Take physic, pomp

The Minera IRL (MIRL.cse) attempted whitewash

Here below is the mail that Minera IRL (MIRL.cse) has sent to multiple shareholders this Saturday morning and once again, the glaring hole in the fiduciary duty of the board is there for all to see. They changed the job titles of Susan Gabbie, Pedro Valdez and Steve Ngatai on September 27th because they were unqualified for their positions, then instruct a third party to investigate them as from October! This is utter madness and only reaffirms the collusion between board and C-suite, you simply cannot hand over a carefully curated list of questions to a third party, refuse to let them report (publically) on any matters that don’t suit them, then expect people to believe that a real investigation has taken place. Minera IRL has wasted shareholder money on a whitewashing exercise that is beyond a joke.

Dear ________

You are receiving this email because you have reached out to us, either directly or through our Canadian whistleblower hotline, in an effort to report certain allegations.  These allegations were originally published by a blogger in August 2021.

I would like to thank you for your concern for our Company. We have taken your concerns seriously, and we have spent the last two months in active investigation.  This began on September 22, when our Board of Directors appointed a Special Committee comprised of two independent directors and myself, the Executive Chairman. The Special Committee conducted an internal investigation that took approximately one month to conclude that the allegations were unfounded.  The Special Committee reported its conclusions to the full Board of Directors in October.  Thereafter, however, the full Board of Directors, with the recommendation of the Special Committee, decided to refer the Special Committee’s conclusions to Baker Tilly (“Baker Tilly”), an independent audit firm, for an external review of both the allegations and the Special Committee’s conclusion.

Baker Tilly invested roughly 300 man-hours over a period of three weeks, at a considerable cost to the Company.  We have today received their confidential report, and I am pleased to inform you that they, too, have concluded that all allegations are unfounded.   For your information, the allegations investigated by the Special Committee and Baker Tilly were:

Conflict of Interest                            unfounded
Excessive Salary CEO                            unfounded
Excessive Vacation time CEO                        unfounded
Incomplete Financial Statements as of 30 June 2021        unfounded
Recruitment of three unqualified executives            unfounded

The Baker Tilly Report is confidential, and some of the specifics are protected by applicable privacy laws.  But here are some of the details that we believe we can safely share without violation of the law:

1.            Patricia Kent was hired by our late Chairman, Courtney Chamberlain, in 2002 to serve in the role of Corporate Relations Manager.  She was promoted in 2006 to the position of Vice President of Corporate Relations, which she held until the end of 2013.  From January 1, 2014, until December 31, 2020, she consulted with the Company on an ‘as-needed’ basis.  Ms. Kent is the partner of the CEO Diego Benavides, though she was not when she was hired, and is no longer employed by the Company.

2.            Felipe Benavides is the Logistics Manager for one of the Company’s Peruvian subsidiaries, and he is also the son of Diego Benavides, our CEO.  He was hired by the late Chairman, Courtney Chamberlain, in 2007.  

3.            Marco Arevalo is an attorney. He was hired by the late Chairman, Courtney Chamberlain, in 2008.  His employment with our Company ended in 2018, when he left to establish his own law firm located in Lima, Peru.  That law firm continues to provide legal services to our Company on a monthly retainer. He is Diego Benavides’ son-in-law

These are the ‘relatives’ of Diego Benavides that were the subject of your complaint, and they are the only relatives of Mr. Benavides that work for, or worked for, our Company.  As Baker Tilly pointed out in its Report, our Company’s own policies – which were implemented by our Company while the late Courtney Chamberlain was still alive and the Chairman of our Company – permit the hiring of related persons.  We note that none of these three was hired by Diego Benavides, though he is certainly aware that they were hired, and none of them report directly to him.

Another allegation is the perception that Diego Benavides is paid an excessive salary.  The amount of his salary is a matter of public knowledge.  It was determined by the compensation committee of the Board of Directors in 2017 and based on a remuneration study of the mining sector conducted in 2017.  The independent firm of consultants found that the amount of Mr. Benavides’ salary is not evidence of wrongdoing.  This consultant also reviewed Mr. Benavides’ perquisites and his expense reimbursements and, similarly, determined that any allegation of improper behaviour in this respect was unfounded.

The last allegation investigated is that Diego Benavides hired three unqualified friends for executive positions, simply because they were his friends.  All three are qualified for their positions, all three are members of the mining community in Peru (two of the three knew Mr. Benavides from the past), and, perhaps the most important, the Company had a pressing need to fill all three of those positions.  That need was created when the company began to transition back to its real business (mining, and the development of Ollachea) after years of hunkering down in the fight with COFIDE. During the COFIDE years we needed every cent of our revenue to fund the arbitration, which was very expensive.  We laid off many of the skill people needed for development and construction.  So, as we made the transition back to an active mining company, we needed to add project management skills (such as those possessed by Mr. Ngatai) and we needed to add skilled communicators in the English language as a commitment to the English speaking investor community. All three of these new hires speak fluent English, and two of them (Susan Gabbie and Pedro Valdez) are skilled communicators.  The Board made the decision to change their “Officer” titles to “Manager” so their focus would be specifically the Ollachea Project at the subsidiary level and in consideration of the size of the Company.  As part of the Special Committee’s review, in October, the company contracted with an international company specializing in human resource matters.  Everest Consulting Group Inc. conducted face to face interviews (via Zoom) and reviewed all existing documentation relating to the three hires. Based on those interviews, and the resumes of the three new hires, both Everest Consulting Group and Baker Tilly concluded that all three of these people are qualified for their positions and the allegation was unfounded.

Both the report of the Special Committee and the Baker Tilly report will be forwarded to our independent statutory auditors, PKF Littlejohn LLP, for their review and consideration.

This investigation has been signed off by the Special Committee, reported to the Board of Directors and is now closed. Thank you for your time, I hope that you will support us over the next year, as we do our best to achieve a successful transaction to develop Ollachea. Please find attached the “Comfort Letter” issued by Baker Tilly.

Gerardo Pérez
Executive Chairman

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