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Gold/Mining/Energy : YBM Magnex Intl Sees Revenue Growth 30-35%/Yr In MagnetOp -- Ignore unavailable to you. Want to Upgrade?

To: Adrian du Plessis who wrote (155)	6/7/1998 1:48:00 AM
From: marcos	Respond to of 314

villagevoice.com fundlibrary.com ....... bien hecho, compa¤ero ........ salud ....... marcos

To: Adrian du Plessis who wrote (155)	6/8/1998 3:50:00 PM
From: Mr Metals	Read Replies (3) \| Respond to of 314

YBM Magnex International Inc - Results and recommendations from independent committee investigation YBM Magnex International Inc YBMShares issued 442229011998-05-13 close $14.35Monday Jun 8 1998An anonymous director reports The report of the audit and finance committee (independent committee) of the board of directors containing the results of its investigation has been delivered to the company's auditors, Deloitte & Touche LLP. The independent committee is composed solely of outside directors of the company. In accordance with the recommendations of Deloitte & Touche, the independent committee of the board engaged outside legal counsel and a U.S. based investigative firm experienced in forensic work on an international scale, to investigate the concerns identified by the company's auditors. With respect to the business activities of the company, the report explicitly notes that the investigation found no evidence of participation in criminal acts by the company, its officers or employees, or by any counterparties to contracts with the company in relation to such contracts. The report also notes that it found no evidence of undisclosed conflicts of interest, transactions that were not genuine or material financial transactions which were not as described in the company's financial statements. In its report, the independent committee cited specific breaches of company policy and business prudence with respect to certain European operations. The report stated that the company had instituted significant modifications to the enforcement of company policy immediately upon becoming aware of these issues, and reprimanded the officers involved based upon breaches of policy. The independent committee recommended additional operational improvements to ensure compliance with all company policies and procedures as well as increased oversight of the company's Eastern European-based operations. The company continues to carry on its usual business operations in the United States and internationally. In addition, the company and its counsel are co-operating fully with U.S. authorities and Canadian regulators. The following executive summary is a summary only and is qualified in its entirety by the more detailed information that appears in the full report and appendices. The full report, which contains confidential and proprietary information concerning the business of YBM and its customers and suppliers, will not be released by the company. EXECUTIVE SUMMARY Favourable Findings The investigation has found no evidence of participation in criminal acts by the company, its officers or its employees. The investigation has found no evidence of criminal acts by any counterparty to contracts with the company as it relates to those contracts. The investigation has found no evidence of any involvement whatsoever in the company by Sergey Mikhailov, a reputed crime figure. The investigation has found no evidence of any involvement in YBM since its initial public offering beyond a passive shareholding by Semeon Mogilevich, a reputed crime figure. The investigation has found no evidence of undisclosed conflicts of interest or hidden financial arrangements among employees, suppliers or customers of YBM. The investigation found no evidence of bogus transactions or that material financial transactions were not as described within the company's financial statements. The investigation readily found office addresses and evidence of existence for customers and suppliers regarding which Deloitte had expressed concern. While investigators found evidence that a number of customers and suppliers were not registered with Russian or Ukrainian business registries, the investigators noted that this was common business practice in that region. The investigation found no evidence of impropriety with respect to the incorporation of certain suppliers and customers as offshore companies. Investigators noted that this was common practice within the region. Unfavourable Findings The investigation has confirmed significant breaches in company policy and common business prudence by the company's chief operating officer with regard to European operations. The investigation has identified substantial transactions that required but did not receive board of directors approval. The committee noted that YBM has instituted significant modifications to the enforcement of company policy and reprimanded the officers involved based on the breaches of policy. The committee noted that the company has not proceeded with the vast majority of transactions that had initially caused Deloitte the greatest concern and that the company had suffered no material loss as a result of those uncompleted transactions. The investigation found that adequate documentation of customers and suppliers did not exist despite specific board of directors direction that such records be kept and updated. The investigation found evidence that certain suppliers and customers may be using tax strategies that would appear inappropriate if undertaken by a public company such as YBM. Support for Findings The committee members were active participants in the investigation and have each reviewed and concurred with the description of the findings above. Wolf, Block, Schorr & Solis-Cohen LLP (Wolf Block), a leading Philadelphia law firm, was counsel to the committee and, in this role, was not made aware of any criminal acts committed by the company, its employees or its officers or by suppliers and agent/customers of YBM with regard to their involvement with YBM. Pinkerton Investigation Services, New York, concluded in its report to Wolf Block that: "Overall, no significant negative information was developed during Pinkerton's investigation" within the scope prescribed to it. Committee Recommendations The committee recommends that the board of directors institute numerous changes in company policy and a tightening of enforcement of company policy. In particular, the committee recommends that YBM institute heightened oversight of its Hungary-based operations. The committee recommends the board of directors establish a permanent oversight committee to ensure compliance with proposed changes in policy and the enforcement of that policy. The committee recommends documentation of contracts and other business documents be upgraded as close as possible to North American standards. The committee recommends background checks be a prerequisite to doing business with new Eastern European entities. Existing board direction on maintenance of databases on customers and suppliers will be enforced. The committee proposes to meet with the auditors to discuss YBM's risk in dealing with unregistered counterparties in the CIS. The committee recommends adequate notice be provided for board meetings and full board packages be provided a minimum of seven days in advance. The committee expressed concerns regarding the sustainability of the company's pricing policies, profitability and apparent market share in the CIS. The committee recommends that the board of directors direct management to prepare a detailed report highlighting the reality of these concerns and an action plan to address any potential problem areas. The committee recommends the board direct the preparation of a formal three year strategic plan. The committee recommends the company, its directors, officers and employees assist in any way possible regulatory agencies that may be undertaking investigations surrounding YBM and its shareholders. (c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com