ABB Ltd., a Zurich-based company, has uncovered embezzlement in its subsidiary at South Korea. This happened after the local treasurer who was suspected of stealing money from the company disappeared. This has resulted in 100 million dollar decline in the results of the last year.
The suspect went missing on 7th February. He was suspected of forging the documents and cooperating with some malicious third parties to execute a criminal scheme. This information was given by ABB on Wednesday. The company checked all its accounts globally for its bank balance; the company revealed that the impact of this theft has been limited to only the Asian nation.
This fraud that has taken place is the 2nd disclosure that has occurred in this month. Investigations are being carried out by the Department of U.K. Serious Fraud Office. This activity aggravated the pressure on Ulrich Spiesshofer, the Chief Executive Officer. Cevian Capital AB, which is the activist investor, has demanded a breakup from the company. ABB also said in a statement that the co-founder of Cevian, Lars Forberg has gained a nomination for the board seat.
Panagiotis Spiliopoulos, an analyst of Vontobel wrote a message to the clients saying that this case of South Korea has been disappointing; however, they do not expect the impact to last for a long term. In Zurich, the prices of the shares went down to 23.08 francs, which is 0.3 percent.
This activity of suspected theft will also cause a charge of 100 million dollars as pre-tax, which will be calculated on the unaudited results of the year 2016. ABB also said that it is collaborating with the law enforcement authorities and has even hired independent forensic specialists.
The legal woes of ABB just added up when Cevian, which is the second largest shareholder, announced a spin-off of the business of power grids in the Swiss company and gave reasons that it is becoming difficult to carry out the executions and has become complex.
The nomination of the board of Cevian will be taking place in the next month and it will give insight about the 6 percent stake in the business. ABB also stated that all its members, excluding Michel de Rosen and Robyn Denholm, will stand for re-election as the board members.
Forberg has also said that he is looking forward to work with the colleagues and the efficient board members management and will contribute to the enhancement of the value and competitiveness of ABB. However, he denied giving any information about the upcoming nominations.
According to the analysts of Morgan Stanley, Cevian has not yet declared in the public that it supports ABB’s idea to keep the division of the power grids.