ABB unit overstates profits
A unit of the Swiss-Swedish engineering firm, ABB, has overstated operating profit by about $70 million (SFr88.1 million) over the past six years.
The company said the irregularities at an ABB division in Italy came to light during an internal audit.
ABB announced on Friday that a factory of its Italian medium-voltage business near Milan also made two improper payments related to a power equipment contract in Italy.
“Our investigation showed that this is an isolated case,” said ABB chairman and chief executive Jürgen Dormann in a statement released after the close of the Swiss stock market.
Dormann said ABB had already contacted both the Italian authorities and the United States Securities and Exchange Commission.
The manager of the unit in Dalmini has been suspended and disciplinary measures against several other employees are being considered, according to the statement.
The accounting flaws in Italy had an annual impact on ABB’s Earnings Before Interest and Tax (EBIT) of 1.4 per cent between 1998 and 2004.
The company said it was planning to publish restated consolidated figures for the period from 1998 to the first quarter of 2004 later this year.
EU probe
Last month ABB announced the European Commission was probing allegations of anti-competitive pricing in the high-voltage switchgear business of ABB and its European competitors.
ABB’s books are audited by the Ernst & Young accounting firm. The same firm earlier this year refused to sign off on the world’s leading employment agency, Adecco.
Swiss-based Adecco was suspected to have bookkeeping problems at the company’s North American unit.
swissinfo with agencies
Swiss-Swedish engineering firm ABB says it has found accounting irregularities at one of its Italian units.
The unit overstated operating profit by about $70 million (SFr88 million) over the past six years.
The company said it was planning to publish restated consolidated figures for the period from 1998 to the first quarter of 2004 later this year.
ABB reported a first-quarter net profit of $4 million after two years in the red.
Over the past three years ABB has made losses of $2 billion and costly asbestos lawsuits in the US against its former combustion engineering unit brought the company to the brink of collapse.
ABB has a workforce of about 113,000 people in 100 countries around the world.
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