Following on from the Court of Appeal judgment on legal professional privilege in 2018, Hogan Lovells has secured another historic win for its client Eurasian Natural Resources Corporation Limited (ENRC) in its civil claims against Dechert LLP (ENRC’s former solicitors), the former Dechert partner Neil Gerrard, and the UK’s Serious Fraud Office (SFO).
In a 386-page judgment handed down on 16 May 2022 following a 47-day trial between May and September 2021, Mr Justice Waksman in the Commercial Court in London found that Mr Gerrard repeatedly and deliberately acted unlawfully, engaging in “appalling” and “egregious” conduct against the interest of his own client. The Judge also found that the SFO, acting through three former officers (including former Director Richard Alderman), acted in “bad faith” and actively induced many of Mr Gerrard’s breaches of duty. The proceedings will now continue to determine issues of causation, loss and damages.
The Hogan Lovells team was led by Michael Roberts (Partner, London Head of Disputes). If you would like further information on the judgment, or an opportunity to discuss its wider implications, please do not hesitate to contact us.
Key findings against Dechert and Mr Gerrard
Mr Gerrard, formerly a member of Dechert’s senior management body (the so-called “Policy Committee”), emerges from the judgment as a thoroughly dishonest, opportunistic and exploitative individual. He is also revealed as a “volatile” and unsavoury character who “could and did use words like ‘fuckers’” (including to describe his own clients), and was even capable of describing himself as being “in rape mode” as he sought to maximise billings on the ENRC matter.
Mr Justice Waksman found Mr Gerrard to be “a highly unreliable” witness who is variously described as “obviously lying”, “plainly lying”, and to have “lied continuously” on the key issues before the Court. When caught out during his cross-examination by the late emergence of text messages proving he had given false evidence under oath, Mr Gerrard resorted to desperate claims of “global amnesia” (which were dismissed by the Court).
Mr Justice Waksman found that Mr Gerrard instigated and/or perpetrated leaks of ENRC’s confidential and privileged information to the press on three separate occasions and, in a final act of vengeance, even leaked documents to the SFO after Dechert’s retainer was terminated. In circumstances where Mr Gerrard was under significant pressure to generate fees and to meet his billing target, the Judge was clear that Mr Gerrard had “a motive and inclination to “kick-start” more substantial work” by soliciting an approach to ENRC from the SFO.
Mr Justice Waksman is highly critical of the way in which Dechert conducted the process of engagement with the SFO, finding that it was “inappropriate and unnecessary” and “unstructured and ever expanding”. The Judge found that Dechert’s advice to ENRC – to the effect that it was at risk of being raided by the SFO – was “scaremongering” and “completely exaggerated”. There was “no foundation in fact” for Dechert’s advice on ENRC’s purported exposure to SFO intervention, with “no rational basis… at all” for possible fines mentioned by Mr Gerrard which were simply “thrown” about for “dramatic effect”.
Rather than the product of mere incompetence, this false advice was contrived in order to meet Dechert’s own ends: Mr Gerrard’s “concern was to keep the process going by scaremongering”.
- With respect to Dechert’s investigation into ENRC’s Kazakh operations, the Judge found (whilst noting that the final report “did not identify any criminality by ENRC”) that “no reasonable specialist solicitor… would have allowed the exercise to become as unwieldy and large as it ultimately did”.
- These findings are echoed in the Judge’s assessment of Dechert’s investigation into ENRC’s African transactions, which he noted had originally been the subject of extensive due diligence, including by other highly reputable law firms. Mr Gerrard “lost any sense of proportion in the Africa investigation… there simply appeared to be no limits to what Dechert thought should be done… he simply did not care whether he was acting within reasonable bounds or not”.
The deliberate and calculated nature of Mr Gerrard’s breaches is underlined throughout the judgment: Mr Justice Waksman describes Mr Gerrard’s actions and language as “extraordinary”, “shocking”, “conspiratorial”, “obviously appalling”, “almost unimaginable” and “egregious”.
Key findings against the SFO
The core of ENRC’s case, namely that the SFO knowingly induced Mr Gerrard’s breaches over the course of numerous secretive and “conspiratorial” meetings, has been overwhelmingly accepted by the Judge. Three former SFO officers (Richard Alderman, Mark Thompson and Dick Gould) repeatedly and knowingly acted unlawfully and, where they gave evidence in these proceedings, they deliberately lied in an attempt to hide their wrongdoing.
