Ann: ASIC Supplementary Submission to Senate Inquiry, page-188

Here again if posters hasn't read

https://www.theaustralian.com.au/business/companies/magnis-energy-board-silenced-on-company-spending/news-story/79e835542027946bc66be896a58a905e?giftid=9yQ8Suvocz

Executives and board members at ASX-listed electric batteries player Magnis Energy had little say over spending on consultants and other expenses – with company money used to pay for personal spending including rent, drinks, cigarettes and even one director’s partner’s gym membership.

That is the conclusion of a confidential audit of payments or agreements created by former Magnis chief financial officer Meghan McPherson and its one-time interim director, Leslie Hosking, obtained by The Australian.

The audit, handed to Magnis chairman Frank Poullas in early 2020, contains significant criticisms of the spending to parties related to the company and to Mr Poullas himself.

READ NEXT

One payment, according to the audit, was for $US15,000 a month for a year commencing July 2019 made to Magnis director Peter Tsegas for political liaison with the Tanzanian government.

Commentary included in the document reads: “It is noted that Peter Tsegas has not provided management, or the board as a whole, with any report (either monthly or any period) or updated on any matter pertaining to Tanzania during the period of this consultancy”.

“It is also noted that Tanzanian staff have been instructed to undertake work for Avadale Resources Limited (the new venture of Peter Tsegas and Frank Poullas). MNS has paid the full fee for these staff members.”

READ MORE: ‘Drug boss’ linked to EV market darling | Magnis withdraws $10bn ‘potential value’ claim | Magnis chair re-elected despite share price probe | Another Magnis director jumps ship | Moss’s men charge out of battery maker | This $600m EV company has a problem. Its chairman is under investigation

Magnis, which has seen shares rise 179 per cent this year, owns stakes in EV battery manufacturers and a mining project in Tanzania. Ms McPherson and Mr Hosking left the company shortly after handing in the audit.

The document claims there is an “ongoing issue with the chairman booking travel expenditure for potential investors and consultants”. “No independent oversight of these changes,” it reads.

“Receipts are not provided in a timely manner to allow the finance team to close off monthly accounts … finance can wait 4-5 months to obtain expenditure receipts with appropriate detail as to why the costs (were) incurred.”

In another instance, the audit claimed Mr Poullas’s corporate credit card was being used to pay the expenses of a business associate “related primarily to airfares and accommodation in India”.

“The issue was raised with the chairman who subsequently cancelled his credit card and had $8697.60 charges reversed by (the) NAB fraud team … It is unclear how Ricky had the credit card details in the first place and why it was deemed appropriate to pay expenses of a business associate with whom no consultancy agreement was in place,” it reads.

The same business associate’s business, Bellrock Protective Services, was paid $13,000 for consulting and for expenses.

“Despite numerous requests to Bellrock (and Mr Poullas) no supporting documentation was provided, “ the audit reads. “Payment was withheld pending supporting documentation; however, this was overruled by the chairman.”

On Monday, Magnis told the ASX it “never had any engagement with” Hakan Arif, an alleged drug smuggler, and “had never made any payment to him”.

That statement came after The Australian reported that former employees and directors claimed they were shocked to discover the company had dealings with Mr Arif, who has been wanted by federal police since March 2018.

“Once I was made aware of (Mr Arif’s arrangement), that was exit territory,” former Magnis director Warwick Smith, an ex-Macquarie executive, said.

Magnis did not respond to a request for comment about the findings of the audit. The document also raises concerns about a $1000-per-day consulting fee paid to Mr Poullas, and notes there is “no independent oversight of work undertaken”. Those payments were made to Strong Solutions, listed as a related party in Magnis annual reports, along with $4500 a month for an IT contract, according to the audit report.

Mr Poullas has repeatedly declined requests for comment.

Earlier this month, The Australian reported that the corporate regulator had opened a file on Mr Poullas, although the reason was unclear.

The Australian Securities and Investments Commission has separately warned traders against artificially inflating the price of Magnis shares, in late October entering discussion groups on the Telegram platform warning so-called “pump-and-dump” activities were criminal conduct.

Other payments listed for Mr Tsegas – $10,000 for political liaison in Tanzania – noted “personal expenses … such as rent, water, electricity, garbage collection, his partner’s gym membership, drinks, cigarettes … were submitted for reimbursement”.

“Whilst the CFO attempted numerous times to refuse these claims and implement the necessary internal controls to ensure Tanzanian staff could not be pressured into paying non-MNS expenses, this was often overruled by the chairman,” it reads. “It is further noted that staff in Tanzania were subjected to hostility from Peter when denied access to cash and complaints have also been received by Peter’s partner when claims for her personal flights and expenditure were denied.”