Ferrexpo under fire over the fate of charity funds that could have been "misappropriated"

Ferrexpo’s management was feeling the heat today as the embattled iron ore company admitted funds it gave to a charity in Ukraine could have been “misappropriated”.

The findings were made by its auditors Deloitte, which in February launched an investigation into charity Blooming Land’s use of Ferrexpo’s funds.

The London-listed Ukraine-focused company said: “The independent review committee cannot yet conclude the ultimate use of the funds by the charity. However, there are indications some could have been misappropriated.”

The investigation shines a spotlight on Ferrexpo chief executive Kostyantin Zhevago, who is a billionaire and a politician in Ukraine.

Questions have been asked over his relationship with Blooming Land as its funding is provided by Ferrexpo and Khimreaktiv LLC, both of which are controlled by the Ukrainian.

However, Deloitte has been unable to conclude how much control or influence Zhevago has over the charity, which provides treatments for diabetes.

Yuen Low, analyst at Shore Capital, said: “It doesn’t look good but until the committee has published its full results then we don’t know who is guilty.” Deloitte said the charity’s accounts had not been properly kept up to date. A Ferrexpo spokesman said: “It’s a classic case of a London-listed company colliding with a Ukrainian charity. No good deed goes unpunished.”

Ferrexpo first started giving money to Blooming Land in 2013 and its payments have totalled $110 million.

Ferrexpo today reported a 13% drop in annual profit but revenues rose 6.4%.