1: A physique, a mine, a thriller
Clement Jackson was at residence by the South African coast, tending to the meat on his beloved braai, when the decision concerning the physique got here. He discovered contentment on the barbecue. Bald, with craggy options and distinguished ears, he favored to impart the secrets and techniques of a succulent lamb shank or the proper T-bone to his youngsters. They have been grown up, with youngsters of their very own, however whilst he approached 60, Jackson was not able to yield the tongs to them simply but.
Since coronary heart bother introduced an early finish to his police profession 20 years earlier, Jackson had labored as a personal detective. Born in 1959 – simply as Nelson Mandela was happening trial for treason – he’d adopted his father into the power. Jackson cherished the sleuthing, assembling a jigsaw of proof. Specialising in mining, he made his identify within the late Nineteen Eighties, when he cracked the smuggling rings that wealthy South Africans have been utilizing to squirrel bullion and treasured stones overseas in the course of the ultimate years of apartheid.
The mining trade was an engine of the bribery, violence and inequality that continued to blight South Africa even after Mandela took energy. So as soon as Jackson started to tackle non-public shoppers, there was loads of detective work to do. In 2016, certainly one of his trade contacts referred a brand new shopper to him. Jackson stepped away from the braai to take the decision.
The American voice on the cellphone belonged to a mining investor. He wished Jackson to analyze the mysterious loss of life of a geologist who had labored on his South African ventures. The geologist’s identify was André Bekker. The earlier evening, 28 October 2016, Bekker’s white Audi Quattro had been set alight on a suburban road in Johannesburg, South Africa’s industrial capital. When the flames burned out, Bekker’s charred physique lay slumped towards the again door.
Jackson agreed to take the case. Just a few days later, he flew to Johannesburg. He started by contemplating whether or not Bekker’s loss of life might have been suicide. The fireplace appeared to have began on the entrance of the automotive. Could Bekker have ignited the blaze from the again seat, maybe with a bullet? Next to unimaginable, Jackson was informed when he visited an Audi dealership. The automotive had burned so sizzling that it appeared somebody will need to have doused it with an accelerant. Jackson, as I reported years later, grew satisfied this was a homicide.
Bekker, Jackson realized, had been going by a divorce and his household suspected he typically paid for intercourse. But he discovered nothing to counsel that these near Bekker wished him useless. Each new lead hit a wall. Then at some point in December 2016, Jackson organized to satisfy a delicate supply he’d identified for years. The supply produced a chunk of paper and drew a diagram of a multinational mining company Jackson had by no means heard of: ENRC.
With mines from Kazakhstan to Congo, ENRC – Eurasian Natural Resources Corporation – was as soon as one of the crucial precious corporations on the London Stock Exchange, value £20bn at its peak just some years earlier. In 2007, when it floated, captains of British enterprise, two of them with knighthoods, have been appointed to ENRC’s board to steward this new large of UK commerce. Soon, although, the enterprise pages have been carrying tales of boardroom ructions. The oligarch founders, three billionaires from the previous Soviet Union referred to as the Trio, have been combating the corporate’s administrators for management of this huge mining empire. The scandal deepened when allegations emerged that the prized mines ENRC had taken over in Africa have been received with bribes.
Jackson’s supply informed him about one other of ENRC’s African offers. In 2011, it had purchased a manganese prospect in South Africa known as Kongoni. The value was $295m. Which was odd. Because Kongoni was so distant and exhausting to mine that it was value nothing like as a lot. That, at the least, had been the view of an professional geologist who had examined it: André Bekker.
“This thing,” Jackson mentioned to himself as he heard the useless man’s identify, “it’s much deeper than we thought.”
Jackson labored his mining contacts to search out out every thing he might concerning the Kongoni deal. He got here to suppose it was a fraud. Less than two years after the deal, the worth of Kongoni recorded in ENRC’s accounts was not $295m – however zero. The firm blamed a fall within the manganese value, suggesting the asset’s worth would possibly go up once more. But Bekker had informed others within the trade that Kongoni had by no means been value $295m. Not even half as a lot. The geology simply wasn’t ok.
And there was one other thriller. Who had ENRC purchased Kongoni from? Beyond the names of some obscure offshore corporations, the accounts didn’t say who had obtained ENRC’s $295m. Though he didn’t have definitive proof, Jackson suspected this was a scheme to siphon that cash out of a British PLC.
Back in his police days, Jackson might have ordered raids, compelled manufacturing of paperwork, extracted financial institution statements. Now it was simply him. And after a couple of months, with Bekker’s loss of life nonetheless unsolved, his shopper stopped paying. Other circumstances got here and went, however Bekker’s ghost wouldn’t let Jackson relaxation. He felt an affinity with this fellow ageing Afrikaner, whose youngsters reminded Jackson of his personal. Even although there was no proof tying the loss of life to the deal, Bekker’s burned Audi had led Jackson to the mining deal. And if the reality of Bekker’s ultimate hours eluded him, possibly he might clear up the riddle of Kongoni.
Jackson realized that there was a law-enforcement company, distant, that was investigating ENRC for suspected corruption and fraud. The UK’s Serious Fraud Office, Jackson believed, was freed from the interference that bedevilled South African companies. What’s extra, the SFO was backed not by an impoverished younger democracy, however by one of many world’s oldest and richest, which prided itself on main the worldwide combat towards corruption. So he despatched the SFO an e mail.
Just earlier than Christmas 2018, investigators on the SFO’s ENRC staff rang Jackson. The following April, they flew him to London. He spent two days with them at SFO headquarters, explaining what he had found concerning the Kongoni deal. Listening to their questions, Jackson might inform they’d additionally been trying into it. They appeared extremely skilled. As he set off again to South Africa, he mentioned to himself: “They are fucking going to crack this case.”
2: Nightmare on Elm Street
The stakes for the SFO might hardly have been larger. A sequence of courtroom defeats and calamitous errors had severely broken its status. Politicians had even threatened to scrap the company. The ENRC case was an opportunity to show its value towards a few of the richest and strongest targets it had ever taken on. The SFO’s annual funds was round £60m; the Trio’s mining empire introduced in that a lot each few days.
