Monday 24 August 2020 4:17 pm

PwC resigns as auditor of gold miner Petropavlovsk on governance concerns

PwC has resigned as the auditor of under-fire gold miner Petropavlovsk due to concerns over the firm’s corporate governance after a long-running boardroom battle.

The FTSE 250 miner today confirmed that the Big Four accountant had turned down its appointment as Petropavlovsk’s auditor.

Read more: Petropavlovsk appoints interim CEO after boardroom battle

According to the Russia-focused company, PwC cited “the recent significant changes in the composition of the board of directors, namely the removal of the majority of both independent and executive directors” as the reason for its decision.

It added that it was concerned “the governance environment and the lack of clarity as to the future direction of the Petropavlovsk group”.

The decision comes after activist investor Everest Alliance prevailed in its attempts to prevent the reelection of former chief executive Pavel Mavlovskiy and six other board members at a requisitioned general meeting earlier this month.

Back in June, PwC warned that it would not sign off on the company’s accounts until after the meeting. 

At the time, it said it would reconsider the offer to audit Petropavlovsk in light of the meeting’s results, the culmination of months of strife at the firm.

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Since the meeting on 10 August, which saw interim chief Alya Samokhvalova and founder Peter Hambro both ousted, the firm said it had been addressing concerns over the make-up of its board.

Last week Petropavlovsk appointed Maksim Meshcheriakov as interim chief executive, returning Samokhvalova to her previous role as deputy chief exec. 

This morning it confirmed that it had appointed steel executive Malay Mukherjee as a new independent non-executive director with immediate effect.

However, it was also revealed that Katia Ray, one of only four board members to survive this month’s cull, had resigned for personal reasons.

In a statement, Petropavlovsk said that it was “in the process of engaging an external search consultancy to assist it in making further appointments of independent non-executive directors”. 

Petropavlovsk “remains committed to ensuring it has the necessary strength and breadth, with a transparent governance structure that will command the trust and support of all stakeholders”, it was added.

Read more: Activist investor Everest prevails in Petropavlovsk board battle

Alongside the concerns over its governance, the company is also facing an independent forensic investigation into all party transactions in the last three years.

An overwhelming majority of shareholders voted for the investigation via an emergency resolution at the August meeting.