The board of Ferrexpo (FXPO) has announced a comprehensive independent review, after "unexplained discrepancies" were found in the bank statements of a Ukrainian charity set up to manage Ferrexpo’s corporate social responsibility function.
The charity in question is Blooming Land, to which the iron ore pellet miner and processor donated $9.5m (£7.2m) in the first half of 2018, although it has not funded the charity since May. Deloitte, which appears to have flagged the issue, has indicated to Ferrexpo that an unfavourable review outcome could "qualify or otherwise modify" its audit opinion relating to the full-year accounts.
Ferrexpo also donated $24m to Blooming Land in 2017, raising questions as to why its funding abruptly stopped last May. Last August, Ferrexpo informed the market that a $16.3m payment to Blooming Land from a subsidiary of tire company Rosava Group was repaid using funds subsequently received from the miner, and should have been disclosed as a related party transaction. Rosava is controlled by chief executive Kostyantin Zhevago.
The announcement, signed off by recently appointed interim company secretary Brian McLelland, wiped as much as 12 per cent off Ferrexpo's share price, ending a rally sparked by sharply rising iron ore futures.
