Petropavlovsk hopes KPMG report will ‘draw a line’ under governance lapses

by | Jan 14, 2022

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Petropavlovsk announced on Friday that KPMG has published its final report on its forensic investigation into some of its historical transactions, identifying a number of issues with payments worth over $300m.
The FTSE 250 company said the investigation, primarily into related-party transactions, was proposed at a meeting on 10 August 2020 and approved by 84% of shareholders.

It said the report identified a number of potential issues with historical transactions and payments involving the group, with an estimated value of $302.4m.

The issues included potentially undisclosed related parties and conflicts of interest among the group’s counterparties in several categories of transactions, including apparent inflated costs of mining licences through pre-acquisitions, transactions with entities related to Petropavlovsk and IRC senior management, expenses paid by the group potentially for the benefit of entities related to senior management, and former group investments where money or value might have been diverted to the benefit of entities related to senior management.

Petropavlovsk said the report did not draw conclusions on specific wrongdoing, but did establish “some clear patterns” of inappropriate behaviour, and pointed to possible lapses in corporate governance and controls during the period in question.

The company said it would review the KPMG findings together with legal counsel, and take “appropriate action” over its content of the report.

“With the publication of this report, we hope to draw a line under the corporate governance lapses that, in the past, may have permitted individuals within the company to personally benefit from corporate transactions,” said chairman James Cameron.

“As I stated following the release of the interim report in June, we have been working diligently over the course of this year to install new rules, policies and procedures and stricter controls while strengthening internal audit functions, improving transparency within the management structure, and instilling a culture of zero tolerance for improper business practises.

“We look to the future with confidence that the business practises described in the report cannot and will not be repeated.”

At 0955 GMT, shares in Petropavlovsk were down 4.35% at 17.1p.

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