And one thing a lot greater was on the road. While leaders like David Cameron hosted grand conferences on combating corruption, London was more and more seen as the worldwide hub for soiled cash. Since the Nineties, the UK had grow to be residence from residence for individuals who made their fortunes from the implosion of the Soviet Union. The oligarchs purchased mansions and soccer golf equipment, donated to political events and universities, and took their place within the British institution. Assisted by London legal professionals and PRs, they crafted photos as visionary tycoons. Yet as the reality concerning the crime and corruption behind many of those fortunes emerged, and as oligarchs’ ongoing entanglements with Vladimir Putin and different ex-Soviet dictators grew to become clear, a disturbing query emerged. Were these billionaires really topic to UK legislation? Or have been they just so rich, their affect so nice, that they and their companies loved impunity, no matter what they did to get wealthy and keep wealthy?
It was not new, this sense that the wealthy get away with it. In 1986 the Economist reported that latest scandals had “raised doubts abroad that the City of London is the most honest place to do business”. Lord Roskill, the senior decide Margaret Thatcher’s authorities appointed to look at the state of fraud within the UK, agreed. “While petty frauds, clumsily committed, are likely to be detected and punished, it is all too likely that the largest and most cleverly executed crimes escape unpunished,” his fee reported. Top of its suggestions was “a new unified organisation” to sort out these crimes. This physique would, for the primary time, deliver prosecutors and specialist investigators beneath one roof. The authorities accepted Roskill’s proposal, and the Serious Fraud Office opened on 6 April 1988.
Before its first yr was over, newspapers have been reporting that the company was “under growing pressure to show results”. In its first main case, the SFO charged the “Guinness Four” – amongst them pillars of British enterprise – with manipulating the drinks firm’s share value in support of a takeover. All 4 males have been convicted, together with the previous Guinness boss. But his five-year sentence was halved on enchantment, two different Guinness prosecutions collapsed, and an extra defendant was acquitted. The case revealed the paradox that has dogged the SFO ever since. The more durable and extra complicated the investigations it takes on, the extra it’s fulfilling its mission – and the likelier it’s to fail.
Not all of the defeats have been of the SFO’s making. As globalisation accelerated after the top of the chilly warfare, the SFO’s work grew extra worldwide. Operating from places of work on Elm St in London’s authorized district, it more and more targeted on bribery overseas by UK-registered corporations and British residents. Some of those circumstances have been delicate, placing the company beneath extraordinary stress. During an investigation into whether or not bribes had been paid to clinch BAE Systems’ fighter-jet take care of Saudi Arabia, the Saudis threatened to stop counter-terrorism cooperation. In the wake of the 2005 London bombings, this was a potent menace. On the directions of Tony Blair’s legal professional basic, in 2006 the SFO dropped the case. Judges later known as the choice “abject surrender” to “blatant” Saudi threats. The UK’s declare to be combating corruption was trashed.
Even with out such political meddling, the SFO developed a knack for bungling authorized process. Under Richard Alderman, who took over in 2008, the company cemented its status as what Private Eye journal calls the Serious Farce Office. In March 2011, having tipped off the press, Alderman’s SFO staged a daybreak raid to arrest two London billionaires over allegations associated to the collapse of a financial institution in the course of the monetary disaster. The warrants, a courtroom later discovered, have been secured utilizing “inadequate and unfair” info. The SFO ended up paying the Tchenguiz brothers greater than £7m in damages and prices. As Theresa May, then residence secretary, drew up plans to disband the SFO, one senior officer mentioned morale was at “rock bottom”. The press known as it “Nightmare on Elm Street”.
But Alderman had additionally launched a case with the potential to revive the SFO’s standing. Not lengthy after the botched Tchenguiz raids in 2011, he realized {that a} main UK company was quietly conducting an inner investigation into suspected fraud and corruption. One of Alderman’s lieutenants wrote to the corporate to counsel a gathering. The firm was ENRC.
So started a saga that might eat the SFO for the following 12 years. Its staff would come to analyze whether or not, simply as Clement Jackson thought, a whole lot of tens of millions had been siphoned out of ENRC, a lot of it flowing to the Trio, in line with courtroom paperwork I’ve seen.
The proof gathered by the SFO, just like the proof gathered for this text, leaves many important questions unanswered. But the general public curiosity in telling this story is evident. The wrestle between the Trio and the SFO would go on to reshape the UK’s authorized panorama, touching every thing from confidentiality to surveillance, defamation to free speech, and the duties that legal professionals owe their shoppers. And but, in 2023, the company would drop its ENRC investigation with no costs introduced, owing to what it mentioned was inadequate admissible proof.
There is, although, a judgment on its approach. Not of the oligarchs, however of the SFO itself. Having dominated that the company mistreated the Trio’s company empire, a decide will now determine how a lot UK taxpayers’ cash ought to be paid to the oligarchs’ firm in damages. The SFO has put aside 1 / 4 of a billion kilos.
Which leaves one query above all: how did one of many UK’s highest-profile monetary crime investigations collapse into such utter humiliation?
3: More Soviet than City
ENRC’s itemizing on the London Stock Exchange in 2007 was celebrated because the City’s newest triumph in attracting the worldwide 1%. Its founders, the Trio, got here from the ex-Soviet republics of Central Asia. Two of them, Alexander Mashkevitch and Patokh Chodiev, acquired their begin in Russia. As communism dissolved into capitalism, the pair labored at a Russian buying and selling home that, Chodiev would later say, “stank of the KGB”. Alongside a dealer named Alijan Ibragimov, they drummed up sufficient western finance to seize at discount costs a few of the precious mines that the Kazakh dictator Nursultan Nazarbayev was privatising. Like Nazarbayev, the Trio grew stupendously rich.
In February 2008, because the monetary disaster pitched tens of millions into hardship, the Trio have been honoured at Banqueting House on Whitehall. A Kazakh string quartet serenaded luminaries of British enterprise within the halls the place kings of England as soon as feasted. The oligarchs’ coal and iron mines on the steppe have been remodeling, in identify at the least, right into a UK public firm. Its headquarters have been at a sensible handle close to Buckingham Palace.
