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Burrows sits on board of firm facing Kazakh fraud probe

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            IN..........Outgoing chairman, Richard  Burrows, makes a point at the Bank of Ireland AGM in the O'Reilly Hall, UCD, Dublin , yesterday.   Pic  Martin Nolan  Friday     3/July/2009

IN..........Outgoing chairman, Richard Burrows, makes a point at the Bank of Ireland AGM in the O'Reilly Hall, UCD, Dublin , yesterday. Pic Martin Nolan Friday 3/July/2009

IN..........Outgoing chairman, Richard Burrows, makes a point at the Bank of Ireland AGM in the O'Reilly Hall, UCD, Dublin , yesterday. Pic Martin Nolan Friday 3/July/2009

Seventy-five grand is a lot of money for a part-time job. Even so, former Bank of Ireland governor Richard Burrows must be wondering if it's worth it.

Burrows, a former boss of giant international drinks maker Pernod Ricard, is one of Ireland's best-known executives. Almost a year ago, he was recruited to the board of miner Eurasian Natural Resources Corporation (ENRC) to bring some rigour to the FTSE-listed firm which had been founded and floated by some of Kazakhstan's richest tycoons.

To say things have gone badly since he joined the €4.5bn-valued company would be an understatement. It has been a catastrophic 12 months for ENRC, which has seen its share price tumble, resignation of senior advisers and board members, bitter shareholders' rows and a possible low-ball takeover approach. It would have seemed that the situation couldn't get any worse.

Ten days ago, it did.

"The board of directors of ENRC today notes that the Serious Fraud Office (SFO) has moved to a formal investigation. ENRC confirms that it is assisting and cooperating fully with the SFO," the company noted in a short statement.

The official investigation by the UK's Serious Fraud Office came after weeks of damaging revelations and claims made against the company. It is of little surprise that ENRC has been the worst FTSE100 performer of recent times, down 50 per cent from its peak.

A number of controversial ENRC deals in Africa and Kazakhstan have come under the spotlight of regulators and investigators. "The director of the SFO has accepted ENRC for criminal investigation. The focus of the investigation will be fraud, bribery and corruption relating to the activities of the firm or its subsidiaries in Kazakhstan and Africa.

The probe was launched after ENRC's own investigation into whistleblower allegations about its Kazakhstan and African operations, all of which pre-dated Burrows's appointment to the board. Last week, ENRC denied reports that an internal probe had uncovered evidence of corruption, including "payments to African presidents", $35m (€27m) of "misappropriated" cash and "document destruction" by staff trying to hamper the probe.

The claims – reported last week – were made by Dechert, the City law firm, in an eight-page letter it sent to ENRC after being removed in March from its role fronting the internal inquiry.

Investigations have also examined allegations concerning the purchase of a farm in Kazakhstan by a key insider. ENRC's dealings with Israeli tycoon Dan Gertler have also been scrutinised. It has been claimed that Gertler's close relationship with Congolese president Joseph Kabila allowed him to buy interests in the country's mining assets on the cheap. He has consistently denied the accusations.

The fraud and corruption allegations are just one issue facing the board. Burrows and his fellow directors may also have to face a buyout approach from some of the company founders. Queries addressed to Burrows through ENRC were not answered.

The shambles at ENRC marks something of a career misstep for the Irishman. Burrows was chairman of Bank of Ireland from 2005 to 2009, as BoI embarked on an orgy of madcap lending to developers, leading to staggering losses. But the taxpayer-funded bailout at BoI didn't deter headhunters from calling.

Within weeks of stepping down from the bank after apologising to shareholders for the destruction of shareholder value, Burrows joined the board of British American Tobacco. He would become its chairman, earning €733,000 per year. He also received a €102,000 perks package, including €8,200 for a home security system, according to the latest annual report. There are also part- time roles as a board member of rat poison group Rentokill, beer maker Carlsberg and cloud technology firm Voicesaga. Not to mention the Trilateral Commission.

Cigarettes, booze, rat poison and a toxic bank made for quite a CV. A controversial heavy-metal miner wouldn't have been the most obvious choice as a career move.

But Burrows was identified as a perfect candidate for the company after corporate adviser Spencer Stuart carried out an evaluation of the ENRC board in early 2012. "This exercise identified certain skills gaps which were addressed with the appointments of Mr Burrows and Dr Khalil [another new board member]," said the firm. He was appointed to ENRC's audit, remuneration and health & safety board committees.

"Mr Burrows has extensive public company experience which has helped sharpen board practices and accountability," ENRC chairman Mehmet Dalman noted in the annual report, published last Tuesday. Since writing that piece for this report and the time taken to print and distribute the document, Dalman has resigned from ENRC.

Last year Burrows earned €75,000 as a board member of ENRC for around six months' work. Full-year pay for other non-executive board members hit €126,000, according to the latest annual report.

Burrows faces ENRC shareholders for the first time at the company's AGM in the Lincoln Centre in London on June 5. His election to the board is to be put to the vote. Judging by the amount of strife at the firm, it is a vote that Burrows could afford to lose.

Irish Independent