Dechert’s former head of white-collar crime Neil Gerrard deliberately leaked confidential information about his client Eurasian Natural Resources Corporation (ENRC) to the press and the Serious Fraud Office - and ‘plainly lied’ in cross-examination, the High Court ruled today.
Gerrard, 67, was found to have been ‘negligent and for the most part reckless’ in unnecessarily expanding his investigation into allegations of bribery and corruption in relation to the mining giant’s operations in Kazakhstan and the Democratic Republic of Congo in an excoriating judgment delivered this afternoon.
Gerrard, a former Metropolitan Police officer, was also negligent in relation to his failure to record his advice in writing, giving incorrect advice about ENRC’s potential criminal liability and failing to determine the scope of the SFO’s concerns about the then-FTSE 100 company.
He was further found to have ‘acted deliberately’ by not informing ENRC that its then-global head of compliance, Cary Depel, was being interviewed by the SFO and to have ‘lied’ to the court when he said he did not remember a text sent to him by Depel.
Mr Justice Waksman said: ‘I very much regret to say that in general I found [Gerrard] to be a highly unreliable and at times dishonest witness. His evidence was often inconsistent with the documents or implausible and, on more than one occasion, he was plainly lying.’
Gerrard was engaged by ENRC in December 2010, when he was still a partner at DLA Piper, to investigate allegations of corruption in relation to its operations in Kazakhstan by an anonymous whistleblower. He took the case with him when he moved to Dechert in April 2011.
The investigation, which was initially expected to cost £400,000 but came to a total of around £13m, expanded to include allegations relating to operations in the Democratic Republic of Congo and whether an ENRC subsidiary had sold material to Iran in breach of sanctions.
Shortly after Dechert’s retainer was ‘abruptly terminated’ in March 2013, the SFO opened a criminal investigation into ENRC – which is ongoing and has not led to any criminal charges.
Gerrard, who retired at the end of 2020, was found by Mr Justice Waksman to be ‘the instigator’ of three leaks to the media about ENRC and also anonymously sent the SFO a brown envelope containing ‘confidential and in some cases privileged information’.
The judge found that the first leak to The Times, resulting in a ‘highly damaging’ article in August 2011, was ‘instigated’ by Gerrard and said it ‘shows that he lied continuously on this particular issue [and] suggests that he was capable of very serious professional wrongdoing’.
He said Gerrard was ‘in gross breach of duty to ENRC’ in relation to leaks leading to articles in The Sunday Times in December 2011 – which caused a 5.6% drop in the then-FTSE 100 company’s share price, wiping £400-500m off its value – and the Financial Times in March 2013.
Waksman also ruled that Gerrard was ‘at least in reckless breach of duty’ in respect of 22 unauthorised contacts with SFO staff – including with Richard Alderman, the watchdog’s director until April 2012 – during his investigation.
ENRC’s claim against the SFO for inducing breach of contract was also upheld ‘subject to causation in respect of 15 disputed contacts’ – but, while some elements of the claim for misfeasance in public office were established, they were ‘not sufficient to make out the tort itself’.
Waksman accepted that the SFO did not ‘actively pump’ Gerrard for information and that ‘the essential driver for all this was Mr Gerrard’, but found that the watchdog had induced Gerrard’s breach of duty out of ‘bad faith opportunism’.
The judge said all questions of causation and loss will be ‘dealt with in a subsequent judgment and/or trial, if necessary’, subject to two exceptions relating to the SFO’s decision to send a letter to ENRC in August 2011 and the company’s engagement with the watchdog thereafter.
The Gazette understands that it is highly likely another hearing will have to be held to determine issues of causation and loss.
After the ruling, a spokesperson for Dechert said: ‘The court has now found Mr Gerrard to have committed conduct which is completely at odds, not only with our values, ethos, and culture as a firm, but also with the high ethical and professional standards adhered to on a daily basis by our lawyers the world over.’
Gerrard said via a spokesperson: ‘I and my family are devastated by today’s judgment. After over 30 untainted years as a solicitor, I remain sure of the appropriateness of my actions, of my advice in relation to my former client and of my personal and professional integrity.
‘I gave evidence to the best of my ability and believed I was telling the truth at all times. I would like to thank Dechert for their support.’
An SFO spokesperson said: ‘We welcome that the judge found against ENRC for the majority of its allegations against the SFO. We are considering the implications of this lengthy and complex judgement for the SFO and other law enforcement authorities.’
A spokesperson for ENRC said the company is ‘profoundly concerned by the very serious implications for other Dechert clients and other subjects of SFO investigations’, while ENRC’s solicitor, Hogan Lovells partner Michael Roberts, said that ‘the SFO was itself complicit in Dechert’s dishonest conduct’.
The damning 386-page ruling likely spells the definitive end of Gerrard’s career, but is far from the conclusion of his legal troubles as he faces a number of other serious allegations in separate proceedings.
He faces claims he was involved in the hacking and publication of aviation tycoon Farhad Azima’s emails before the trial of a multi-million-pound fraud claim against Azima brought by Gerrard’s former client, the Ras Al Khaimah Investment Authority, which are denied.
In that case, Gerrard is accused of putting key witnesses through ‘perjury school’ at a boutique Swiss hotel to rehearse a false account of how they obtained the hacked emails, which is denied ‘in the strongest possible terms’.
Gerrard also faces claims from two Jordanian lawyers, Karam Al Sadeq and Jihad Quzmar, that he was responsible for their unlawful detention in Ras Al Khaimah and from Al Sadeq’s lawyers Stokoe Partnership Solicitors for alleged involvement in hacking and data theft attacks – which are denied.
A spokesperson for the Solicitors Regulation Authority said: ‘We are reviewing the judgment before deciding on any next steps.’