Former auditor says Ferrexpo delayed investigation into charity partner

April 29, 2019

(Reuters) – Ferrexpo Plc’s former auditor Deloitte believes the miner delayed an investigation into the use of funds by its charity partner in Ukraine, the accounting firm has said.

Ferrexpo, led by Ukrainian billionaire Kostyantin Zhevago, disclosed the auditor’s statement on Monday, saying that it initiated the formal independent review at an appropriate time, “given the other steps it was taking and all the surrounding circumstances”.

Deloitte quit as Ferrexpo’s auditor on Friday, days after saying it was unable to conclude whether the iron ore miner’s CEO controlled a charity being investigated over its use of company donations.

Blooming Land, which coordinates Ferrexpo’s Corporate Social Responsibility (CSR) program, came under scrutiny after auditors found holes in the charity’s statements.

Funding for Blooming Land’s CSR activities is provided by one of Ferrexpo’s units in Ukraine and Khimreaktiv LLC, an entity ultimately controlled by Zhevago, who is also the miner’s majority owner, according to the company.

Ferrexpo’s board has maintained that Zhevago did not have significant influence or control over the charity, but Deloitte said earlier it was unable reach a conclusion on this.

“Ferrexpo would like to re-emphasize that Blooming Land is not considered a related party of the group,” Ferrexpo said on Monday.

Ferrexpo said its chairman will be speaking to investors during the course of this week.

“While there are indications that some funds could have been misappropriated, further work is required before any final conclusions can be drawn,” Chairman Steve Lucas said.

“Board would like to make clear that to date no conclusive evidence of misappropriation of funds has come to light.”

(Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty)

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