SFO Launches Criminal Investigation into Eurasian Natural Resources

The UK’s Serious Fraud Office (SFO) has taken over Eurasian Natural Resources’ (LSE:ENRC) efforts to investigate allegations of corruption regarding its Kazakhstan and African businesses, today launching a criminal investigation into the company, according to The Guardian.

While Eurasian, a FTSE 100 miner, had been reporting its findings to the SFO, Metal-Pages notes that it recently broke ties with the law firm it had hired to conduct an internal review and “has witnessed an exodus of executives in the past few weeks.” These factors seem to be what drove the SFO to take over.

The list of executives who have left the company in recent days is long and includes chief commercial officer Jim Cochrane, company secretary Victoria Prentice, Tony McCarthy, the head of human resources, and Stuart Nolan, group head of reward, according to Metal-Pages. Those were capped off by yesterday’s departure of Mehmet Dalman, chairman of the company and leader of the internal investigation. Though The Guardian notes that he had “staked his reputation” on getting the company out of its troubles, he ultimately admitted, “I believe I have achieved all that I can as chairman of ENRC.”

In Africa, Eurasian faces questions regarding Dan Gertler, its former partner. He has been accused of using his relationship with Joseph Kabila, president of the Democratic Republic of the Congo, to “buy interests in the country’s mining assets on the cheap.” In Kazakhstan, allegations related to a farm supposedly purchased by the director of a subsidiary of Eurasian have been brought forward.

Added to the mix is the fact that Eurasian’s founders, Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov, own 44 percent of the company and are considering teaming up with the Kazakh government to buy it out and take it private, The Telegraph reported. That news sent Eurasian’s shares up nearly 27 percent last Friday.

Together, the founders and Kazakh government hold about 56 percent of Eurasian. They have until May 17 at 5:00 p.m. to either “announce a firm intention to offer for ENRC” or “state they will not proceed.” Kazakhmys (LSE:KAZ), which holds a 26-percent stake in Eurasian, so far has not commented on the proceedings.

For its part, Eurasian stated in a press release put out today that it is “assisting and cooperating fully with the SFO.”

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.