Australian tycoon Clive Palmer, who is in a court dispute with Citic Pacific over iron ore royalty liabilities, has said the conglomerate's recent decision to swap external auditors for the first time in more than 25 years raises questions about its transparency.
Hong Kong-listed Citic Pacific, the steel-to-property flagship of Beijing-backed conglomerate Citic Group, said last Tuesday that its board has proposed to its shareholders that KPMG be appointed as its auditor, replacing PricewaterhouseCoopers.
Citic Pacific did not say why PwC will be replaced, but said the appointment of KPMG would "enhance the efficiency of the audit process", given that "a number of [its] subsidiaries have been audited by KPMG for many years". There was no disagreement between PwC and Citic Pacific, it added.
The allegation by Palmer's mineral resources exploration and development firm Mineralogy, which signed an agreement in 2006 to sell Citic Pacific the right to mine up to six billion tonnes of iron ore in the state of Western Australia, is its second attack on Citic Pacific in two weeks.
"Why sack the auditor," Palmer asked in a statement yesterday. "Is it because the auditors required them to list their debt to us as a current liability in the [annual report]?"
A Citic Pacific spokesman refused to comment on the matter.
On March 26, Palmer said Citic Pacific was trying to avoid royalty payments because it was in financial difficulty. A spokesman for Citic Pacific said at the time: "Mr Palmer's sense of humour is a known quantity."
