Ethics Executive Charged with $100 million Fraud
Posted Monday, May 1st, 2017 by Angela Fabek
Embezzlement can strike any company and be committed by anyone, but the last person you would expect to embezzle approximately $100 million would be the executive in charge of ethics training. That’s exactly what happened recently with Swiss engineering group ABB (ABBN.S) on February 22, 2017. The company announced it fell victim to a “sophisticated criminal scheme” at its South Korean subsidiary. The chief suspect of this multi million-dollar theft? The executive responsible for overseeing ethics training in the South Korean branch.
The executive, named by a source in the country as Oh Myeong-se, served the company as both treasurer and one of two integrity ombudsmen for ABB Korea. An online company magazine that can be found on ABB’s Korean website notes Oh as the person to whom employees report ethical concerns.
Among the positions Oh held while at ABB Korea was head of compliance – another role dealing with ethical and legal integrity – until 2010, a source close to the investigation stated.
It’s believed that the former executive committed this white collar crime through document forgery and conspiring with third parties to steal the funds, ABB stated, estimating it would absorb a pre-tax charge of about $100 million for the affair. The Swiss company stated that the alleged theft was limited to South Korea.
Analysts have already said the ordeal raises concerns about the corporate oversight at ABB.
Four days before the company got wind of the embezzlement and filed a complaint against Oh with the South Korean police, the executive departed for Hong Kong on Feb. 4, a police official said. ABB claims Oh made off with a combined 35.7 billion won ($31.31 million) from 73 transactions, the official said.
Group Chief Executive Ulrich Spiesshofer described the alleged embezzlement as “shocking news.” This is yet another incident for the industrial firm that’s also dealing with suspected bribery and corruption in Britain.
The company’s South Korean subsidiary declined to comment. ABB’s stock took a sharp dip after announcement of the potential charge.
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