[miningmx.com] — HARMONY Gold has agreed to pay $9m to the lead plaintiff in a US class action filed against it in 2008; after being accused of overstating earnings in 2007.
The suit came after Harmony in August 2007 said the implementation of new accounting software resulted in inaccurate cost allocations between March and June that year. As a consequence, the group’s operating costs increased by 44% from the March (R103,608/kg) to June quarter (R149,180/kg), causing net profitability to tumble from R247m to a loss of R653m.
Former Harmony CEO Bernard Swanepoel stepped down from his post the same month.
Harmony has American Depositary Receipts (ADR) listed in the US. ADRs are certificates issued by US banks representing shares of a foreign company’s stock.
Marian van der Walt, Harmony’s executive: corporate and investor relations, said the legal costs pertaining to the matter have already been accounted for, while the $9m would be paid by an insurance claim.
The settlement would require final approval from a US court on or after a hearing scheduled for November 10.
“Harmony did not admit to any liability in connection with the proposed settlement and, if finally approved, the settlement will result in the dismissal of all claims against Harmony,’ read a statement issued on Monday.
According to US legal website www.law360.com, the proposed cash settlement would go out to some 2,300 investors who purchased Harmony ADRs between April 2005 and August 7, 2007, as well as an additional 2,400 individuals contained in a claims database.
Current Harmony CEO Graham Briggs said in Monday’s announcement the parties have followed a “mediated settlement process’ to avoid an expensive litigation process.
