ZURICH (Reuters) - Power transmission and industrial automation company ABB (ABBN.S) has replaced its senior management in South Korea after an executive disappeared from the business with $100 million (79.43 million pounds).
The Swiss company has fired the managing director and chief financial officer in charge of South Korea in the wake of the scandal, which exposed a failure to maintain effective financial controls.
The suspected fraud reduced ABB’s 2016 net income by $64 million after taxes and insurance recoveries.
ABB’s headquarters in Zurich is reviewing weakness in internal controls which enabled the scandal, with Chief Executive Ulrich Spiesshofer determined to prevent the problems arising elsewhere, the company said on Monday.
“We are reviewing the roles and responsibilities of our staff to ensure a proper segregation of duties and make sure something like this does not happen again,” ABB spokesman Saswato Das said.
“ABB continues to take corrective and disciplinary action where necessary,” he added.
As part of the shakeup SweeSeng Lee has been appointed managing director of ABB in South Korea, with immediate effect, succeeding MK Choi, who has left the company. Rajiv Malhotra has been appointed country CFO.
The management overhaul comes after ABB last month said a South Korean treasurer had engaged in a “sophisticated criminal scheme” to embezzle millions before disappearing.
The treasurer, identified as Oh Myeong-se, is still being sought by authorities.
Auditor Ernst & Young concluded ABB had not maintained effective internal control over financial reporting, according to ABB’s annual report published this month.
ABB acknowledged the shortcomings, citing inadequate management oversight of the Korean unit’s treasury activities.
Reporting by John Revill; Editing by Michael Shields