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ABB comes clean over loss cover-up

ABB says it has sacked a number of its London-based staff Keystone Archive

The Swiss engineering group, ABB, has sacked a number of London-based staff for attempting to conceal losses.

This content was published on July 9, 2002 - 16:01

According to the group, "a handful" of managers in the manufacturers and consumer industries division tried to overstate the company's net income for 1999 and 2000 by $30 million and $10 million respectively.

"The internal auditors found out and the faulty amounts never entered official accounts," said ABB spokesman, Thomas Schmidt. "There is no need for us to change the annual reports."

Accounting irregularities

Tuesday's announcement comes amid a series of damaging revelations of accounting irregularities at big firms around the globe, including energy giant Enron and telecoms operator WorldCom.

ABB shares slipped more than two per cent by mid-afternoon trading on Tuesday from SFr13.70 to SFr13.40.

The company said managers had tried to understate losses in order to hide cost overruns resulting from poorly-calculated contracts.

"In 2001, we identified and recorded additional costs amounting to approximately $25 million relating to these activities," added Schmidt.

ABB has been battling to restore investor confidence in the wake of a pensions scandal involving two former CEOS earlier this year.

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