3 min readNew DelhiOct 1, 2012 12:43 AM IST
First published on: Oct 1, 2012 at 12:43 AM IST
National Mineral Development Corporation NMDC has refused to reimburse Australian entity Legacys demand of AUD 8,36,502 as investment for exploration in the Mt Bevan mines in Perth saying the expenditure was unilateral and above the approved budget.
The PSU may send a fact-finding team to Australia to ascertain Legacys accounts and the various activities carried out in Mt Bevan.
NMDC had acquired at least 50 per cent equity of Legacy early this year for a consideration of AUD 18.89 million and currently has three of its top functionaries in the companys board.
The trouble began in July when Legacy sent a missive to NMDC asking for AUD 7,00,000. Again,on August 3,the Australian firm sent its board memorandum asking for another AUD 1.3 million for critical items to maintain the project development.
The PSU questioned Legacys AUD 7,62,445 spend against the approved budget of AUD 80,000. Besides exceeding their budget by AUD 6,82,445,it also asked for AUD 1 million to meet their expenditure for the current month.
In our opinion there is no justification for any unilateral spending by Legacy management in the absence of due approval, the company observed in a recent note.
NMDC is also planning to make one of its nominee as the executive director in Legacy board to get control over its finances and operations.
NMDC is upset because it has no concrete mechanism to authenticate the statements or information provided by Legacy in the absence of participation by NMDC or its representative in Legacys day-to-day management.
Legacy management does not provide information to its directors even on critical areas such as appointment of full-time personnel and rationale for such appointments, a senior steel ministry official told The Indian Express.
The turf war between the two companies have intensified further as even seven months after acquisition of board level control in Legacy,the earlier powers delegated to MD of Legacy have not been changed.
The PSUs concerns have mounted as Legacy has recently told the Australian stock exchange that an amount of AUD 435,000 was used for repayment of borrowings,which was uncalled for as sufficient cash was available for undertaking activities as per budget.
Reining in
NMDC had acquired at least 50 per cent equity of Legacy early this year
NMDC has refused to reimburse Legacys demand of AUD 8,36,502 as investment for exploration in Mt Bevan mines
The PSU may send a fact-finding team to Australia to ascertain Legacys accounts
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