Khalid al-Kaf suspended as accounting probe undertaken

Mobily, Saudi Arabia’s second-largest telco has suspended its chief executive Khalid al-Kaf and put his deputy Serkan Okandan in temporary charge pending an investigation into accounting errors.

Earlier this month the company announced a restatement of its results which it blamed on accounting errors, wiping out SAR 1.43 billion (US$381 million) of previously reported profits and sending its share price tumbling.

Al-Kaf will be suspended until Mobily’s audit committee completes its investigation into these errors, the company said in a statement.

Al-Kaf was appointed CEO of Mobily in 2005 after 19 years at Etisalat, which owns 27.5 percent of Mobily.

On November 5 Etisalat cut its own profits by AED162 million (US$44 million) following Mobily’s results restatement.

Okandan, Etisalat’s CFO, was appointed as deputy CEO of Mobily in October, while Etisalat’s chief executive Ahmad Julfar is also a director of Mobily and chairman of its Risk Management Committee.

Mobily’s share price has fallen 36 percent since late October, when rumours began to circulate that something was amiss with the company’s results, wiping out SAR6.56 billion from the value of Etisalat’s stake, according to Reuters calculations.

Mobily’s annual profits more than quadrupled from 2006 to 2009 to reach SAR3 billion that year.

The telco reported a record annual profit in 2013 of SAR6.68 billion, up 11 per cent from the previous year, although that result has now been cut in the restatement.