A former board member of Eurasian Natural Resources Corporation (ENRC) said "he couldn't quite believe" the news that the controversial Kazakh miner had bought a company controlled by its three biggest shareholders.
The FTSE 100-listed, Kazakhstan-based mining group yesterday agreed to buy the 75 per cent of Shubarkol Komir, a Kazakh thermal coal producer, that it does not already own for $600m (£384m) from ENRC's trio of founding shareholders.
Ken Olisa, who was ousted from ENRC's board in June following a dispute with the three about corporate governance, said: "Of all the transactions on the planet, this is absolutely not the one to do. The deal raises more questions than it answers. The market is concerned that ENRC is a private company with a public listing and if wants to prove that it is a proper public company it's best not to do a deal that pours three-quarters of a billion dollars into the pockets of the founders." Mr Olisa added: "Clearly they didn't understand what I thought I was talking about."
The billionaire Kazakh oligarchs, Alexander Machkevich, Alijan Ibragimov and Patokh Chodiev, collectively own about 45 per cent of ENRC and have been accused of using their stake and management connections to manipulate its board.
Two weeks ago, ENRC announced some changes to its senior management, declaring it was "committed to a strong and independent board" following a corporate governance review.
Cailey Barker, an analyst at Numis Securities, said: "We're back to business as usual. It may have done a corporate governance review but I don't see that anything has changed," noting that the deal continues a tradition of related party transactions at ENRC. "On face value, it looks like a reasonably good deal for ENRC but people will always be suspicious of related-party transactions and quite rightly so, because you can't be sure why the deal is being done, so it's difficult to read if it's a good deal for shareholders or not."
As a result of the review, ENRC kept its chairman, Johannes Sittard, and reinstated Felix Vulis as chief executive. Mr Vulis resigned from ENRC in February for "personal reasons", but had remained as acting chief executive.
An ENRC spokesman said the deal is "very good for shareholders" adding that, as a related-party transaction, it had to be approved by a vote of ENRC's independent shareholders.
Concerns about the influence the three founders were wielding over ENRC's board had been mounting for months before the company announced its three-month corporate governance review in June. Sir Richard Sykes, who had been brought in as senior independent director ahead of ENRC's London listing in 2007, and Mr Olisa were ousted over the summer by the trio and the Kazakh government – which has a 12 per cent stake – over disagreements about corporate governance.