Although the Trio had bought a fifth of ENRC’s shares to inventory change traders, it quickly grew to become clear that they’d no intention of relinquishing management over the corporate. When the Trio ejected ENRC’s impartial administrators from the board in 2011, a type of administrators pronounced their ways “more Soviet than City”. It appeared ENRC was each. It apparently remained the non-public empire of oligarchs accustomed to deploying immense sums of cash nonetheless they happy. At the identical time, it was a FTSE-100 British enterprise with a compliance division supposed to make sure the best requirements of company conduct.
ENRC had been a listed UK firm for 3 years when, late in 2010, an nameless whistleblower alleged fraud and bribery at its Kazakh mines. In most such circumstances, there’s a routine. The firm hires a City legislation agency to analyze the allegations. If wrongdoing is discovered, the corporate informs the Serious Fraud Office, and asks for a deal. In change for coming clear, the corporate can often keep away from a company felony cost and get away with a superb. With its chequered trial document, reaching settlements additionally fits the SFO: the corporate pays the dizzying authorized charges for an investigation, the 2 sides agree a model of occasions and the dimensions of a superb, and nobody takes any possibilities in entrance of a jury.
The investigation at ENRC was anticipated to comply with this playbook. It didn’t.
4: ‘Corrupt and criminal activities’
Neil Gerrard, the City lawyer who ENRC employed to analyze the whistleblower’s allegations, was a gruff former Metropolitan Police officer. As effectively as being a prime fraud lawyer with years of investigative expertise, he knew senior figures on the SFO. He appeared ideally suited for the job.
From the beginning, Gerrard might really feel the stress between the 2 ENRCs – the primary consisting of London enterprise figures who thought-about themselves stewards of a listed firm, and the second comprised of these loyal solely to the Trio. When Gerrard and his staff arrived in Kazakhstan, in line with an account his agency later gave within the excessive courtroom, they noticed sufficient to suspect that fraud and bribery have been certainly afoot inside ENRC’s operations there, albeit apparently in fairly minor methods. And he grew to become conscious of suspicious exercise on what appeared a far bigger scale elsewhere within the ENRC empire. Over summer time 2011, Gerrard widened the investigation to Africa.
As ENRC’s legal professionals dug into the corporate’s dealings in Africa, their inquiries rapidly started to concentrate on the enigmatic determine who ran its operations there. Victor Hanna’s previous was a closed e book. Those who knew him gleaned that he had Egyptian heritage. The highschool sports activities web page of a 1988 Los Angeles Times information that he grew up in Australia, then California, redeploying his bulk from rugby to American soccer. A Victor Hanna of Los Angeles went on to serve eight years within the US military, achieve a legislation diploma, and work in finance, in line with a 2007 press release by a US funding agency. Around that point, he grew to become the Trio’s man in Africa.
Some of Hanna’s subordinates loved his firm. He was keen on boozy employees nights out. “I liked his forthrightness,” Ron Honey, a former ENRC worker in Africa, informed me. “But he had too many hidden agendas.” He could possibly be brash, former colleagues say, with a fast mood, disinclined to having his orders questioned. His image was absent from firm experiences. Honey described witnessing Hanna snatch and smash a cell phone after he was snapped on it.
Gerrard and his staff established that, within the months earlier than they began their investigation in December 2010, Hanna had overseen a sequence of offers for ENRC to purchase mines, prospects and infrastructure within the Democratic Republic of the Congo and neighbouring international locations additionally crippled by corruption. They set about gathering extra info. Gerrard and his agency later alleged to the excessive courtroom that Hanna was decided to thwart them. At one assembly, in line with Gerrard, Hanna mentioned he wished recommendation on the best way to hold paperwork out of the SFO’s attain.
Within ENRC, Gerrard believed he discerned a wrestle for management between these making an attempt to run a PLC by the e book and people loyal to the Trio, Hanna foremost amongst them. “Everyone was petrified” of Hanna, a director mentioned to Gerrard, in line with what he later informed a courtroom. When Gerrard realized of strikes inside ENRC to dramatically slim his investigation, he delivered a warning. Gerrard emailed ENRC’s chairman in mid-2012 to say he had “grave concerns” that the SFO was dropping confidence within the firm’s willingness to cooperate: “The consequences of this will be the withdrawal of the civil process and the commencement of a criminal investigation.” Gerrard later informed the excessive courtroom he acquired his approach: Hanna was pushed off the committee overseeing his investigation, and Gerrard delved deeper into the Africa offers.
As the investigation entered its third yr, the SFO wrote to ENRC expressing impatience: “You will appreciate that if we cannot progress these matters with your assistance, we have no alternative but to progress them without your assistance.” Gerrard informed the SFO to anticipate his findings on Africa by the top of March 2013.
Gerrard, his excessive courtroom submitting would later allege, was discovering “further evidence that Mr Hanna, among others at ENRC, was involved in corrupt and criminal activities”. That included obvious violations of sanctions towards Robert Mugabe’s regime in Zimbabwe. In Congo, Gerrard believed Hanna had covertly despatched a $35m cost from ENRC to an Israeli businessman near the nation’s rulers. There have been, Gerrard mentioned, “reasonable grounds for concern that the true purpose” of the cost was to allow “corrupt payments to senior government officials” to advance ENRC’s enterprise pursuits. (All of this has been very strongly denied by each Hanna and the mining firm.)
A gathering was fastened for April, at which Gerrard was to current his findings to the SFO. In advance, Gerrard informed ENRC’s administrators that Hanna ought to be suspended, “as the evidence indicated that he had been directly involved in bribing public officials”. To obtain a civil settlement with the SFO, Gerrard mentioned, ENRC must “sign up” to “wrongdoing on the part of individuals”. Hanna, it appeared, was to be handed over in order that the company may be spared. One of Hanna’s previous colleagues informed me he felt a pang of sympathy. “He got an opportunity to be a big shot and he just got swept away. In his heart of hearts he’s not a bad guy. He was way, way out of his depth.”
