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KGHM Polska Miedź SAKGHM copper completes 17 audits on company managers' activities in recent years
Listed copper group KGHM has completed 17 audits and inspections relating to the activities of the company's managers in recent years, seven audits are nearing completion and a further five are at various stages of progress. Two notices relating to KGHM Zanam have been submitted to the prosecutor's office and materials from an audit of medical equipment purchases have been handed over, KGHM said in a statement.
"The audits were aimed at identifying irregularities in the disbursement of funds and covered various aspects such as business, management, investment, marketing and sponsorship activities," head of the Audit and Internal Control Department Andrzej Przeczek told the briefing.
"Seventeen audits and controls have been completed. Seven are close to completion and a further five audits are at various stages of advancement. The audit material on medical equipment purchases has been forwarded to the public prosecutor's office, which is investigating the case. Two notices to the prosecutor's office have been sent as a result of the audit at KGHM Zanam," he added.
In a statement posted on KGHM's website, it was written that the following areas of the KGHM group's operations were audited: purchases of goods to counteract the COVID-19 pandemic, the processes of purchasing and managing photovoltaic farms, the financing of the Zaglebie Lubin football club, the functioning of the Hydrotechnical Plant Division of KGHM, the activities of foreign assets, particularly in the KGHM International group, the activities of the KGHM Polska Miedz Foundation, the purchasing processes at KGHM ZANAM SA, marketing and sponsoring services.
KGHM said that it is in the process of implementing the post-audit recommendations. The main objective is primarily to rectify the consequences of the irregularities identified.
As stated, the first conclusions of the audits indicate a number of irregularities, including: lack of proper ownership supervision, management errors, pursuit of goals unrelated to KGHM's business, failure to apply the procedures in force and the code of ethics of the KGHM Polska Miedz Group.
"Audits and inspections at KGHM are cross-cutting in nature, and in numerous instances in-depth verification activities are needed, which are already underway. However, it can be noted that the actions of the previous management of the company were largely focused on marketing activities and less on its core business, namely mining and smelting," the statement said.
"A number of corrective actions have been taken at KGHM ahead of the results of the audits, including in the sponsorship part. The copper company will focus in the coming years on improving production efficiency, optimising processes and reducing costs. This means, among other things, not continuing some of the sponsoring projects," it added.
As stated, an audit of KGHM Polska Miedz's spending on sponsorship, marketing and advertising is still underway, but the first conclusions indicate that activities were carried out without supervision, and some funds were transferred to entities that did not meet the conditions of accepted sponsorship practices.
"In 2022-23, and especially in the pre-election period, there was a spike in sponsorship spending at KGHM," the statement pointed out.
"In 2022, the sponsorship budget was PLN 51.6 million and in 2023 it was already more than PLN 54 million, which represented an increase of more than 100 percent compared to 2016 and more than 50 percent compared to 2021," it added.
KGHM said it is taking all steps to ensure transparency and integrity in the management of its projects and investments, and legal analyses are currently underway regarding the possibility of taking specific legal action, in particular the filing of notices of possible criminal offences against KGHM and the initiation of legal proceedings for damages.
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