/ 23 August 2007

Rumours swirl of R2bn hole in Harmony accounts

Nomfundo Qangule, financial director of Harmony since July 2004, has resigned amid rumours of a massive hole in Harmony’s accounts, Moneyweb reported on Thursday.

The ballpark figure mentioned is about R2-billion, which, being historic, may mean any further damage would be limited.

The first public hints of number problems at Harmony were unveiled at the beginning of August this year, when Harmony said that results for the quarter ending June 30 this year were “expected to differ significantly from those of the three previous quarters as well as from the analysts’ consensus”, the report said.

The news of Qangule’s departure follows the resignation of Bernard Swanepoel as Harmony CEO on August 6.

Those familiar with the situation said that problems with Harmony’s accounts fell exclusively in the domain of honest incompetence, but conceded that the extent of the number problems had triggered Swanepoel’s departure.

The resignation of Swanepoel, whose name was synonymous with Harmony, shocked investors, not least as to its immediacy and the patent lack of a succession plan, Moneyweb said.

Harmony this week appointed Frank Abbott as interim financial director for a period of six months. Abbott is the financial director of Harmony’s biggest shareholder, African Rainbow Minerals.

Harmony’s shares on Wednesday shed as much as 67c, or 1%, to R64,02 after the announcement before recovering somewhat, Business Day reported on Thursday. They ended 0,45% weaker.

Since the announcement of Swanepoel’s resignation, Harmony shares have lost about one-third of their value.