On 25 March 2013, in line with the account Gerrard later gave in courtroom, ENRC’s chairman and the impartial administrators agreed that Hanna ought to be suspended. But though on paper the board was the company’s highest authority, in actuality ENRC’s masters have been who they all the time had been – the Trio. Two days later, one of many Trio – Alexander Mashkevitch – appeared at ENRC’s headquarters. Victor Hanna was going nowhere. Instead, Neil Gerrard was fired.
5: A cash path to Mayfair
Gerrard’s dismissal torpedoed ENRC’s talks with the SFO. It appeared clear that those that managed the corporate have been now not considering a settlement. If the SFO was going to deliver residence this landmark case, they must do it themselves. On 25 April 2013, the company introduced a felony investigation into ENRC.
The SFO informed Gerrard’s agency at hand over the information of his investigation, together with 184 information of interviews his staff had carried out with ENRC employees previous and current. ENRC went to courtroom to argue that the work Gerrard had executed was protected by authorized skilled privilege, the fitting that forestalls the state from demanding to know what passes between lawyer and shopper. The argument would take years to work its approach by the courts, however ENRC clearly had a powerful declare, and the SFO’s staff sought new methods to construct the case independently of Gerrard’s investigation.
Transnational corruption investigations are gradual. They take, on common, seven years. But the SFO was making progress beneath new administration. The bungling Alderman had departed on the finish of 2012, changed by a revered new boss, David Green. Even after the Trio purchased again the shares they’d bought on the London Stock Exchange, taken the corporate non-public and moved their company headquarters to Luxembourg, the SFO’s investigators continued. In September 2016, they interviewed Victor Hanna. He had, by then, left ENRC. He had left his spouse, too, marrying the daughter of one of many Trio, Patokh Chodiev. Another of the oligarchs, Mashkevitch, took his seat within the SFO’s interview room the next yr. He, Hanna, and ENRC itself maintained their innocence. An SFO supply was quoted within the Evening Standard saying ENRC was “our next big case and number one priority”. The solely query gave the impression to be: who’s going to be charged, and the way quickly?
The SFO’s central line of inquiry was the suspected bribery in Congo. This alleged corruption was the acquainted sort: people purportedly paying bribes to advance the corporate’s pursuits. But a few of the SFO’s sources claimed there was an extra sort of soiled enterprise happening: people inside ENRC siphoning cash out of the corporate beneath the guise of reliable enterprise offers. In the previous case, the corporate was the alleged beneficiary; within the latter, it was the alleged sufferer.
Some of the mining belongings ENRC was shopping for in Africa and elsewhere belonged to not different corporations however to ENRC’s foremost shareholders – the Trio. Some of the costs appeared very beneficiant, a lot larger than what the oligarchs themselves had paid to accumulate them. It appeared as if the offers might need been designed to maneuver cash out of a UK listed firm and into the oligarchs’ personal accounts, with a pleasant revenue.
In 2018, a brand new supply from South Africa acquired in contact relating to what he mentioned was one other questionable deal. He claimed to have vital details about ENRC’s acquisition of a manganese prospect named Kongoni. After an preliminary Skype name, Phil Hawkins, a plain-spoken former tax investigator who was one of many dozen SFO employees on the ENRC staff, determined it was value bringing the supply to London for additional discussions.
That was how, in April 2019, Clement Jackson discovered himself checking right into a lodge near the brand new SFO headquarters off Trafalgar Square. Jackson informed me about his discussions with Hawkins and the staff within the company’s drab cubicles. “They wanted to prove ENRC’s purchase of Kongoni was overvalued,” he mentioned. One potential witness who might need elucidated this, André Bekker, was now not alive. But Jackson thought he had discovered “a big piece of the puzzle”.
As the non-public detective spoke, the SFO staff took notes. By then, they have been “really interested” in Kongoni, one other one that assisted Hawkins and the staff informed me, saying they regarded the deal as “insane”. An evaluation by the revered mining consultancy Royal Haskoning, apparently produced for ENRC following the deal, advised that creating Kongoni might end in losses starting from giant to huge. Yet one of many UK’s most dear corporations had handed over $295m for this scrubby patch of South African terrain. More perplexing nonetheless, the recipients of this enormous quantity have been hidden.
A breakthrough got here whereas Jackson was in London. The SFO raided the workplace of a solicitor 5 minutes away alongside the Thames. Not lengthy after the Kongoni deal, in 2013 this solicitor had been concerned within the £8m buy of an Edwardian home on a Mayfair mews. The new occupants have been ENRC’s head of Africa, Victor Hanna, and his spouse, Mounissa Chodieva, daughter of one of many Trio.
In the raid, the SFO found Swiss financial institution accounts by which the cash to purchase the home appeared to have handed. It requested extra info from the Swiss authorities. We know this as a result of a Swiss courtroom later dominated on the request. Like all Swiss rulings, this one doesn’t identify the protagonists. But they’re recognized by their description. One is described as being, on the time, the Africa boss of the company beneath investigation, who was additionally married to certainly one of its founder’s daughters – plainly that is Hanna. According to the ruling, the SFO informed the Swiss that it believed he had “obtained” a lot of the $295m ENRC paid out within the Kongoni deal by arranging for it to be paid to offshore corporations he managed. Then, the SFO alleged, he shared it out. Some went on the mews home. A “substantial portion” of the remaining cash “was channelled … to the beneficiaries, including the founders”.
In different phrases, the SFO was saying there was cause to ask whether or not Hanna and the Trio had looted what was, on the time, one of many UK’s largest companies. If the investigators have been heading in the right direction, then it appeared they could have an opportunity, in Jackson’s phrases, of fucking cracking the case.
6: Lawyers on trial
For all of the SFO investigators’ enthusiasm as they listened to what he had found about Kongoni, Jackson additionally detected a be aware of trepidation. We’re having some bother with legal professionals, Hawkins mentioned.
