Monday 24 May 2021 1:54 pm

Serious Fraud Office encouraged ‘Machiavellian’ top City lawyer to leak client's file, court told

The Serious Fraud Office encouraged a “Machiavellian” top City lawyer to leak confidential information about his client while it was under investigation for alleged bribery, corruption and fraud, the High Court heard today.

Eurasian Natural Resources Corporation (ENRC) is suing the SFO for alleged misfeasance in public office over an investigation into the Kazakh mining giant, which is seeking around £70m in damages.

The company is also suing Neil Gerrard and his former employer, the law firm Dechert, which represented ENRC in relation to the investigation, for breach of contract in a linked claim worth potentially hundreds of millions of pounds.

ENRC claims that Gerrard, a former policeman turned white-collar crime lawyer, was “motivated by greed” when he gave the watchdog inside information about his client’s response to the probe in order to make more money.

Gerrard, who retired from Dechert at the end of last year, is alleged to have “bullied” ENRC into taking his advice by threatening that the SFO would raid directors’ homes and “find their porn”.

He is also said to have told colleagues he was “in rape mode” and was going “screw these f****** (ENRC) for £25m” after he celebrated leaking confidential documents to a national newspaper with “a glass – or perhaps two – of pink champagne”.

‘An elaborate work of fiction

Lawyers representing Dechert and Gerrard say ENRC’s claims are “an elaborate work of fiction”, and that “the sheer nastiness of the attack on Gerrard smacks of vendetta”.

They argue that “ENRC’s real complaint is that the defendants were too successful uncovering wrongdoing”, having discovered “corrupt payments to senior government officials in Africa, breaches of financial sanctions against Zimbabwe and extensive fraud in procurement and outsourcing”.

The SFO – which says it continues to carry out a criminal investigation into ENRC over “allegations of fraud, bribery and corruption around the acquisition of substantial mineral assets” – says the claim against it is “hopeless”.

Earlier today, the multimillion-pound trial – which is expected to see three former directors of the SFO called to give evidence – began with ENRC’s opening submissions at a remote High Court hearing.

Nathan Pillow QC told the court that Gerrard’s “secret disclosures” to the SFO were “nothing short of astonishing”, adding that the lawyer “completely turned on his client”.

Gerrard should have given ENRC his “undivided loyalty”, but instead “effectively invited the SFO to open a criminal investigation”, Pillow added.

The barrister said in written submissions that, in 2011, the SFO was “desperate for a high-profile win” after a series of public failures and decided to “tap Gerrard for inside information” about ENRC.

He told the court that senior SFO officers “were only too happy to encourage Gerrard to share obviously confidential and privileged information, to do their work for them at ENRC’s expense, and to pressure ENRC into admitting wrongdoing”.

The SFO then “echoed Gerrard’s messages back to his client, and even compliantly parroted secretly pre-agreed lines, to assist Gerrard to apply further pressure on ENRC to go along with his proposals,” Pillow said.

Regret

Andrew Onslow QC, representing Dechert and Gerrard, said in written submissions that the “large number of extremely serious and wide-ranging allegations against Dechert and Gerrard” are all “entirely without merit”.

Onslow added: “Gerrard did not leak, and was not a party to any conspiracy to leak, any confidential/privileged information or documents to the press or to the SFO.”

Simon Colton QC, for the SFO, said the watchdog had “no reason … to doubt the authority of Gerrard to make on behalf of ENRC the disclosures that he did”.

He added: “ENRC now regrets its choices, and regrets sharing so much information with the SFO.

“Whether ENRC is justified or not in criticising Dechert and Gerrard for their advice, that regret cannot support a claim for deliberate or reckless wrongdoing against the SFO.”

Justice Waksman will hear opening submissions remotely this week, before the hearing resumes in person at the Royal Courts of Justice in London for the start of live witness evidence in June.

The trial is due to conclude in September after closing submissions on behalf of ENRC, Dechert and the SFO.

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