Ferrexpo says Deloitte has resigned as its auditor, three days after they expressed different views over potential links between the iron-ore miner’s CEO and a charitable foundation being probed for possible misappropriation of funds.
The London-listed company fell the most in more than two years.
The resignation of Deloitte comes as an independent review committee set up by Ferrexpo investigates “discrepancies” in payments to Blooming Land, a charitable foundation established primarily to co-ordinate the company’s philanthropic activities. The committee was set up in February after Ferrexpo’s auditors received bank statements from the foundation containing “irregularities”. There are indications that some of funds may have been “misappropriated,” Ferrexpo said on Tuesday.
Further announcements will be made in due course, Ferrexpo said in a statement on Friday.
A spokesperson for Deloitte declined to comment.
Ferrexpo’s own investigation of Blooming Land comes as Ukraine probes whether the charitable foundation was used to launder money and evade taxes. While Ferrexpo has said it doesn’t control Blooming Land, the investigations into the foundation threaten to overshadow the iron-ore company’s renaissance since losing $174m in an insolvent Ukrainian bank controlled by CEO Kostyantin Zhevago in 2015.
Ferrexpo’s CEO is also the company’s majority shareholder.
Control questions
Ferrexpo shares fell as much as 21%, the most since October 2016, and were down 18% as of 8.46am in London.
When Ferrexpo published its delayed full-year results on Tuesday, it noted differences of opinion between the company’s board and Deloitte on the influence and control that CEO Zhevago exerts over the charitable foundation.
Deloitte resigns from Ferrexpro amid probe into charity
Ferrexpo says Deloitte has resigned as its auditor, three days after they expressed different views over potential links between the iron-ore miner’s CEO and a charitable foundation being probed for possible misappropriation of funds.
The London-listed company fell the most in more than two years.
The resignation of Deloitte comes as an independent review committee set up by Ferrexpo investigates “discrepancies” in payments to Blooming Land, a charitable foundation established primarily to co-ordinate the company’s philanthropic activities. The committee was set up in February after Ferrexpo’s auditors received bank statements from the foundation containing “irregularities”. There are indications that some of funds may have been “misappropriated,” Ferrexpo said on Tuesday.
Further announcements will be made in due course, Ferrexpo said in a statement on Friday.
A spokesperson for Deloitte declined to comment.
Ferrexpo’s own investigation of Blooming Land comes as Ukraine probes whether the charitable foundation was used to launder money and evade taxes. While Ferrexpo has said it doesn’t control Blooming Land, the investigations into the foundation threaten to overshadow the iron-ore company’s renaissance since losing $174m in an insolvent Ukrainian bank controlled by CEO Kostyantin Zhevago in 2015.
Ferrexpo’s CEO is also the company’s majority shareholder.
Control questions
Ferrexpo shares fell as much as 21%, the most since October 2016, and were down 18% as of 8.46am in London.
When Ferrexpo published its delayed full-year results on Tuesday, it noted differences of opinion between the company’s board and Deloitte on the influence and control that CEO Zhevago exerts over the charitable foundation.
While “the auditors have been unable to conclude whether the CEO does or does not have significant influence or control over Blooming Land”, the board formed a “unanimous view” that Zhevago does not have such influence or control over the foundation. The board said its conclusion was based on a lack of clear evidence to the contrary and representations by the CEO over many years.
Through donations to Blooming Land, Ferrexpo says it supports charitable activities in Ukraine. A unit of the iron-ore miner has given the foundation about $110m over the past six years to fund causes such as diabetes awareness and care of the elderly.
Other funding for Blooming Land comes from Khimreaktiv, an entity connected to Rosava, which is controlled by Zhevago, according to Ferrexpo’s annual report.
The company said on Tuesday that the interim conclusion of the independent review committee is that the charity is not a related party of Ferrexpo, its executive management, or Zhevago.
Bloomberg
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