ENRC v. Burgis Over Kleptopia

As I read Kleptopia by Tom Burgis I was thinking the author is a brave man and his publishers braver men and women yet. Describing corrupt actions of East European oligarchs, dictators, their financial and legal advisors takes courage. I was not thinking of physical courage though too many journalists in the world have perished while reporting. I was thinking of legal fortitude. In Kleptopia the reputations of powerful men (very few were women), their companies and their governments were severely tarnished. Libel actions were probable.

Burgis was clearly aware of the risks of a defamation action. He documented every statement. He invited comments from everyone potentially defamed. He noted their responses. Many did not reply or provided minimal commentary.

Still I wondered if he and HarperCollins could prove in a court of law what he had written.

My sons gave me a paperback copy of the book for Christmas. As the book arrived sometime after Christmas my review is long after the holiday season.

In his Afterword of the paperpack edition Burgis says four months after publication of the book he was accused of corruption as American lawyers sought proof whether he “ ‘....was paid by third parties to publish the Book as part of a negative campaign against ENRC’ “. In England he was sued for libel by ENRC.

ENRC (Eurasian Natural Resources Limited) was for a time a public English corporation with 82% owned by the Trio (three Central Asian oligarchs), the Kazakhstan government (effectively its leader Nursultan Kazarbayev) and another oligarch. The remaining 18% was owned by the public. Ultimately the corporation faltered and was taken private by the Trio and moved to the friendly corporate confines of Luxembourg.

ENRC made a bold claim in its court action. It asserted that Burgis had stated that ENRC had murdered a trio of men and poisoned a fourth to protect its business interests. ENRC was certainly not going to raise the word “corruption”.

I searched out the case and found a decision, a link is below, of The Honourable Mr. Justice Nicklen. The lawyers for Burgis and HarperCollins made an application to dismiss the action for several reasons. The pivotal issues were whether the statements complained of could be defamatory of ENRC and whether they referred to ENRC.

Accusing a person of murder would be defamatory and subject to heavy damages if not true. Accusing a corporation of murder is less clear in defamation law.

The lawyers for Burgis looked back to the principle established in 19th Century English cases that ‘a coporation cannot sue in respect of allegations of murder, incest or adultery’ because a company, not being a real person, cannot commit those acts.”

ENRC’s counsel looked to an Australian case from early in the 20th Century that set forth a contrary principle:

The injury done to the reputation of a trading company by imputing to them criminal practices is in no way affected by the question whether they could be successfully prosecuted for them in a criminal court.

Justice Nicklin, in the 21st Century, concluded:

There is an unreality at the heart of the Claimant’s pleaded meanings. They attribute, to a corporate entity, actions, and a motive, that it simply cannot have. Only individuals can carry out acts of murdering or poisoning. Only individuals can be motivated to do so to protect some business interests. A company cannot. I reach that conclusion not by application of 19th century legal precedent but by a straightforward application of the principles that guide the determination of natural and ordinary meaning to the text of this book.

Media articles focused on this statement but the key paragraph of the decision is more nuanced:

I accept that it is possible to make an allegation that implicates a company in murder, for example, as I gave earlier, by stating that it procured it or to suggest that a company is legally or morally responsible for a murder. But this Book does not make any such allegation against ENRC. In short, the Book does not bear the defamatory meaning contended for by the Claimant because, read in their proper context, the allegations complained of by the Claimant do not refer to any ENRC corporation.

Meeting the “reference” standard is going to be a challenge for many corporations as they shift in structure. More importantly, as here, books and articles will inevitably concentrate on individuals making decisions rather than Boards of Directors.

The judge concluded his judgment with an intriguing proposal he had put to ENRC’s lawyers. In his reading of the book he noted references in the book to the assertion of corrupt acts by ENRC for which damages could be claimed. He said:

At the hearing I asked Ms Page (counself for the Claimant ENRC) whether the Claimant’s decision not to complain of this or any similar meaning was deliberate. She confirmed that it was.

I find it fascinating that ENRC chose not to have allegations of corporate corruption examined by an English court. 

I read in subsequent media articles ENRC has decided to drop the lawsuit. I think they were well advised to avoid further court scrutiny of the corporation.

The ENRC v. Burgis case involved important issues unlike the celebrity defamation actions of Deep v. Heard in the U.S. and Wagatha in the U.K. In the latter cases the greatest damages to reputations were self-inflicted.

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Kleptopia by Tom Burgis

ENRC v. Burgis decision