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Mine deal corruption risk 'was ignored by ENRC'

Blue-chip group's chairman pledges more transparency to investors at heated AGM

The blue-chip miner ENRC knew there was a risk of corruption when it acquired the Kolwezi copper mine in the Congo from Dan Gertler, a friend of President Joseph Kabila, but went ahead with the deal anyway, it was alleged yesterday.

As ENRC's new chairman, Mehmet Dalman, sought to assure investors at its annual shareholders meeting yesterday that the Kazakh miner was entering a new era of transparency, it was suggested the risk that corrupt Congolese officials might have benefited from the opaque asset sales was reported to the Serious Organised Crime Agency two years ago.

The group also threatened court action to prevent the 100Reporters investigative news organisation disclosing the report's existence, let alone its content, at the end of last month. Mr Dalman was appointed chairman of ENRC in February in the wake of a corporate governance scandal that saw two senior independent directors ousted from the board – Sir Richard Sykes, the former boss of GlaxoSmithKline, and Ken Olisa, who famously accused the company of "being more Soviet than City".

The controversy stemmed, in part, from the acquisition of the Congolese mining assets Mr Gertler bought at prices below commercial estimates from the Congolese government and quickly sold to ENRC for a large profit.

"We need to make our company much more transparent and simple than it has been in the past," Mr Dalman, a former investment banker, said yesterday. He was speaking after the group's annual shareholders meeting, from which journalists were barred in a move that is normal for ENRC but highly unusual elsewhere. He blamed the board he runs for not allowing the journalists into the meeting.

Speaking at the AGM, one shareholder, representing the Global Witness anti-corruption group, cited ENRC's Suspicious Activity Report, which he said "it had reason to believe Mr Gertler and his associated companies may have obtained control of Kolwezi by corrupt means before selling a share of it to ENRC".

"Given these concerns at the time, why did ENRC proceed with acquiring a stake in Kolwezi just eight days after filing this report to the Serious Organised Crime Agency?" the shareholder asked, adding: "Will ENRC terminate its relationship with Mr Gertler if ENRC's upcoming audit results continue to leave question marks hanging over corruption?".

Mr Dalman responded that it would be inappropriate to comment on the report, which is subject to extensive confidentiality rules.

However, he added: "I remain confident that we have done everything properly. A great deal of due diligence, a great deal of advice was taken on every transaction we entered. And just for those of you who don't know I also took extreme pains in getting an independent investment bank to advise the board – Lazards."

A spokesman for Mr Gerler's Fleurette Group categorically denied all allegations of impropriety and denies any wrongdoing in the Congo. The spokesman said Fleurette offered Global Witness "an independent audit of its companies" but Global Witness rejected that offer, and only Gertler family members had interests in the offshore middlemen companies.

Global Witness campaigner Daniel Balint-Kurti denies the group rejected the offer, saying it had asked to discuss the matter with Fleurette.