Shares of Gran Tierra Energy Inc. (AMEX:GTE) dropped about 10% on Wednesday after the company disclosed that four members of its board had stepped down following disagreements tied to an audit committee investigation.
According to a regulatory filing, Evan Hazell, Sondra Scott, David Smith and Brad Virbitsky resigned from the board on March 11 and March 12. Their departures reduced the size of the board from nine directors to five.
The directors said their resignations stemmed from disagreements with the majority of the Audit Committee over how an independent investigation into an anonymous complaint was being handled. The departing members opposed the committee’s decision to dismiss the independent legal counsel that had been hired to carry out the investigation.
Smith, who had been serving as Chair of the Audit Committee, wrote in his resignation letter that he “strongly disagree[d] with the decision by a majority of the Audit Committee members to terminate the independent legal counsel,” describing the move as “a fundamental error in corporate governance.”
Scott also criticized the decision, stating she disagreed with ending the independent investigation “despite advice from outside council that the investigation should remain independent.”
Gran Tierra said the anonymous complaint does not involve allegations of fraud or inaccuracies in its financial statements. The Audit Committee added that it has instructed management to continue examining the matter and to retain external legal advisers and other specialists as needed.
Before stepping down, Hazell chaired the Health, Safety & Environment Committee, Scott led the Nominating and Corporate Governance Committee, Smith headed the Audit Committee, and Virbitsky served on several board committees.