Tuesday 28 July 2020 1:28 pm

PwC refuses to audit miner Petropavlovsk amid board room battle

Big Four auditor PwC has said that it will not work with gold miner Petropavlovsk due to concerns over corporate governance at the FTSE 250 firm.

Since early July, the Russian focused miner has been gripped by infighting, with two rival groups of shareholders battling for control of the company.

Read more: Petropavlovsk gold sales surge amid boardroom strife

At the firm’s last board meeting at the end of June, seven of its board members were voted off by shareholders by by several shareholder groups, including UGC, Everest Alliance, Slevin and Fortiana Holdings, which hold a combined 39 per cent of Petropavlovsk stock.

Subsequently, fellow shareholder Prosperity Capital Management, which controls 20 per cent of shares, has complained to the Takeover Panel, saying that the investors acted in concert to oust the board members.

And last night Everest Alliance hit back, referring Prosperity to the same body for the same reason. 

It has also commenced legal action against the firm for appointing temporary new directors, who will serve until the next general meeting.

The infighting initially crashed Petropavlovsk’s share price, but record gold prices and an impressive set of first half results have seen stock surge back since early July.

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In a filing released by the gold miner, PwC said it had turned down the appointment because of “the significant changes to the board of directors at the recent AGM, namely the removal of the majority of both independent and executive directors including the chairwoman designate, raising concerns about corporate governance standards, the consequent lack of clarity as to the identify of those charged with governance and the current challenges facing the board in its ability to function properly”.

It added that PwC would reconsider its decision in light of the results of the next general meeting, which is to be held on 10 August.

PwC said it would wait “to understand the composition of the board that will be entrusted with leading the Group as well as complete satisfactory background checks on any new Board member”.

Read more: Petropavlovsk pours cold water on UGC merger reports

Earlier this year fellow Big Four accountant Deloitte also ended its decade-long work with the company. 

As a consequence of not having an auditor, Petropavlovsk warned that it might have to delay the publication of its financial results.