Endeavour used Linklaters for CEO probe despite independence concerns

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Endeavour Mining turned to its longstanding law firm, Linklaters, to undertake investigations into its ousted chief executive, Sébastien de Montessus, despite complaints from employees at the gold producer about the firm’s independence, according to three people familiar with the matter.

Critics within the company who spoke to the Financial Times maintain that Linklaters’ relationship with Endeavour — which flourished under the tenure of De Montessus and earned the “magic circle” law firm millions of pounds — meant it lacked the independence necessary for impartial investigations into the CEO’s behaviour.

The FTSE 100 gold mining group fired long-term boss De Montessus earlier this month after the board found evidence that he instructed an irregular $5.9mn payment.

De Montessus fought back, saying that while he did not notify the board of the payment, it was made to provide urgent security services. Linklaters handled the forensic accounting investigation into the payment instruction with EY, the FT has previously reported.

At the time of the dismissal, Endeavour also said the board would consider next steps following a probe into De Montessus’s personal conduct with colleagues. Endeavour did not specify what allegations had been made about his behaviour. That probe was also conducted by Linklaters.

The miner said on Friday that it “strongly stood” by its original statement. A person close to the company said Linklaters was appointed following careful consideration of their relevant expertise and safeguards implemented to ensure the impartiality of the investigation.

For his part, De Montessus has said he is assessing his legal position after “an independent investigation by Linklaters did not uphold any of the personal conduct allegations”.

The scandal at Endeavour marks a blot on one of the London market’s few recent success stories after it grew from a market capitalisation of about $1.5bn to almost $7bn at its peak through aggressive dealmaking under the charismatic French CEO.

Endeavour employees raised concerns directly with at least one board member as well as with the law firm about its independence during the course of the investigations, according to the communications seen by the FT and people familiar with the matter.

Linklaters’ services to Endeavour while De Montessus was CEO spanned advising on its IPO, corporate bonds, M&A activities and corporate governance. This included guidance to the board after French authorities put De Montessus under judicial inquiry in 2018 for alleged corruption when he was at Areva, the French nuclear group. The French authorities’ inquiry — in which De Montessus denies wrongdoing — is continuing.

Ian Hunter, a corporate partner at Linklaters, was in charge of managing the relationship with Endeavour. The law firm advised Endeavour’s board on De Montessus’s remuneration package by which he earned $22.7mn in 2021, the most of any FTSE 100 CEO.

Linklaters also acted for the company in relation to the dismissal of a string of senior executives and board members from the company starting from early 2022 who tried to call out lapses in corporate governance and concerns about De Montessus’s behaviour, the people familiar with the matter said. The law firm’s advice included drafting non-disclosure agreements, they added.

Henri Servaes, a corporate governance professor at London Business School, said that in the case of an investigation into sensitive matters involving senior personnel, it is better to hire a law firm that has no previous dealings with the company.

“The bottom line is that in these kinds of circumstances you want to avoid any appearance of a conflict of interest. Any appearance of a conflict — even if it is totally properly managed and there are no biases at all — is just not good for the optics of the matter.”

Law firms are frequently brought in to conduct internal investigations for their clients, which are often handled by lawyers from different teams within the firm. It is usually up to the discretion of the company and the law firm to determine the scope and reporting lines for an investigation and who is privy to the information.

“We are committed to the highest standard of honesty and integrity and to conducting ourselves in accordance with applicable professional obligations,” Linklaters said in a statement.

“We have robust processes in place to safeguard against conflicts of interest,” the firm added.

De Montessus declined to comment.