Ferrexpo PLC (LON:FXPO) shares rallied on Monday as the iron-ore company rejected the assertion by its former auditor Deloitte that it had delayed a review into controversial donations to the Blooming Land charity in Ukraine.
In a statement, the FTSE 250-listed miner sought to present its version of events following the resignation last week of Deloitte as its auditor.
Deloitte had said it told Ferrexpo in October 2018 that if Blooming Land did not supply original bank statements by the end of that month, the company should start an independent forensic investigation.
The auditor has said it had not been given enough evidence to show that US$33.5mln of donations to Blooming Land by Ferrexpo over two years was spent legitimately.
The Ukraine-focused miner twice this year delayed its 2018 annual results – before publishing them last Tuesday - as it reviewed its donations to the Ukrainian charity which was set up to coordinate Ferrexpo's corporate and social responsibility activities.
Review launched in February
Unexplained discrepancies were found in Blooming Land's bank statements, prompting Ferrexpo's board to launch a review earlier this year.
Ferrexpo said, however, that Deloitte did not point out any problems after auditing the group’s half-year results, published on 1 August 2018.
After discrepancies were found in copy bank statements from Blooming Land on 29 August, it tried to get the originals from the charity, it added.
The company said it formally considered setting up a review on 22 November 2018 but decided to take a "cooperative route" with Blooming Land, while in January this year, it again deferred a review, though differing views were expressed.
After requesting further clarification from Blooming Land on 25 January, the group added, its board decided unanimously on 3 February to launch a review.
Ferrexpo said: “The company formed its own considered view and believes it initiated the formal independent review at the appropriate time, given the other steps it was taking and all the surrounding circumstances."
Shares in Ferrexpo, which have been battered by the affair in recent weeks, were nearly 7% higher at 205.80p in late morning trading.