Petropavlovsk pledged to recover any “misappropriated funds or assets” as it announced it had hired KPMG to investigate transactions undertaken during the past three years.
The FTSE 250 Russia-focused gold miner, which has been rocked by a series of boardroom battles and shareholder feuds, said it had already identified “several areas which warrant further inquiry”.
“Petropavlovsk has failed to deliver value to its shareholders and employees over many years, and we believe that poor governance and controls have been a major contributory factor,” said chairman James Cameron in a statement.
“The current board is committed to transparency and exposing any historic instances of failed corporate governance, as well as the recovery of any misappropriated funds or assets.”
The investigation comes amid a bitter internal conflict that has pitched employees fiercely loyal to Pavel Maslovskiy, who was ousted as chief executive in June after three years at the helm, against Petropavlovsk’s new management team led by interim chief executive Maksim Meshcheryakov.
Mr Meshcheryakov had to force his way into the company’s Moscow headquarters in August and Petropavlovsk warned last month that a lack of co-operation from some employees and former employees had resulted in delays in receiving cash from its subsidiaries.
“The company is seeking additional external funding sources to meet its obligations in the event that future funding from the Russian subsidiaries is not received,” the company said in its half-year results statement.
Petropavlovsk was founded in 1994 by Mr Maslovskiy and Peter Hambro, a scion of the London banking dynasty. It is one of the biggest UK-listed gold companies with production of 560,000-600,000 ounces expected this year.
In June the company was plunged into corporate turmoil when rival Russian miner UGC and a group of other investors ousted half the board, including Mr Maslovskiy.
A move to reinstate Mr Maslovskiy was defeated at a general meeting in August. At the same time, shareholders voted in favour of a resolution put forward by Nikolai Lioustiger, a Russian businessman, calling for forensic investigation of principally related-party transactions carried out by the company over the past three years.
One likely to be scrutinised, according to people with knowledge of the situation, is a deal announced in April to buy out the remaining shares Petropavlovsk did not already own in the Temi gold project in Russia’s far east for $56m.
KPMG will also examine deals involving IRC, a Hong Kong mining company in which Petropavlovsk has a 31.1 per cent stake.
Since the general meeting in August Petropavlovsk’s board and management team in London has been trying to simplify its complex organisational structure, which includes 30 subsidiaries.
However, attempts to reverse changes made by Mr Maslovskiy in June and July to the constitutional documents of several Russian subsidiaries have faced legal challenges in Russia from employees and the former chief executive’s son Alexey Maslovskiy.
Petropavlovsk said the changes have had the effect of entrenching previous management teams and making it difficult to appoint new directors.
Mr Maslovskiy could not be immediately reached for comment.
Shares in Petropavlovsk were down 2.8 per cent at 25.9p on Monday. On the back of record-breaking gold prices, they have doubled this year and the company is currently valued at just over £1bn.