Ferrexpo delayed investigation into charity despite requests from auditor

Deloitte said this morning it repeatedly asked Ferrexpo to open an investigation into it corporate social responsibility partner before resigning as the miner’s auditor last week.

In a letter to the company’s board, Deloitte said Ferrexpo has delayed the investigation despite three requests from the auditing giant starting in October.

The miner finally announced an independent investigation on 4 February into discrepancies in the bank statements of Blooming Land, a programme which provides medical and social services in Ukraine. Ferrexpo donated $9.5m to Blooming Land in the first half of 2018.

Ferrexpo's board has maintained that its chief executive and biggest shareholder Kostyantin Zhevago did not have significant influence or control over the charity. But Deloitte has said it was unable to reach a conclusion on this.

Deloitte quit the role last week after Ferrexpo published its annual results, which had already been delayed twice.

In a letter released this morning the auditor said it was “unable to obtain satisfactory audit evidence or explanations in respect of two key audit matters” as the independent investigation had not concluded.

“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,” Deloitte said.

Ferrexpo’s board said that Financial Conduct Authority rules meant it was forced to publish its already twice-delayed results by 30 April, so was unable to wait any longer.

The company’s shares plunged 29 per cent on Friday after the resignation, and the departure of two board members, was announced.

Shares clawed back some of the gains this morning and are trading up around eight per cent.

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