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ABB fires UK managers for hiding $65m losses

01 July, 2002

ABB fires UK managers for hiding $65m losses

ABB has revealed that it has fired "several" UK employees for attempting to conceal losses totalling about $65m during 1999 and 2000. The employees, who have not been identified, were part of the management team in the "London region" of ABB`s manufacturing and consumer industries division.

ABB discovered the irregularities during a regular compliance investigation by its internal audit group. This revealed that, during 1999 and part of 2000, the employees had deliberately concealed losses arising from contracts for which revenues were insufficient to cover costs. According to ABB, costs were understated to hide cost over-runs resulting from poorly calculated long-term contracts.

As a result of the investigation, the individuals concerned were "terminated", and the local management in the London region was replaced.

ABB believes that the activities were limited to the London region of the division and did not extend to other operations.

In a statement filed with the US Securities and Exchange Commission (SEC) in June, ABB says that "if we had not discovered these activities, our net income for 1999 and 2000 would have been overstated by $30m and $10m, respectively".

It adds that during 2001 it identified additional costs amounting to around $25m, related to these activities.

The losses were discovered before they entered ABB`s official accounts.

In its SEC statement, ABB states that "we cannot ensure compliance on a global basis by all of our employees with our internal control policies and procedures".




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