Two years earlier, in 2017, ENRC had taken a extremely uncommon step. It filed a lawsuit towards its personal former legal professionals. Neil Gerrard and his agency, Dechert, had betrayed their shopper, ENRC alleged. Gerrard had pushed ENRC to enter negotiations with the SFO, then expanded the scope of his investigation far past what was mandatory, “in reckless disregard of his duties in order grossly to inflate the bills”. Put one other approach, Gerrard had seen ENRC, this chaotic company backed by oligarchs, as a mark. His former shopper claimed Gerrard informed scare tales about SFO raids that might ensue except the corporate gave him increasingly more work. In complete, his agency had billed ENRC £13m.
The submitting supplied little exhausting proof to assist a declare {that a} senior City lawyer had gone rogue. “ENRC’s real complaint,” Gerrard and Dechert countered in a authorized submitting, “is that the defendants were too successful uncovering wrongdoing.” And the lawsuit swiftly appeared to backfire. Freed from the standard constraints of confidentiality by the necessity to reply the allegations, in June 2018 Gerrard and Dechert filed a blistering defence, the primary substantial public account of his three-year investigation. ENRC’s personal former legal professionals claimed that “the majority of its African business appeared to represent the proceeds of criminal conduct”.
But the lawsuit additionally compelled Gerrard and Dechert to reveal proof to the brand new staff of legal professionals and personal investigators that ENRC had employed. Those legal professionals have been inspired by what they learn in these new paperwork. So a lot in order that in March 2019, shortly earlier than Clement Jackson landed in London, ENRC had commenced an extra authorized motion. The declare was a bombshell. ENRC was suing the Serious Fraud Office.
The Trio’s company claimed that the SFO had, by the “arbitrary, oppressive and/or unconstitutional” conduct of its management, dedicated what is known as “misfeasance in public office”. Its senior officers had, the lawsuit alleged, conspired with ENRC’s lawyer, Neil Gerrard, to have him violate his skilled duties by serving to the SFO open a case that might result in a high-profile win for the embattled company, whereas Gerrard milked ENRC for charges. The SFO had confronted civil actions earlier than, sometimes to problem some technical side of its dealing with of a case, however by no means an allegation so grave.
“This,” one City lawyer thought upon studying of ENRC’s transfer, “is bold.” A decide determined that ENRC’s go well with towards Gerrard and his agency, Dechert, ought to be mixed with the one towards the SFO right into a single case. Preparations started for a blockbuster trial – not of the Trio, their allies or their company, however of their enemies within the UK authorized system.
7: ‘Screw these fuckers’
The barrister representing Neil Gerrard and his agency couldn’t have been extra contemptuous. Giving his opening assertion in May 2021, he derided ENRC’s accusations as “the stuff of conspiracy theories”.
In the witness field, John Gibson, who had led the SFO’s investigation into ENRC from 2014 to 2018, mentioned he felt “compelled” to “question the true motives” for ENRC to sue the SFO. “The criminal investigation into ENRC, which involves suspicions of extremely serious multinational bribery and corruption, remains open,” Gibson mentioned. The actual cause ENRC had sued the SFO, “is to influence the decisions taken in the ongoing criminal investigation”.
If Gibson was proper, it appeared that the Trio’s technique was to make use of authorized motion to hound the UK state into abandoning potential felony costs. To win, ENRC’s authorized staff must present that Gerrard, a high-flying City lawyer commanding tens of millions in charges, was a liar who conspired towards his personal shoppers. It seemed like a determined lengthy shot. Until the day when, within the witness field on the excessive courtroom, Gerrard was revealed to be exactly that.
During Gerrard’s testimony about his time as ENRC’s lawyer, it emerged that his agency had didn’t disclose copies of his previous textual content messages. When these messages have been revealed, ENRC’s trial staff in contrast them towards sworn proof Gerrard had given. He had informed the courtroom he’d been unaware that ENRC’s compliance officer had secretly given an interview to the SFO. If he had identified this, he would have been obliged to tell his shopper, because it was clearly of significant significance. Yet the brand new messages confirmed that Gerrard was not telling the reality. He had known concerning the secret SFO interview, however he had saved that info from his shopper, ENRC.
“You have lied to the court,” ENRC’s barrister mentioned to Gerrard. The decide intervened to remind Gerrard of his “right not to answer a question which might expose you to a criminal charge”. After a break, Gerrard returned to the witness field. He informed the courtroom he’d been affected by “global amnesia”, and might need forgotten the explosive texts. He produced no medical proof to assist this.
Others had clearer reminiscences. Cameron Findlay was a contract investigator who was serving to Gerrard together with his ENRC work. In his testimony, Findlay described Gerrard’s arrival at a gathering in Chelsea. It was August 2011, a couple of months after Gerrard had been employed by ENRC. Gerrard, Findlay mentioned, turned up rubbing his arms collectively and introduced: “Right boys, I’m in rape mode.” He was planning to “screw these fuckers” – ENRC, his shoppers – for tens of millions.
On 16 May 2022, Mr Justice Waksman handed down his judgement. Gerrard, he discovered, was a liar. He had been negligent “and for the most part reckless” in increasing his ENRC investigation ever wider to generate extra charges, together with by slipping info to the SFO. Gerrard was “so obsessed with making money from his work that he lost any real sense of objectivity, proportion or indeed loyalty to his client”, Waksman discovered. (A spokesperson for Dechert informed me that Gerrard’s conduct “does not reflect our firm’s values”. Gerrard “maintains that he did nothing wrong”, his lawyer mentioned, and the case has “taken a serious toll” on Gerrard’s well being.)
For the SFO, the trial was a blow to its already tattered status. Although the decide dominated that ENRC had not proved misfeasance in public workplace, he discovered that Alderman’s SFO had proven “bad faith opportunism” in repeatedly accepting info from Gerrard towards his shopper’s pursuits. Even if SFO officers had merely been making an attempt to assemble helpful info for its ENRC case, they need to not, Waksman determined, have accepted it from a lawyer who was betraying his shopper. Alderman himself had acted in “gross and deliberate breach” of his duties, and former senior SFO officers had sought to deceive the courtroom.
