Swiss-based power and automation group ABB cut its 2016 profit report by $64 million after saying that internal controls failed to catch suspected fraud in South Korea.
It revised net income to $1.89 billion, ABB said in its annual report, down from $1.96 billion reported in February. The pre-tax impact was $73 million, less than the roughly $100 million previously reported, due to insurance recoveries.
Swiss-Swedish engineering giant ABB said Wednesday that it had uncovered significant embezzlement at its South Korean subsidiary, which it warned would heavily impact its 2016 earnings. The suspected theft will lead to a pre-tax charge of about $100 million.
The company said it had discovered "a sophisticated criminal scheme related to a significant embezzlement and misappropriation of funds" at the South Korean unit.
The executive was treasurer and one of two integrity ombudsmen for ABB Korea – to whom staff were supposed to report any ethical concerns – according to an online company magazine available on ABB’s Korean website.
