Ferrexpo admits funds may have gone astray as bosses are cleared

FERREXPO has admitted funds it donated to a charity may have been misappropriated after an independent inquiry into the missing cash failed to reach a firm conclusion.

The FTSE 250 miner hired auditors BDO this year to investigate “discrepancies” in payments to a charity in Ukraine called Blooming Land. Fer- rexpo set up Blooming Land in 2013 to support its corporate social responsibility goals and paid it £110m over six years.

Ferrexpo said the review was “unable to conclude as to the ultimate use of all of the funds by the charity” adding: “Indications therefore remain that some of the funds could have been misappropriated.

“The board is considering further steps in this regard.”

The company’s shares plunged nearly 30pc in a day earlier this year after its former auditor Deloitte warned it might have to qualify Ferrexpo’s accounts, having queried the bank statements of Blooming Land.

Ferrexpo subsequently delayed publication of its annual accounts and Deloitte resigned as auditor, having expressed concern that it could not establish whether co-founder and chief executive Kostyantin Zhevago “held significant influence or exercised control” over Blooming Land. Billionaire Mr Zhevago owns just more than 50pc of Ferrexpo’s stock and is a politician in Ukraine.

Ferrexpo has always insisted that the chief executive is not a related party to Blooming Land. It said yesterday that the independent committee set up to investigate the matter was “satisfied that none of Ferrexpo’s directors, management or employees have had any involvement in any possible misappropriation of funds”.

The miner has now terminated its relationship with Blooming Land, which supports healthcare initiatives in Ukraine such as running diabetes awareness campaigns.

Meanwhile, it has appointed Baker Tilly as its auditor.

Ferrexpo is one of the world’s biggest producers of iron ore pellets, used in steelmaking, and operates two large open-pit mines in Ukraine. It had a turnover of $1.2bn (£990m) last year.

Analysts described the update as “both good and bad news”, while investors appeared unfazed by the inconclusive report, sending the shares up 1.5pc.

Despite the miner’s travails, the stock has added 11pc this year.