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.

PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

h2 Recruit Ltd: Telesales Executive - Cloud Software/SaaS - £37,000 OTE

£25000 - £37000 per annum + benefits: h2 Recruit Ltd: Are you seeking to furth...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game