In suing the SFO, Gerrard and Dechert, ENRC had turned the tables on its adversaries. The trial didn’t look at whether or not the allegations of fraud and corruption by ENRC have been true, however it blew a gap within the reliability of the messenger, Gerrard. And it switched consideration from the substance of the investigation to the conduct of the investigators. On that, the decide’s verdict was clear. Yet this did nothing to resolve the questions on ENRC’s personal conduct in Africa.
And so, even because the drama of the Gerrard scandal unfolded within the excessive courtroom, the SFO staff was doggedly persevering with its work. By this level, the investigators had been constructing the felony case towards ENRC for seven years. They had been granted additional authorities funding out there for “blockbuster” investigations that eat greater than 10% of the SFO’s annual funds. And the case had simply grow to be nonetheless extra vital.
On 24 February 2022, simply earlier than Waksman’s judgement, Vladimir Putin started his full-scale invasion of Ukraine. In response, then-home secretary, Priti Patel, introduced a crackdown on soiled cash within the UK. She denounced the “mob of oligarchs and kleptocrats who have abused the financial system and the rule of law for too long”. But the UK’s flagship investigation into alleged monetary abuses stemming from the previous Soviet Union was beneath sustained authorized assault.
The SFO’s progress in its case towards ENRC had been painfully gradual. But the April 2019 raid on the London solicitor concerned in shopping for Victor Hanna’s mews home had damaged new floor. It unearthed what seemed to be a cash path that confirmed the place a few of the a whole lot of tens of millions ENRC paid out within the Kongoni deal had ended up. All that remained to make a money-laundering case, it appeared, was proof that this cash originated from against the law.
Then, three months into the Ukraine warfare, Phil Hawkins of the SFO’s ENRC staff obtained one other e mail from Clement Jackson.
“Good morning Phil,” Jackson wrote from South Africa. “Can I forward you some very interesting correspondence I received recently.” The correspondence, Jackson indicated, associated to ENRC’s Kongoni deal. “It contains,” he wrote, “very damaging information.”
8: ‘We do not require any further information’
By 2022, it had been six years since Jackson had first come throughout André Bekker, ENRC and the Kongoni case. Since his go to to London to see the SFO, Jackson had suffered a coronary heart assault. Following emergency surgical procedure, he thought again over his life, the unceasing pressure of his work, operating brokers inside smuggling rings, all the time up towards some formidable adversary. “I went through a lot of fucking stress,” he informed me. Now it was time to decelerate, his docs mentioned. But he couldn’t depart Kongoni unsolved. He believed he knew what had gone on. He simply wanted the proof.
As Mr Justice Waksman was making ready to provide his judgement in ENRC’s go well with towards the SFO in early 2022, Jackson obtained, by way of a supply, a replica of an e mail. It had been despatched by Mike Nunn, head of the South African mining firm that bought Kongoni again in 2011. In the e-mail, Nunn informed an investor the worth: $145m. Jackson stared on the quantity. It was $150m lower than what ENRC had paid for Kongoni. Where was the remainder?
Here, finally, was proof of fraud, Jackson believed. When he supplied the SFO this “damaging information”, Hawkins replied later the identical day. “Hi Clement. Good to hear from you – I trust you are well? If you have information you wish to provide, this can come direct to me, or via ‘contact us’ on our website.” Jackson went forward and despatched the doc.
That was just one e mail. Not, by itself, compelling proof of lacking tens of millions.
But a couple of months later, Jackson acquired in contact with Hawkins once more, indicating he had one other killer doc. “If this is of assistance and need I can forward the information,” Jackson wrote.
This doc seemed to be a near-final draft of the contract for the sale of Kongoni. It contained a sale value very near the $145m talked about in Mike Nunn’s e mail. And there was one thing else putting about it. The document of revisions to the doc confirmed that, because the contract had initially been drafted, Kongoni was to be bought to ENRC instantly. But it had been altered. Kongoni was as a substitute to be bought to a newly created firm registered in Mauritius, an island nation off the African coast identified for company secrecy. There was no apparent cause for this variation.
And there have been additional puzzling components to the emails by which this draft contract and different paperwork was exchanged between the events. In one, Nunn says folks on the ENRC aspect “interposed” this preliminary sale to the mysterious Mauritian firm. Indeed, two senior ENRC workers are on the e-mail thread making ready the deal. Another e mail, despatched by Nunn’s investor, recounted how he had ran into Victor Hanna, then ENRC’s Africa boss, on a flight to London. Hanna “confirmed everything” concerning the transaction construction.
And but it appears clear that this construction made ENRC the sufferer of a large loss. Instead of taking possession of Kongoni for $145m immediately, the asset went to mysterious offshore homeowners first, then to ENRC simply three months later for twice as a lot.
Jackson had nothing to point out who these hidden beneficiaries behind the Mauritian firm have been. But, unknown to him, the SFO was asking questions. By the time Jackson supplied to share his new proof, the company was making an attempt to hint the place the Kongoni tens of millions had gone. According to the Swiss courtroom ruling, the SFO mentioned it had “obtained bank statements” exhibiting that “companies registered in Mauritius” had obtained a whole lot of tens of millions of {dollars} from ENRC purportedly for a South African manganese prospect. The financial institution statements, the SFO informed the Swiss, “show that these companies then made tens of millions of USD in payments to various beneficiaries for purposes other than the explanation given” to ENRC. These beneficiaries, the SFO informed the Swiss, could have included Hanna and the Trio.
If the SFO’s concept was proper – and Jackson’s paperwork appeared to tally with it – then the Trio had been looting their very own firm. It wouldn’t be completely implausible in gentle of the historical past of the previous Soviet Union. Oligarchs constructed their empires in locations the place enterprise is usually executed at gunpoint, and the price of dropping a dictator’s favour is to have every thing taken from you. One of the ways in which emerged to protect towards this was to drift your organization someplace like London, from the place belongings are far more durable for despots to expropriate. But with that got here all the foundations and legal guidelines and scrutiny of western markets. Suddenly, your fortune was now not yours. Unless, that’s, you could possibly discover methods to bleed it again out of the listed company into your personal non-public accounts.
