Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Categorized | Banks, Financial

ENRC faced 11th-hour hitch over listing

Posted on April 30, 2013

The controversial London flotation of Eurasian Natural Resources Corporation in 2007 faced an 11th hour hurdle after lawyers and auditors found evidence that financial records at the Kazakhstan-based miner had been falsified or destroyed, according to people familiar with the matter.

At least one director of the FTSE 100 company was so concerned about the revelations that they considered whether the 2007 initial public offering should be put on hold, one person familiar with the matter said. Another person involved with ENRC at the time added: “There was a question over whether we should go ahead.”

    The Kazakh miner is now the subject of a criminal investigation by the Serious Fraud Office, primarily over whistleblowing allegations made since then amid criticism of the standards of London listing rules.

    A few weeks before its December 7 2007 float, ENRC received a report commissioned from Herbert Smith into a network of sales intermediaries in Russia. This set out evidence the law firm said was uncovered by PwC, ENRC’s auditors, of the falsification of audit data in Russia and the destruction of records relating to cash payments to the three Central Asian oligarchs who still have big stakes in ENRC.

    An adviser involved with ENRC at the time of the listing said the problems with Russian trading were considered by UK Listing Authority while vetting the oligarchs – Alexander Mashkevich, Patokh Chodiev and Alijan Ibragimov – as directors of the company. He said this had been seen as a last-minute hitch to the deal.

    “They [the UKLA] saw a lot of red flags,” he said. The other person familiar with the float said: “[Directors] were told by PwC and the banks that there might be a problem.”

    The Herbert Smith report, part of which has been seen by the FT, stated that Russian sales intermediaries sold $870m of minerals in 2004-2006. It said sales agents collected part of each payment in cash to pass on to the three oligarchs who still have big stakes in ENRC. An employee who collected this money first told Herbert Smith investigators that he had destroyed related records, and later that he had kept none.

    On the issue of audit data, the law firm stated that confirmations of sales figures sent to PwC, supposedly from 32 different businesses, all arrived on the same day, bearing addresses written in the same handwriting and having all been posted at roughly the same time in Moscow.

    According to the report, PwC contacted two purchasers of ENRC commodities that had purportedly sent audit confirmations for 2006. Neither knew anything about it, Herbert Smith concluded.

    Moreover, large volumes of data were wiped from computers in the Moscow office of ENRC, states the report, dated September 25 2007. According to one named witness, a manager “asked employees to leave their computers switched on . . . so that information could be deleted due to the impending IPO”.

    This week, ENRC said the Russian sales network was “thoroughly investigated prior to the IPO, the investigation was closed and all allegations of wrongdoing were dismissed”.

    Deutsche Bank, which advised the company on the float, Herbert Smith, PwC and the UK Listings Authority all declined to comment.

    Herbert Smith found no evidence that ENRC or its management knew about the false audit confirmations or to suggest that, excepting one named employee, “reliance [could] not be placed upon the representations for audit purposes of current management”.

    The flotation went ahead after PwC signed off financial data in the prospectus as “true and fair”. The “historic” Russian sales system is described in detail on page 16, among other “risk factors”. The falsification of audit confirmations is disclosed separately in a single paragraph on page 217 in “Part XIII: Additional Information”, which also states “much” of the deleted data were recovered.