29th Apr 2019 08:55
LONDON (Alliance News) - Iron producer Ferrexpo PLC on Monday said it was "naturally" disappointed by the resignation of auditor Deloitte LLP.
Last Friday, Deloitte quit with immediate effect amid an investigation into payments made by Ferrexpo into Ukrainian charity Blooming Land.
Deloitte noted, as reasons for resigning, Ferrexpo's refusal in January to set up a forensic investigation into the matter. At the end of that month, it said that if Ferrexpo did not do so it would be forced to consider its position as auditor.
Ferrexpo did set one up, but then released 2018 annual results before the review was completed. Ferrexpo released the annual figures on Tuesday last week.
"Whilst we recognise the company is conducting the independent review (which remains ongoing), and that is welcome, in the circumstances we consider the company's response to the situation, including its delay in conducting an independent forensic investigation, with the consequences described above, are incompatible with our continuing in the role of statutory auditor beyond the 2018 financial year," said Deloitte.
Ferrexpo has said the charity is not related to the company in any way, nor to Chief Executive Kostyantin Zhevago, but Deloitte has disagreed.
Further, Non-Executive Directors Mary Reilly and Bert Nacken have departed. Reilly had been chairing Ferrexpo's audit committee, and Nacken the remuneration committee. The two left after helping Ferrexpo publish delayed 2018 financial results in "difficult and very time-consuming circumstances".
Ferrexpo Chair Steve Lucas on Monday said: "The board of Ferrexpo is committed to the highest levels of corporate governance and transparency.
"We are naturally disappointed by Deloitte's resignation and its reasons, as well as the resignation of Reilly and Nacken. We have commenced a process to appoint new auditors and additional independent non-executive directors."
"We are also committed to completing the independent review into Blooming Land as quickly as possible and will update shareholders on the outcome in due course," he continued.
Lucas said the company cannot with any certainty confirm the ultimate use of funds by the charity, and admitted there are indications some money may have been misused, though insisted no "conclusive" evidence has yet come to light.
Ferrexpo has started looking for a new auditor, it confirmed Monday, and also said trading so far in 2019 has remained strong.
Shares were 9.9% higher in early trade in London at 211.70 pence each, the best performer in the mid-cap FTSE 250 index.
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