Whatever the motive might need been, Jackson thought that on this new doc he had, finally, discovered a smoking gun – exhausting proof indicating tens of millions had gone lacking from a multinational company. On 2 February 2023, he emailed Hawkins with the information, providing to “forward the information”.
“Dear Clement,” Hawkins replied the following day. “Good to hear from you. All is well at this end. Thank you for the email below, but I can confirm we do not require any further information on the transaction. Kind regards, Phil.”
Jackson was baffled. An established supply was providing the UK’s fraud-fighting company proof of what gave the impression to be an unlimited fraud at one of many UK’s largest corporations – and the SFO didn’t need to know.
9: Once in a lifetime
Just a few months later, in July 2023, I flew to Johannesburg to see Clement Jackson. We met at a restaurant. He arrived carrying his traditional saggy shirt and a woolly tank prime towards the crisp winter air. A waitress came to visit. “What would you recommend on the meat side?” Jackson requested. He ordered a steak. As far as I can inform, he subsists fully on crimson meat, plus the occasional potato. When I supplied him a chunk of my broccoli, he winced.
As we ate, Jackson mirrored on the Kongoni affair. “This is a once in a lifetime case,” he mentioned. He couldn’t perceive Hawkins’ reply to his latest e mail providing dynamite proof. There was no approach for the SFO’s investigators to know if the doc Jackson was providing was one they already had – he had described it solely within the broadest phrases. And even when it have been, a key a part of bringing the case to a prosecution could be gathering a physique of proof that was not contaminated by the company’s ruinous dealings with Neil Gerrard. Jackson’s materials was fruit of the unpoisoned tree. Why didn’t the SFO need it?
I used to be again in London the following month when a attainable clarification emerged. On 24 August 2023, 10 years after it opened the felony investigation, the SFO introduced that it had closed the ENRC case. It blamed “insufficient admissible evidence to prosecute” within the case of alleged bribery in Congo. There was no point out of the investigation into the attainable laundering of the proceeds from the alleged Kongoni fraud. I requested the SFO if it had deserted that investigation too. It declined to reply. Only a month earlier, it had triumphed in its four-year try to realize entry to extra information from the Swiss financial institution accounts it suspected had been used to channel the Kongoni proceeds. Swiss judges cleared the way in which for authorities to provide the company what its investigators wished. But, in line with a Swiss press account that the SFO has not disputed, slightly than look at this recent proof, it withdrew the request.
The SFO wouldn’t focus on the case with me. So I requested Ian Winter KC, a barrister who has efficiently defended shoppers charged by the SFO, what he fabricated from the ENRC case. “It ought to have been a pretty routine prosecution,” Winter claimed. “There was some pretty strong evidence of what was going on. And a clear public interest in prosecuting.” But Winter mentioned he believed that no felony decide would allow a prosecution whose origins the excessive courtroom had discovered to be so tainted. Mr Justice Waksman had dominated that the SFO “would not have commenced the criminal investigation” had its then boss Richard Alderman not connived with ENRC’s lawyer Neil Gerrard. This occurs every now and then within the felony justice system: no matter how compelling the proof, if, say, an investigating police officer coerced a witness or botched a warrant, the accused walks free. Other City legal professionals I spoke to believed, like Winter, that ENRC’s authorized onslaught towards the SFO had helped to scupper the felony investigation.
And the SFO has not been the one goal. ENRC’s authorized fightback has grow to be a multi-front warfare stretching from New York to Harare to Astana, in additional than a dozen proceedings. Among its targets within the UK have been certainly one of its former administrators, a safety contractor, an IT specialist, an info dealer and a dissident ex-prime minister of Kazakhstan. Related proceedings within the US have focused a journalist, two non-public intelligence consultants, a agency of auditors, and even (unsuccessfully) the previous UK deputy prime minister Nick Clegg, in connection to his spouse’s work as a lawyer on ENRC enterprise. At the guts of most of those claims has been info that grew to become public however which ENRC says it was entitled to maintain secret.
ENRC circumstances have reached a few of the highest courts within the land. In one essential ruling, the courtroom of enchantment blocked the SFO from having access to the work Neil Gerrard had executed investigating ENRC, strengthening the authorized privilege that shields an organization’s inquiries into suspected crime from scrutiny by the authorities. And there was a high-profile defamation declare within the excessive courtroom. That one helped to set off a marketing campaign to cease such actions being used to muzzle the press. I do know the case effectively. It was introduced towards me.
10: ‘It is our client’s view that Mr Burgis is biased’
The Trio and their company function extensively in Kleptopia, my e book about how soiled cash is conquering the world. After it got here out in 2020, I organized to satisfy the lawyer John Gibson. From 2014 to 2018, he had labored on the SFO, the place he ran the ENRC investigation. I knew ENRC had used non-public spies such because the infamous agency Black Cube, which focused Harvey Weinstein’s victims. So I all the time took precautions assembly anybody within the firm’s orbit, utilizing encrypted messaging apps and choosing discreet areas. Nonetheless, a couple of weeks later, Gibson obtained a threatening letter from ENRC’s lawyer at Quinn Emanuel, certainly one of a number of prime companies it retains. The letter accused him of leaking confidential info. “You met with Mr Burgis at an underground car park near the National Theatre, London, in a clandestine manner,” it mentioned. Gibson, ENRC’s lawyer added, was carrying “an orange/red notebook”. Evidently, somebody had been watching.
ENRC is suing Gibson for allegedly leaking info from the SFO investigation he used to run. The trial is in October. “I wholly reject any suggestion that I have acted in any way dishonestly or improperly,” he mentioned when testifying within the Gerrard case.
The Trio’s company sued me, too. Its courtroom filings advised I had been paid off to assault the corporate. ENRC’s defamation motion claimed I had written that it had murdered potential witnesses within the SFO case, together with André Bekker. It took till simply after lunch on the first listening to in March 2022 for the decide to throw the case out. (We nonetheless don’t know the reality of those deaths, and in any case, people, not corporations, commit homicide.) ENRC’s lawsuit was an instance of “legal harassment used by those with deep pockets to silence journalists and other public watchdogs”, Index on Censorship and different press freedom campaigners mentioned.
