The controversial mining group ENRC has settled the legal battle with a rival over ownership of a copper mine in the Congo by handing over $1.25bn in a deal that could go some way towards cleaning up its battered reputation.
It ends a dispute which became emblematic of concerns about the behaviour of giant foreign-controlled companies who have floated their shares on the London market. It also shines a spotlight again on the way assets in Africa have been sold off in cut-price deals by poor governments.
Kazakhstan-based ENRC has been beset by controversy since it floated in 2007. It is effectively controlled by three Kazakh billionaires, and was accused by one former board director as being "more Soviet than City". The row over the Kolwezi project stake has been one of its biggest controversies.
The Congo assets were seized by the government of Joseph Kabila from Canada's First Quantum and sold for just $60m to his friend, the mining baron Dan Gertler. To the fury of First Quantum, Mr Gertler sold the stake on to ENRC for $175bn. The deal caused such uproar in the City that Standard Life, one of Britain's biggest investors, sold its stake by way of protest.
Yesterday, ENRC made a settlement that will see it pay First Quantum $750m plus a deferred consideration of $500m. As part of the settlement, ENRC will take over all of First Quantum's Congolese assets, which include the Frontier and Lonshi mines.
First Quantum began a legal challenge to ENRC in September 2010. It had already won previous stages in the battle, recently having had a court uphold its $2bn claim for damages.
The MP Eric Joyce, who chairs Parliament's Great Lakes of Africa Group, was a vocal critic of the deal, and has spoken out regularly against the sale on the cheap of African mining assets. Yesterday he said: "ENRC is probably the most controversial company in the FTSE 100, but this development shows it is taking corporate governance more seriously now."
ENRC's corporate governance issues came to a head last summer with the ousting of two independent directors, Sir Richard Sykes, former boss of GlaxoSmithKline, and Ken Olisa, who made the "more Soviet than City" comment.
Sir Richard said: "This is very good for the Congo, good for First Quantum and good for ENRC, and it's got to help its reputation for corporate governance."
Mr Olisa, who had always said the acquisition of the Kolwezi project was the right thing to do, said yesterday that the settlement vindicated him. "We bought it after lots of due diligence, we did it properly. They said they would never sell us any of the assets and now they are [as part of the settlement]. They were just trying to negotiate a price," he said.
While ENRC appears to be taking steps to improve its image, the affair has caused scepticism about the tide of foreign corporate flotations in London. Several mining giants from former Soviet states have listed shares in the capital in recent years while retaining effective control in the hands of a few billionaires back home.
In a bid to reduce their power, FTSE recently imposed rules forcing foreign-owned companies to ensure at least 25 per cent of their shares are available on the wider market.