ENRC shares fall sharply, despite denial of corruption charges

Kazakhstan-focused miner, Eurasian Natural Resources, is said to be examining allegations of corruption at a Kazakh iron ore subsidiary but denied on Sunday that it was the subject of a formal investigation by Britain's Serious Fraud Office (SFO), Reuters reports.

ENRC has had a troubled year in the boardroom following the removal of two city stalwarts from the management team. Sir Richard Sykes and Ken Olisa left after criticising interference from ENRC's owners who include the Kazakh-Israeli billionaire Alexander Mashkevitch.

ENRC is one of a growing number of FTSE 100 commodity companies from the former Soviet Union. There has been concern expressed in city circles that Britain's leading equity benchmark is no longer British.

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On the 16th of December Investec (a bank), satellite group Inmarsat and mining firm Lonmin will be replaced by Irish construction firm CRH, along with two Russian miners, namely Evraz and Polymetal.

There are concerns that the corporate governance standards expected of FTSE 100 firms is not second nature to some of the new entrants.

This view was hardened by the recent legal battle between the Russian owner of Chelsea FC, Roman Abramovich and his ertswhile "protector" now mortal enemy Boris Berezovsky.

ENRC's troubles will raise further questions over the business culture amongst former Soviet block companies.

The exact nature of contacts with the Serious Fraud Office have not been revealed but the Telegraph is reporting that an internal investigation by ENRC's audit committee has been referred to the SFO. According to the Telegraph concerns have been raised not only about ENRC's operations in Kazakhstan but also over its copper asset in the Democratic Republic of Congo.

Shares in ENRC have fallen 5% in morning trading. Since January the firm's share price has dropped 38%.

BS