Future of ENRC in the melting pot

A fraud inquiry, a dearth of information at the agm and a bid still swirling. Where next for the blue-chip miner that's 'more Soviet than City'?

Hanging above the reception desk at the Lincoln Centre in London is a picture of three lions stalking their prey. Appropriately, this was the venue chosen to host the annual meeting of Eurasian Natural Resources Corporation (ENRC), the scandal-scarred miner that is being stalked by the trio of oligarchs who founded the group out of Kazakhstan's privatisation programme two decades ago.

Investors and the media descended on the converted 1890s townhouse yesterday morning, scouring for clues on how the coal-to-aluminium giant is handling claims of corruption and bribery in Kazakhstan and Africa. A Serious Fraud Office (SFO) investigation is under way into the allegations, which include concerns over contracts worth $100m (£65m) handed out by its iron ore subsidiary SSGPO.

They were also hoping for information regarding the likelihood of a revived bid from a consortium of leading investors – headed by those oligarchs, Alexander Mashkevich, Alijan Ibragimov and Patokh Chodiev, and backed by the Kazakh government – whose first offer was promptly dismissed last month. They have until 24 June to come up with a new proposal: the first, at 260p a share, was not even half the price at which ENRC was floated in 2007.

However, the press and shareholders were to be disappointed, as a company once criticised by an ousted former director for being "more Soviet than City" kept any useful information studiously under wraps.

Perhaps this is understandable, given that ENRC shot to notoriety in 2010.

The group was accused of taking a stake in a copper mine that was alleged to have been illegally seized from First Quantum by the government of the Democratic Republic of Congo. In other words, dealing in stolen property; a situation that was eventually settled out of court when ENRC handed the Canadian group around £800m.

At a hastily arranged 10-minute press briefing yesterday, its chairman Gerhard Ammann simply said that he was "concerned" about leaks to the press – which this week included details of a report alleging employees' misuse of funds to buy a horse farm and guesthouse – and that he was "still cleaning up the problems". The chief executive Felix Vulis did not say a word.

Beyond that, Mr Ammann declined to answer questions that he deemed, mostly disingenuously, to be speculative, though he did confirm that the police have not arrested anyone. Ivan Pearce, the senior partner at ENRC's counsel Fulcrum Chambers, made vague claims of being in a "very collaborative position with the SFO", and said he hoped to "work with them as efficiently as possible". The annual meeting kicked off at 11am but there was a distinct lack of the fireworks that the advisory group International Shareholder Services had hoped for, such as a backlash against the annual accounts and remuneration report.

In the end, there was a decent 6 per cent against the proposed executive pay but barely half that figure tried to vote down the financial statements.

What did draw gasps were polls of more than 25 per cent and almost 40 per cent against ENRC's ability to allot and purchase its own shares, therefore voting down these special resolutions. These are fairly typical, straightforward resolutions easily passed at most investor votes, but it is believed that the Kazakh government didn't want to risk the company delving into shares in moves to destabilise a bid.

"Sometimes there's a misunderstanding over what these terms mean," sighed one attendee. "Clearly, there are people out there who don't want ENRC to buy and sell shares in an offer period."

These votes aside, last year's shareholder spring seemed a very distant memory. Remarkably, one of the FTSE 100's most besieged companies only attracted a question from one private investor, Victor from Romford.

He had put money into ENRC soon after it floated in December 2007, and demanded to know why the board had not issued a final dividend after announcing a $550m pre-tax loss for 2012. He told The Independent that he was "very disappointed" by Mr Ammann's fairly bland response.

"They don't want to tell us shareholders anything unless the case is over," he complained. "I'm a shareholder, I want to know [what's going on]."

Victor's friend, who owns shares in Kazakhmys, which in turn holds a big chunk of ENRC, moaned that the institutional investors hadn't piped up to quiz the board as "they didn't want to know" what is happening at the company. Still, in private the word was that lawyers have estimated that it will take one to two years to clean up the mess and conclude the investigations into ENRC's affairs.

There was one attempt at humour: the question used to test the handheld gadgets the audience used for voting. This asked whether or not "a good summer is good for morale".

There were few laughs on this bright, sunny morning. This meeting was a gloomy, solemn affair overcast by concerns over corporate governance and the possibility that ENRC could soon be bought on the cheap.

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