Auditor could face jail term
THE former auditor of mining success story Sandfire Resources faces up to five years in jail if found guilty of charges over a family shareholding in the company.
THE former auditor of mining success story Sandfire Resources faces up to five years in jail if found guilty of charges over a family shareholding in the company.Kevin Somes, a partner at Perth accounting firm Somes Cooke and a well-known figure in the city's mining industry circles, appeared in the Perth Magistrates Court on Friday to face 18 charges brought by the Australian Securities and Investments Commission.Somes was charged with six counts of failing to be independent as an auditor and 12 counts of making a false or misleading declaration to ASIC.The news came as a surprise to the managing director of the company at which Somes is chairman, Great Western Exploration."I really can't comment about anything because I don't know anything about it," Jordan Luckett told BusinessDay."It's a bit of a shock to me because Kevin is a pretty straight-up-and-down guy."ASIC alleges that "between 2007 and 2010, immediate family members of Mr Somes held significant shareholdings through their superannuation fund in a listed company that he audited".In addition, it alleges Somes made false declarations to the watchdog of his independence.Auditors and their immediate families are prohibited from holding a "material" stake one big enough that it might compromise their objectivity in a company they are auditing.Shares in Sandfire Resources soared in April 2009 after company announcements that it had struck gold and copper on its Doolgunna tenement in Western Australia, rising from under 10? to close the year at more than $3.65.In 2008 and 2009, "JE & AJ Somes" held 125,000 partly paid shares, or about 1 per cent of the company, according to annual reports filed by Sandfire Resources.The 2007 annual report lists KCS Super as holding 93,750 partly paid shares, but a search of the companies database failed to unearth any such entity.However, Somes has since 1994 been a director and shareholder of the similarly named KCS Superannuation.In January he was appointed chairman of Great Western Exploration, where he has been a director since 2007, after incumbent Jitto Arulampalam resigned as a director.He is the auditor of 11 ASX-listed companies, most of which are miners or explorers, according to Morningstar data.He could not be reached yesterday and a Sandfire spokesman said the company could not comment "because it's the subject of legal proceedings".Each count of failing to be independent as an auditor carries a maximum penalty of a $2750 fine or six months' jail. Making a false statement to ASIC attracts a maximum penalty of a $22,000 fine or up to five years' jail.The case returns to court for mention on August 31.