(Bloomberg) -- Ferrexpo Plc said an independent review into its charitable donations suggested some funds could have been misappropriated, but found the company and its biggest shareholder weren't connected to any possible wrongdoing.
The review was unable to confirm the ultimate use of all of the funds related to the Blooming Land Charity and Ferrexpo's board is “considering further steps in this regard.” The Ukrainian iron ore producer has also terminated its relationship with Blooming Land.
Friday's statement to announce the conclusion of the review may disappoint investors hoping for more detail or certainty. The company had already said three months ago that there were indications that some funds “could have been misappropriated.” Ferrexpo dropped as much as 6.5%, before trading down 1% as of 9:22 a.m. in London.
It's been a tumultuous period for Ferrexpo, as investors weighed the uncertainty from the charity probe against surging iron ore prices in the first half of the year. In April, Deloitte LLP resigned as the company's auditor over delays in the Blooming Land investigation. Ukraine is also investigating whether the charity was used to launder money and evade taxes.
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Ferrexpo said the review committee was satisfied that none of its own directors, management or employees were involved in any possible misappropriation of funds. The review committee also concluded that the charity was not a related party of Ferrexpo or majority shareholder and Chief Executive Officer Kostyantin Zhevago.
Zhevago's role at Blooming Land was one of the subjects of dispute between Ferrexpo and Deloitte, the miner said in April. The auditors weren't able to determine whether the CEO had significant influence or control over Blooming Land, while the board held the unanimous view that he did not.
The problems at Blooming Land came to light earlier this year after Ferrexpo's auditors received bank statements from the foundation containing “irregularities.” Ferrexpo set up an independent review committee to investigate discrepancies in payments to the charitable foundation, established primarily to coordinate the company's philanthropic activities.
--With assistance from Volodymyr Verbyany and Elena Mazneva.
To contact the reporter on this story: Liezel Hill in Johannesburg at lhill30@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Dylan Griffiths, Nicholas Larkin
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