(Bloomberg) -- Ferrexpo Plc fell the most in a month after it said that Deloitte LLP has resigned from its office as statutory auditor with immediate effect.
- Further announcements will be made in due course, the London-listed iron-ore miner said Friday in a statement.
Key Insights:
- The resignation of Deloitte comes as an independent review committee set up by Ferrexpo investigates “discrepancies” in payments to Blooming Land, a charitable foundation set up primarily to coordinate 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.
- 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 Chief Executive Officer Kostyantin Zhevago exerts over the charitable foundation. While “the auditors have been unable to conclude as to whether the chief executive officer does or does not have significant influence or control over Blooming Land,” the board formed a “unanimous view” that -- based on a lack of clear evidence to the contrary and representations by the CEO over many years -- Zhevago does not have such influence or control over the foundation.
- 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 probes into the foundation threaten to overshadow Ferrexpo’s renaissance since losing $174 million in an insolvent Ukrainian bank controlled by Zhevago in 2015. Ferrexpo’s CEO is also the company’s majority shareholder.
Market Reaction:
- Ferrexpo shares fell as much as 9.4 percent, and were down 9.2 percent as of 8:11 a.m. in London on Friday.
More Detail:
- READ: Ferrexpo Plans Record Dividend as Charity Probe Continues
- READ: Ukraine Probes Ferrexpo Charity on Possible Money-Laundering
To contact the reporter on this story: Dylan Griffiths in Geneva at dgriffiths1@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill
©2019 Bloomberg L.P.
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