Mining executives fined $200K each for conduct that 'completely undermined' regulations, BCSC says

The B.C. Securities Commission logo in an undated file photo.

British Columbia's securities regulator has fined the executives of a now-defunct mining company a total of $400,000 for "failing to disclose information, concealing financial losses and making false or misleading statements."

Zahir "Zip" Dhanani and Robert Naso were both directors of Arian Resources Corp. between 2014 and 2017, when the misconduct took place, according to a decision by a panel of the B.C. Securities Commission. 

For part of the period, Dhanani also served as the company's chief executive officer, and Naso served as its chief financial officer.

The company's only material asset was an Albanian copper mine, which it agreed to purchase all the shares in from a different Canadian company in 2014, according to a news release from the BCSC.

The terms of that agreement, as described in the panel's decision, required Arian to pay the seller $2 million at the end of June 2015.

The mining company was unable to make that payment, prompting the vendor to commence arbitration against it and, eventually, the Albanian authorities to issue a stop work order on the project.

Arian did not mention any of this in its financial disclosures from the time, the panel's decision notes.

The company also falsely stated the compensation that its executives had received in 2015, the panel found. While it claimed to have paid Dhanani $162,500 and other named officers a total of $386,744, the company had actually paid Dhanani $514,752 and other officers just $83,940, according to the decision.

Arian also misrepresented an $800,000 loss as a consulting payment, the decision notes, even though the promoter paid to do the work never did it. And a roughly $285,000 payment to Dhanani's mother was classified as travel-related, according to the BCSC panel, which noted that the company did not disclose that it was paid to an executive's relative.

The panel released its decision in the case in October, but issued sanctions to the two men and their company this week. 

In addition to a $200,000 fine for each man, the panel issued orders permanently banning them from trading any securities, except in accounts in their own names. They're also banned from taking advisory or promotional roles in the financial markets.

Similar bans on trading, advising and promoting securities were issued to the company itself, which the BCSC said has been dissolved.

In issuing the bans, the panel wrote that the company's conduct had "completely undermined the purpose of the continuous disclosure regime that lies at the heart of securities regulation."