ENRC: UK’s Serious Fraud Office must share blame for its former lawyer’s leaks, Dechert tells High Court
US law firm Dechert has accused the UK’s Serious Fraud Office (SFO) of knowingly cultivating an “improper relationship” with its former partner, corrupt City lawyer Neil Gerrard, in an ongoing legal battle concerning Kazakh mining firm ENRC.
The law firm’s charge comes as it responds to a High Court claim by ENRC, which is seeking £21m to cover the costs it claims it incurred due to Gerrard’s decision to leak its information and the SFO’s subsequent decision to launch a criminal probe into the former FTSE 100 company.
Dechert has admitted liability for the actions of Gerrard – the US law firm’s former head of white-collar crime – but is now arguing the SFO should be forced to pay half of the £21m sum.
Lawyers acting on behalf of Dechert told the court that “without the SFO’s encouragement and willing participation there would have been no breach by Mr Gerrard”.
The SFO should therefore take a “fair share” of the blame for Gerrard’s decision to leak ENRC’s confidential information to the SFO and three British newspapers while carrying out an internal investigation for the Kazakh firm, Dechert’s lawyers said.
They added that Gerrard and the SFO had a “symbiotic” relationship as they argued the City lawyer “could not have played to an empty house.”
“We say that the SFO was just as much to blame as we were,” Dechert’s lawyers said.
They added: “[We] are throwing SFO a reasonable lifeline, a 50/50 split is reasonable. The SFO has just doubled down. It says wrongful conduct is irrelevant and it should get off scot-free.”
Letting the SFO off would set “a dangerous precedent” and give the investigator “carte blanche to continue to engage in that kind of behaviour knowing it will never be held financially accountable,” they argued.
The SFO, however, argues Gerrard would have leaked ENRC’s information anyway, even if no inducement on the part of its officials had occurred. The agency claims the City lawyer started trying to maximise his workload well before he came into contact with the SFO.
In a judgement last year, High Court judge Justice Waksman ruled SFO officials “induced” Gerrard into leaking ENRC information by providing a “willing audience”. The High Court, however, determined “the essential driver for all of this was Mr Gerrard”.
The UK fraud investigator also argues it would have opened its investigation regardless as to whether it had received information from Gerrard. It claims its decision to launch its probe into ENRC was driven by complaints from others including Global Witness and Eric Joyce MP.
A spokesperson for Dechert said: “The firm is taking an appropriate, reasonable, and pragmatic approach to the issues of causation and damages.”
An SFO spokesperson said: “Our criminal investigation into ENRC remains ongoing. We deny any liability to ENRC.”
A spokesperson for ENRC said: “The investigating authority recruiting a defence solicitor as an informant casts doubts over the whole UK criminal justice system. Such behaviour can not be condoned or downplayed by the SFO.”