Adecco probe ends with no action

Adecco says the US probe has ended Keystone

A United States investigation into last year’s accounting crisis at Swiss-based Adecco, the world’s largest employment agency, has ended without any action.

The inquiry was opened last year by the US market watchdog following the late reporting of results by Adecco, a move which cost investors billions of dollars.

“The staff of the US Securities and Exchange Commission has notified Adecco that its investigation of the group has been terminated and that no enforcement action has been recommended,” Adecco said in a statement on Tuesday.

Last June, the employment agency said that the commission was conducting an informal inquiry concerning events leading up to the company’s January announcement that it would not be delivering its 2003 results on time.

The firm said it had discovered major control weaknesses in its North American operations. It then launched its own probe into the accounting problems.

Meanwhile investors lost billions of dollars and the chairman, finance chief and the head of the North American operation all lost their jobs.

Minor mistakes

Adecco later said that no fraud had been found and the problem involved minor accounting control mistakes.

The company, which has its headquarters near Zurich, eventually posted a 26 per cent rise in profit at SFr466 million ($381 million) for 2003 and said that its review showed no need to restate earnings for the first three quarters.

Adecco was also investigated by the Swiss authorities and faced class action lawsuits in the US. It said that the US Department of Justice had issued a grand jury subpoena for “a variety” of its records.

“The disappearance of this uncertainty factor should be rated as positive, even though the market had expected the investigation to be dropped,” said Zurich Cantonal Bank analyst Marco Strittmatter.

Adecco’s shares rose one per cent on Tuesday morning on the news, but were still nearly 20 per cent below the levels seen prior to the company’s accounting flap.

swissinfo with agencies

Key facts

Adecco is the world’s largest employment agency.
It was formed in 1996 from Adia und the French firm Ecco.
It directly employs 30,000 people in 71 territories around the world.
It claims to connect 700,000 jobseekers and temporary staff with businesses every day.
2003 net profit: €305 million.

In brief

Adecco’s accounting woes began when auditors Ernst & Young refused to sign off on 2003 figures.

The firm said they were accurate and refused to restate them, but publication was delayed for months and the share price was hammered.

Adecco revamped its board in June, after chairman John Bowmer stepped down in the wake of the accounting scandal.