Senior staff ‘stole and lied’atmine2 Jun 2013 23:58
ENRC dismissed team after internal report
An internal review at ENRC recommended that the company dismiss 20 of its senior Kazakh staff for fraud and discipline more than 60, The Times has learnt.
The alleged wrongdoing at the FTSE 100 miner included employees using company money to buy a guesthouse, a farming business and a horse farm, according to a leaked document.
Dozens of employees were involved in a network of relationships with suppliers that led to ENRC paying massively inflated prices for old equipment.
The scale of the investigation will add fuel to the debate over whether companies such as ENRC, which listed in London in 2007, should be allowed to form part of the FTSE 100 index.
The Kazakh mining company is under investigation by the Serious Fraud Office for “fraud, bribery and corruption” and is also the subject of a takeover bid by its founding shareholders, three Kazakh oligarchs, who hope to take it private on the cheap. They will ask ENRC for an extension to today’s deadline for making an offer for the shares, which floated at 541p in late 2007 but are trading 62 per cent lower at 240p. The three oligarchs initially offered 260p, which was rejected by ENRC’s board.
Months before the SFO became involved ENRC was conducting its own investigation, which resulted in the company dismissing a team of executives at SSGPO, its biggest Kazakh subsidiary, and slashing the bonus of Mukhamejan Turdakhunov, who is president of the division and sits on ENRC’s group-wide executive committee, The Times can reveal.
So far it has not acted upon a further recommendation from Tony McCarthy, its head of human resources, that Mr Turdakhunov ought to be ousted. Mr McCarthy quit the company several weeks ago. He declined to comment when contacted.
“The internal investigation has concluded, which uncovered evidence of fraud against ENRC. A remedial action plan has been put together, which is being implemented. As a result of this 20 employees at SSGPO have been fired to date,” said ENRC.
The Times understands that the company’s internal governance review conducted by Dechert, the law firm, which has since been fired by ENRC, suggested that senior executives had funnelled large amounts of resources out of the company into unauthorised projects and had misled auditors about their activities. One of those projects was a farm business in Kazakhstan, which used equipment bought by ENRC, while another involved the illicit purchase of a guesthouse using company funds, a transaction that auditors forced the company to unwind once they discovered it. One of ENRC’s executives owned the farm before transferring it to an associate.
In another illicit transaction uncovered by the Dechert interim review, one employee bought a horse farm with ENRC money, while another executive was accused of incompetence and of discussing the possibility of making sales to Iran.
The review also
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