Monday, July 4, 2016

British Special Frauds Office Is Stepping Up Investigations Of Corruption In Africa

UK awards extra funds for SFO probe into ENRC’s mining deals

Serious Fraud Office stepping up investigation into alleged corruption involving Africa deals
The UK’s Serious Fraud Office has won special government funding to pursue itsinvestigation into Eurasian Natural Resources Corporation, the Kazakh-based miner that left the FTSE 100 in 2013 amid allegations of corruption.
The Treasury has given the cash-strapped SFO ringfenced funding for the probe into ENRC in a signal that the agency’s three-year investigation has shifted up a gear, said people familiar with the probe.
The move comes after the SFO called suspects in for a fresh wave of interviews earlier this spring. Investigators are examining ENRC’s acquisition of mines and prospects in the Democratic Republic of Congo, home to some of the world’s richest stocks of copper and cobalt.
Transaction documents show that the Congolese state sold mining rights to the Israeli tycoon Dan Gertler, a close friend of Congolese president Joseph Kabila, for far less than the price at which Mr Gertler swiftly sold them on to ENRC.
Critics argue that the transactions deprived a poor African nation of revenue, to the benefit of Mr Gertler, and question why ENRC was willing to pay the increased prices. Both Mr Gertler and ENRC have denied wrongdoing.
The SFO officially launched its probe in April 2013. But the company had begun two separate internal investigations into alleged fraud at its Kazakh and African operations following whistleblower reports. The SFO only ever received a copy of its internal report into the company’s Kazakh unit.
Listed ENRC no longer exists after being taken private by its founding trio and the Kazakh government in 2013; in its place is the renamed Eurasian Resources Group. The founding trio own 60 per cent of ERG, and the newly restructured group says it has zero tolerance for corruption.
The SFO, the Treasury and ERG declined to comment.
A so-called “blockbuster” funding arrangement with the Treasury allows the SFO to ask for extra money if an investigation is forecast to require more than 10 per cent of the SFO’s annual £33m budget.
Some of the SFO’s most high-profile investigations have secured similar funding, such as the investigation into Barclays’ arrangements with Qatar during an emergency cash call at the height of the financial crisis, and into alleged overseas corruption by Rolls-Royce.
The SFO has also received a total of £21.4m in special funding from the Treasury for its various Libor investigations.
But questions have been raised over the propriety of the Treasury giving ringfenced funds for specific investigations.
report by the inspector that oversees the SFO in May expressed concern over the agency’s reliance on blockbuster funding, arguing that the government should instead increase the SFO’s official budget, which has fallen from £52m in 2008 to £33m this year. By comparison, over the past two years the SFO has asked for blockbuster funding amounting to nearly half of its annual budget.
Additional reporting by James Wilson in London

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