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ENRC tells London court UK's fraud watchdog would not have opened probe without leaks

FILE PHOTO: A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London

By Sam Tobin

LONDON (Reuters) - Kazakh miner ENRC told a London court on Monday that Britain's Serious Fraud Office (SFO) would not have opened a criminal investigation into the company if the watchdog had not induced ENRC’s former lawyer to act against the company's interests.

Eurasian Natural Resources Corporation (ENRC) is suing the SFO and international law firm Dechert at London’s High Court following a stinging judgment last year.

Judge David Waksman found that former Dechert lawyer Neil Gerrard, who conducted an internal investigation for ENRC between 2011 and 2013, engaged with senior SFO officials without authority in a "reckless breach of duty".

The judge also found that the SFO induced Gerrard to breach his duty out of “bad faith opportunism”.

ENRC is now claiming around 21 million pounds ($25.28 million) to cover the costs of “unnecessary” work performed by Gerrard and his colleagues, which it argues were caused by Gerrard’s breaches.

The former FTSE 100 company has been under investigation since 2013 over allegations of bribery and corruption. No charges have been brought against ENRC or any individuals and the company denies any wrongdoing.

ENRC's lawyer Nathan Pillow said on Monday that Gerrard's disclosures to the SFO created a "feedback loop", which sowed "seeds of doubt in the SFO's mind".

The company argues that it was cooperating with the SFO, which it says would not have launched a criminal investigation in April 2013 but for Gerrard's breaches.

The SFO, however. says it had enough material from publicly-available reports and disclosure provided by ENRC itself during a self-reporting process to launch the investigation.

Simon Colton, the SFO's lawyer, also said in court filings that any losses suffered by ENRC were “solely and exclusively” caused by the wrongdoing of Gerrard, who retired in 2020, and Dechert.

Dechert accepts it is liable to pay around 9 million pounds to ENRC, but argues the SFO should have to pay half of any damages awarded in relation to breaches committed by both Gerrard and the SFO.

(This story has been refiled to correct spelling of 'judgment' in paragraph 2)

(Reporting by Sam Tobin; Editing by Susan Fenton)