Swiss Engineering Firm ABB Just Took a $100 Million Hit from a ‘Sophisticated Criminal Scheme’
Exec in South Korean office disappears after allegedly embezzling $100M
Oh Myeong-se, treasurer and integrity ombudsmen for ABB Korea, with responsibility for maintaining legal and ethical integrity, allegedly forged documentation and colluded with third parties to steal from the company
Oh allegedly, embezzled a combined 35.7 billion won ($31.31 million) in 73 transactions
The fugitive Oh, in his late 50s, fled to Hong Kong on Feb 4, four days before the company filed a complaint against him with South Korean authorities
ABB robot in Nord-Pas-de-Calais, France
A Swiss engineering company on Wednesday discovered that it had been the victim of a massive $100 million insider fraud, allegedly masterminded by an executive in its South Korea unit.
The treasurer of an ABB subsidiary in Seoul, believed to be behind the rip-off, disappeared on Feb. 7. The company discovered the alleged crime two days later.
Swiss engineering group ABB on Wednesday said it fell victim to a “sophisticated criminal scheme” at its South Korean subsidiary, with the chief suspect an executive responsible for ethics training.
The executive, named by a source in South Korea as Oh Myeong-se, was treasurer and one of two integrity ombudsmen for ABB Korea, to whom staff were supposed to report any ethical concerns.
He was also the head of compliance at ABB in Korea until 2010, said a source familiar with the investigation, a role that carries responsibility for maintaining legal and ethical integrity.
Mr Oh is suspected of forging documents and colluding with third parties to steal funds, ABB said, estimating it would take a pre-tax charge of about $100 million for the affair, which analysts said raised concerns about its corporate oversight.
The company claimed that he embezzled a combined 35.7 billion won ($31.31 million) in 73 transactions, the official said, adding that police were investigating the man’s accounts.
Oh disappeared on Feb. 7 and ABB subsequently discovered significant financial irregularities, the company said.
Oh, in his late 50s, left for Hong Kong on Feb.4, four days before the company filed a complaint against him with the South Korean police, a police official said on Thursday.
ABB AG headquarters in Baden Switzerland
Quoting a source, Reuters identified the suspected insider as Oh Myeong-se. After he disappeared, ABB discovered significant financial irregularities.
“On Feb. 9, we became aware of suspected financial irregularities in South Korea and we immediately launched an investigation,” ABB spokesman Saswato Das said.
“Given the size of the scheme, the investigation may expand to third parties inside and outside of ABB in South Korea,” he said in a statement.
ABB Chief Executive Ulrich Spiesshofer described the alleged fraud as “shocking news” which he said could dent the power equipment and industrial company’s reputation.
“The entire ABB group, all 132,000 of us, will have to live with the consequences,” Spiesshofer told staff in a letter after the company said it had uncovered the significant embezzlement and misappropriation of funds, Reuters reported.