Aug. 13 (Bloomberg) -- African Minerals Ltd., which last month investigated its founder and chairman, Frank Timis, and a director over a $50 million payment, is studying measures to curb his power and change his role on the board.
The West African mining company intends to tighten controls after Timis authorized the 2012 payment without board approval to a Cyprus-registered iron-ore company, Roger Liddell, its senior independent non-executive director, told shareholders at the annual general meeting in London today. One element of tightening internal controls “will be to reduce the chairman’s absolute level of authority,” he said.
The company, GIO Cyprus, was subsequently shown to be linked to African Minerals Director Dermot Coughlan. An internal probe into the payment neither proved nor disproved allegations Timis benefited from it, the company said last week. Coughlan resigned on the day the internal probe was completed last month.
“The view of the board is that Frank’s hands-on role as executive chairman is very, very important, but it is not the ideal corporate structure longer term,” said Liddell. He chaired the AGM in the absence of Timis, who was returning from a business trip to China.
Two of the board’s eight members attended the AGM in person -- Liddell and Chief Executive Officer Bernie Pryor. Director Ian Cockerill, the former CEO of Gold Fields Ltd., was connected by phone.
The stock was unchanged at 33.75 pence by the close in London. Timis is the biggest shareholder with almost 13 percent of the Sierra Leone-focused iron-ore producer.
The company has slumped 83 percent this year as the price of the steel-making raw material declined, the Ebola virus spread through West Africa and as news surfaced of the internal investigation by Good Governance Group.
“Your opinion is in line with the thinking of the directors of the company and obviously dialog with Frank,” Liddell said in a response to a shareholder who suggested Timis should move from his role of executive chairman to be an executive director.
Liddell, who managed the probe internally along with Cockerill, said he was 99.5 percent confident Timis wasn’t involved in wrongdoing. The payment of $50 million is the maximum that can be authorized without seeking board approval, according to a document outlining matters that must be place under the stewardship of the board posted on the company’s website.
“In terms of the details of the investigation, they found no reason to be concerned with his role at all,” Liddell said. “They didn’t have access to his bank accounts and the money that went to GIO went into Switzerland, I think to two different accounts, one of them being a law firm. So you just don’t have access to the trail of the cash.”
The payment to GIO Cyprus was made after African Minerals was forced to cancel future iron-ore sales contracts to the group, after the mining company oversold its production, Liddell said today.
Affidavits from the former chief financial officer of GIO Cyprus, who wasn’t named by African Minerals, and an investor in GIO Cyprus contained claims that Timis, director Dermot Coughlan, his son Craig and a fourth person each owned 25 percent of GIO Cyprus “pursuant to a side agreement.”
The investigation found no evidence Timis was a director or shareholder in GIO Cyprus, Liddell said today.
“I could conceive of no reason why he would put himself in a position whereby he would get what to him would be frankly a relatively small amount of money by washing cash through GIO,” he said. “It would be illogical for him to do that.”
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