RIYADH — The CEO of telecommunications company Etihad Etisalat, known as Mobily on the Saudi stock exchange, has been suspended after accounting errors forced the company to restate 18 months of earnings. Etihad Etisalat, which is 28 percent owned the United Arab Emirates' Etisalat, said in a statement posted on the Saudi stock exchange website Sunday that CEO Khalid Al-Kaf was suspended effective Nov. 21. The suspension of Al Kaf will last until the audit committee submits a report to the board, the company said today in a statement to the Saudi Stock Exchange. The statement said Deputy CEO Serkan Okandan would run the company's operations until an audit committee submits its report identifying the responsibilities and errors to the board of directors for 2013 and the first half of this year. The telecommunications company's shares have plunged 30 percent since Oct. 30, closing at around SR56 ($15) a share last week. The disclosure prompted the Saudi market regulator to start a probe to determine if Mobily violated rules and led the company's market value to plummet to SR43.2 billion ($11.5 billion) last week from SR61.6 billion at the start of the month. Etisalat, as its largest shareholder is known, today called for an independent investigation to identify what had happened at Mobily, it said in a statement. The shares swung between gains and losses, and closed Sunday down 0.2 percent at SR56.07. They've plummeted about 30 percent this month. Okandan is also the chief financial officer at Etisalat. Mobily's restated profits will be reflected in Etisalat's fourth-quarter financial results, the company said Nov. 5. “As a major shareholder Etisalat wants to make sure it has some influence over cleaning things up, although ultimately I see this as a temporary management change before a new CEO is found,” Asim Bukhtiar, vice president and head of research at Riyad Capital, said today by phone. “It is hard to say how long this will take for the company to get over but at least the share price now seems to be stabilizing around 56 riyals.” Mobily's third-quarter profit dropped more than 70 percent, missing analyst estimates. The company said on Nov. 6 that it won't pay a dividend for the third-quarter. “The company has taken a decision here and it should give investors confidence that any error like this will be dealt with,” Tariq Qaqish, head of asset management at Dubai-based Al Mal Capital PSC, said today by phone. “This is a good sign for investors that the company is committed to transparency and corporate governance.” — SG
