ZURICH, March 27 Power transmission and
industrial automation company ABB has replaced its
senior management in South Korea after an executive disappeared
from the business with $100 million.
The Swiss company has fired the managing director and chief
financial officer in charge of South Korea in the wake of the
scandal, which exposed a failure to maintain effective financial
The suspected fraud reduced ABB's 2016 net income by $64
million after taxes and insurance recoveries.
ABB's headquarters in Zurich is reviewing weakness in
internal controls which enabled the scandal, with Chief
Executive Ulrich Spiesshofer determined to prevent the problems
arising elsewhere, the company said on Monday.
"We are reviewing the roles and responsibilities of our
staff to ensure a proper segregation of duties and make sure
something like this does not happen again," ABB spokesman
Saswato Das said.
"ABB continues to take corrective and disciplinary action
where necessary," he added.
As part of the shakeup SweeSeng Lee has been appointed
managing director of ABB in South Korea, with immediate effect,
succeeding MK Choi, who has left the company. Rajiv Malhotra has
been appointed country CFO.
The management overhaul comes after ABB last month said a
South Korean treasurer had engaged in a "sophisticated criminal
scheme" to embezzle millions before disappearing.
The treasurer, identified as Oh Myeong-se, is still being
sought by authorities.
Auditor Ernst & Young concluded ABB had not maintained
effective internal control over financial reporting, according
to ABB's annual report published this month.
ABB acknowledged the shortcomings, citing inadequate
management oversight of the Korean unit's treasury activities.
(Reporting by John Revill; Editing by Michael Shields)