After the SFO dropped its investigation in August 2023, I wrote to ENRC, the oligarchs and Victor Hanna. The SFO had walked away, however there have been unanswered questions concerning the Kongoni deal. Clement Jackson’s paperwork, plus the emails exhibiting how the deal was executed, advised that an enormous sum of money had gone lacking from a significant UK firm.
ENRC’s legal professionals at Taylor Wessing replied – to not me, however to the Guardian’s authorized division – questioning my credibility. “It is our client’s view,” they wrote, “that Mr Burgis cannot be looking at these matters objectively given the previous litigation history between himself and ENRC and is biased.” The letter largely ignored my questions on Kongoni. “Any allegation that ENRC committed fraud is false,” the legal professionals wrote.
I saved digging, and located the Swiss ruling on the SFO’s request for help with its Kongoni investigation. After determining what this thinly anonymised judgment was saying – that the SFO was taking a look at whether or not Hanna had extracted a whole lot of tens of millions of {dollars} from ENRC, despatched a few of it to the Trio and saved sufficient to purchase himself a home in Mayfair – I wrote to ENRC once more this May. Its legal professionals replied, setting out the corporate’s place. ENRC had by no means been conscious of Bekker’s doubts about Kongoni, they mentioned. Nor had it ever seen the Royal Haskoning report that advised the prospect might solely be mined at a loss. ENRC had recorded Kongoni as nugatory in a single set of accounts not as a result of it really was, however as a result of on the time the manganese value had fallen and the SFO investigation was making it exhausting to boost funding, the legal professionals went on. Kongoni’s actual worth, removed from being “negligible”, had been positioned at $300m by “Chinese investors who expressed an interest in acquiring it” shortly earlier than ENRC did. An “international bank” and a number of other legislation companies suggested on the deal, which was finally permitted by the board. And ENRC’s legal professionals informed me that, whereas Kongoni was the principle asset ENRC acquired within the deal, there have been others too.
Emails went backward and forward. Eventually, I boiled it right down to some easy questions. In explicit, when ENRC purchased Kongoni, who was the cash paid to? At this level, legal professionals at Taylor Wessing accused me of “pursuing a premeditated agenda” and informed the Guardian’s authorized division that “our client does not see the point in engaging directly with Mr Burgis any further”.
I’d requested Taylor Wessing if the Trio themselves – now a duo, for the reason that loss of life of Ibragimov from Covid in 2021 – wished to answer the allegations. The legal professionals mentioned they might not go the inquiries to the oligarchs. When I identified that it was ludicrous to refuse to provide their shopper ENRC’s homeowners the prospect to remark, Taylor Wessing didn’t reply.
I additionally requested Hanna concerning the allegations on this article. Hanna denied wrongdoing, however didn’t present any solutions to my questions on what occurred to the Kongoni tens of millions. His lawyer mentioned the allegations had been “thoroughly investigated by the SFO and no criminal charges have been brought against Mr Hanna, ENRC, or others in connection with it”. ENRC says the identical factor. Its legal professionals argue that there was one cause that the SFO dropped its investigation: it had been unable to search out any proof that ENRC had executed something unsuitable, as a result of it by no means had.
Fifteen years since I started trying into ENRC, after reporting journeys to 4 continents and resisting repeated efforts to show my sources, following virtually a yr of exchanges between the Guardian’s legal professionals and ENRC’s, and recent threats of authorized motion if we printed this text, we determined that this story was within the public curiosity, and ought to be revealed.
11: All the legislation you may afford
The SFO could also be completed with ENRC, however the oligarchs aren’t completed with the SFO. At an extra trial, more likely to happen subsequent yr, Mr Justice Waksman will determine how a lot UK public cash the SFO should pay ENRC in damages.
According to ENRC’s most up-to-date revealed accounts, two of the “major lenders” to its Luxembourg guardian firm are Sberbank and VTB. Both are Russian state-owned banks. They have been positioned beneath UK sanctions after Putin’s full-scale invasion of Ukraine in 2022. ENRC doesn’t have direct money owed to those banks, however the group to which it belongs “envisages payments to Sberbank and VTB in 2024”, the accounts say, stressing that they are going to be made “in compliance with all applicable laws and regulations”. So whereas the UK offers billions in navy support to Ukraine, it could additionally find yourself, by way of damages and debt repayments, in impact making a considerable cost to the opposite aspect.
It is difficult to keep away from the conclusion that the ENRC saga has been settled by power of cash. Plenty of individuals have made numerous it: legal professionals on all sides, City bankers, PRs, non-public spies and friends, to not point out the oligarchs, who retain their world mining empire. During the SFO investigation, ENRC’s accounts present that the Trio’s company spent almost half a billion {dollars} on “professional fees and other exceptional litigation costs” because it introduced authorized actions towards those that crossed it.
The losers, in contrast, are those that can least afford it. If cash was stolen from a FTSE-100 firm, the traders who’re poorer in consequence in all probability embody many pensioners. If bribes have been paid to those that run Congo, that helped entrench the kleptocracy that condemns generations of Congolese to privation and predatory rule. If Hanna and the Trio embezzled a few of the $295m ENRC paid for Kongoni, that might counsel an enormous tax invoice has gone unpaid in South Africa, the place public providers have all however collapsed. Meanwhile, within the UK, taxpayers are on the hook for the misconduct of SFO bosses.
Clement Jackson informed me he was “stunned” when the SFO dropped the case. When I noticed him in Johannesburg, he confirmed no signal of wavering in his pursuit of the reality. He is in contact with the Hawks – the South African FBI – who’ve informed him they’re trying into the Kongoni affair. “Life goes so fucking fast man,” he mused as he ate his steak. He informed me he thinks usually of André Bekker and his fatherless youngsters. “I adore my grandkids. I adore my kids. When I’m not here, that’s what I want them to think. That I was involved. In making justice prevail.”
