Fresh blow for ENRC as fraud inquiry is launched

Serious Fraud Office to investigate claims of corruption in Africa and Kazakhstan

ENRC's troubles escalated yesterday when the Serious Fraud Office (SFO) began a criminal investigation into allegations of fraud, bribery and corruption at the beleaguered Kazakh miner.

The inquiry follows months of talks between the London-listed miner and the SFO amid two internal investigations into its assets in Kazakhstan and Africa.

In a statement, an SFO spokesman said: "The director of the Serious Fraud Office has accepted ENRC for criminal investigation. The focus of the investigation will be fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa."

A company spokesman added: "ENRC is committed to a full and transparent investigation of its procedures and conduct."

ENRC has been investigating allegations of illegal payments in Kazakhstan and has forwarded its findings to the SFO. A second investigation into the group's African operations was ongoing.

ENRC, which also has operations in Brazil, has been struggling for months to overcome concerns about corporate governance at the company, which the former independent director Ken Olisa described as "more Soviet than City" when he was ousted in 2011.

The concerns have centred on a range of issues such as the corruption allegations, battles between directors and its trio of founding shareholders as well as its $5bn (£3bn) debt mountain. They have nearly halved the share price in the past year and closed at 285.4p yesterday.

However, while ENRC has rarely been out of the news in recent months, the events have proved particularly dramatic in the past week.

Last Friday the founders announced that they were considering an offer for the company that would have seen it leaving the London Stock Exchange and becoming private. The Kazakh founders – Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev – have teamed up with the Kazakh government, another shareholder, to explore their offer. The quartet collectively owns 55 per cent of the miner.

The potential takeover – thought to have been prompted in part by a new rule coming into effect in January – is understood in turn to have persuaded the SFO to launch an inquiry while the miner is still listed in London. The new rule requires companies to have a "free float" of at least 25 per cent. ENRC's currently stands at 18 per cent. The free float refers to the volume of shares that are readily available to trade.

On Tuesday fears about the company escalated when Mehmet Dalman, who was appointed chairman last year to lead a turnaround and boost ENRC's corporate governance credibility, resigned over unresolved corporate governance concerns."I believed I have achieved all that I can as chairman of ENRC," said Mr Dalman, who was charged with improving corporate governance and investigating whistleblower allegations of fraud.

The company secretary, Victoria Penrice, human resources head, Tony McCarthy, and Stuart Nolan, group head of reward, have also left ENRC.