On as many as 15 separate occasions (in the words of the Judge, “again and again”), senior SFO officers actively engaged with Mr Gerrard despite knowing that what he said “could not possibly have been authorised by his clients”. The Judge found that, in inducing Mr Gerrard’s breaches of duty, the SFO was motivated by “bad faith opportunism” and that “they were prepared to receive the information which he should not have given them on the basis that it might prove useful intelligence in going forward”. These contacts were then concealed from ENRC by the SFO.
The judgment dwells on the example of a letter, dated 18 June 2012, that Mr Gerrard requested be sent by the SFO, a request which Mr Thompson was willing to oblige. The Judge found that the “terms of the letter itself are disingenuous” and that Mr Thompson wrote it in order to “help… Mr Gerrard (albeit wrongfully) to exert pressure on his client”.
These covert and unlawful dealings between the SFO and Mr Gerrard “contributed significantly to the SFO taking a jaundiced - or more jaundiced - view of ENRC”. Indeed, the Judge found that “the only possible reason why the termination of [Dechert’s] retainer could have caused the SFO to start the criminal investigation (if it did) is because Mr Gerrard had primed the SFO with references to the need for him to resign… and what he had said in other unauthorised contacts”. In fact, the Judge found that ENRC had entirely legitimate reasons for dismissing Dechert. Nine years later, the criminal investigation remains ongoing without a single charge against the company or any of its current or former directors or employees.
The judgment is scathing in its assessment of Mr Alderman and his tenure as Director of the SFO when, as his successor Sir David Green noted in his evidence, it was known colloquially as “Nightmare on Elm Street” and the “Serious Farce Office”. The Judge found that Mr Alderman’s approach to observing legal standards “could be wanting to say the least”, that he would “ride roughshod over proper procedures”, and was “capable of providing misleading information”. Most remarkably, the Judge found that Mr Alderman met with Mr Gerrard and discussed ENRC prior to the SFO’s first approach to the company. By doing so, Mr Alderman “acted in gross and deliberate breach” of duty.
The Judge stressed that the allegations against Mr Alderman were especially serious because he “was himself the head of a state organisation whose very function is to investigate and, where appropriate, prosecute or otherwise resolve instances of serious wrongdoing”.
The Judge determined that Messrs Thompson and Gould gave dishonest evidence at trial about their state of mind at the time. In relation to Mr Thompson, the Judge found that “his evidence simply did not stack up in my view and was implausible”; with respect to Mr Gould, the Judge found that his “particular problem… was that he got far too close to Mr Gerrard”. The Judge concludes “The upshot of all of this is that in rejecting their accounts I consider that they were lying.”
The Judge also found that the SFO accepted legally privileged information in the course of an interview with ENRC's former compliance officer, and that Mr Thompson had been “thoughtless (and negligent)” in failing to consider privilege in that context. In relation to a further former SFO officer, James Coussey, the Judge found that there was a “strong case of negligence” in relation to his handling of privileged material that Mr Gerrard leaked to the SFO in June 2013, and which was retained by the SFO until as late as 2018.
The High Court’s findings will have significant implications for the SFO, particularly against the backdrop of the independent review of the SFO commissioned by the Attorney General that is being carried out by Sir David Calvert-Smith, a retired High Court judge and former Director of Public Prosecutions. As the Justice Select Committee identified at a hearing on 29 March 2022 at which SFO Director Lisa Osofsky gave evidence, the SFO faces systemic issues including “basic failings” of disclosure and “inappropriate relationships” with third parties. Mr Justice Waksman’s judgment suggests that both of these issues are longstanding.
The Hogan Lovells team was led by Michael Roberts (Partner, London Head of Disputes) and includes Elaine Penrose (Partner), Ed Hickman (Counsel), Alex Hohl (Counsel), Theresa Hudson (Senior Associate), Michael O’Donoghue (Senior Associate), Katie Skeels (Senior Associate), Reuben Vandercruyssen (Senior Associate), Amy Harding (Associate), Catherine Hegarty (Associate), Alex Riposi (Associate), Isabel Orange (Associate) and Morven Macaulay (Associate).
Authored by Michael Roberts, Elaine Penrose, Alex Hohl, and Ed Hickman.