Jan. 6 (Bloomberg) -- Eurasian Natural Resources Corp., the producer of metals in Kazakhstan, sued its former head of human resources Andrew Balgarnie, accusing the ex-Morgan Stanley banker of dishonestly giving himself a 100,000 pound ($154,500) raise.
ENRC filed the counterclaim against Balgarnie last month, according to court documents. The move follows Balgarnie’s decision to sue ENRC for wrongful dismissal in November, claiming he is owed 310,000 pounds in back pay and bonuses.
Balgarnie “is an individual who appears to operate on the basis that wrongdoing on the part of a senior executive is acceptable so long as he can get away with it,” ENRC said in court papers filed on Dec. 22. The company said it is seeking the return of 74,000 pounds which resulted from a pay increase not properly approved by Chief Executive Officer Felix Vulis.
ENRC, which held a three-month review of its corporate governance last year amid conflicts between the board and shareholders, agreed yesterday to acquire First Quantum Minerals Ltd.’s assets in the Democratic Republic of Congo for $1.25 billion, ending a legal dispute between the companies over the Kolwezi copper project.
“The allegations of misconduct and dishonesty as set out in ENRC’s counterclaim are vigorously resisted,” Balgarnie’s lawyer James Cox said in an e-mailed statement.
Vulis resigned in February of last year only to be re- appointed as CEO seven months later following a management review that began when shareholders voted against rehiring independent directors Richard Sykes and Kenneth Olisa in June.
Executive Pay Review
ENRC’s three founders, Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, hold 14.6 percent of the company, which makes ferroalloys, iron ore, aluminum and power in Kazakhstan.
“Mr. Balgarnie’s claims are unfounded and ENRC is vigorously defending its position,” the company said in a statement.
Balgarnie was asked to carry out a review of executive pay in November 2010 and appointed management consultants to help with the task, London-based ENRC said in its counterclaim.
He told the consultants his basic salary was 300,000 pounds despite knowing it was in fact 200,000 pounds. When Vulis confronted him, Balgarnie “concealed his earlier dishonesty,” ENRC said.
Vulis signed but didn’t read a service agreement about Balgarnie’s increased pay because “he trusted the claimant not to act dishonestly.”
In his complaint against ENRC, Balgarnie said both Vulis and the remuneration committee had approved his pay. He claims he was fired without notice in April 2011 when he “was telephoned by Mr. Vulis and accused of cutting himself a check for 70,000 pounds and receiving a 200,000 pound bonus,” according to court papers.
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