its ratings under review in light of “the turmoil at the board and senior management level”.

ENRC’s trio of founders and the Kazakh government announced last Friday that they were considering a potential bid for the 45 per cent stake in ENRC they do not already own.

They have until 17 May to confirm an intention to make an offer.

Kazakhmys, the London-listed rival that owns a 26 per cent stake in ENRC, has declined to comment on its intentions.