ABB Ltd. (NYSE: ABB), the Swiss engineering group, uncovered a fraud by the local treasurer at its South Korean subsidiary, which leaving a $100 million gap in the financial results of 2016.
The suspect was named Oh Myeong-se, which was the treasurer and the executive responsible for ethics training, according to ABB’S Korean website. On February 7, the suspect disappeared. “On February 9, we became aware of suspected financial irregularities in South Korea and we immediately launched an investigation," said Saswato Das, the spokesman of ABB.
According to the company, the treasurer is “suspected of forging documentation and colluding with third parties to steal from the company” in a “sophisticated criminal scheme”.
Currently, the South Korea subsidiary owns about 800 people and created $525 million sales in 2015. After checking the balances, the Swiss ABB said the loss is only limited to South Korea. The South Korean subsidiary refused to comment on this fraud. ABB said that it is cooperating with law enforcement authorities and hired independent forensic specialists. The fraud had negative effect to the reported 2016 results, which would cause a $100 million pre-tax charge.