Hastie suspends employee after $20m 'irregularities' May 25,...

Hastie suspends employee after $20m 'irregularities' May 25, 2012 - 12:11PM

Read later.Electrical and refrigeration company Hastie Group will take a $20 million hit to its full year profit after discovering "deliberate" irregularities in its financial accounts.

The company today said an employee deliberately caused the irregularities in Hastie's accounts in the 2008/09 financial year.

The employee had been suspended, said the company, a supplier of mechanical, electrical and refrigeration services to the building industry.

Advertisement: Story continues below Hastie stock last traded on April 13, at 16 cents, and have been suspended every since. The company's market value is about $20 million - roughly the size of the accounting losses.

Other current and former senior management also may have been involved, and may have failed to apply the required financial supervision and review standards, Hastie said in a statement.

Investigation

Hastie CEO Bill Wild told BusinessDay this morning that fewer than 10 staff - current and former senior managers and business directors - were under investigation.

"I don't believe it was done for personal gain, but it's certainly improper behaviour," he said, stressing this assessment was a preliminary view only.

"Some might have done it to ensure the business they were involved in looked good, or because someone put pressure on them," he said.

Mr Wild declined to comment whether its auditors Deloitte Touche Tohmatsu were also being looked at.

He said that the revelations had "scared" one prospective suitor away completely, and "in light of what's happened, you'd have to think that due diligence could take longer" for a second potential recapitalisation proposal.

Questioned how long the investigations would take, Mr Wild replied: "How long is a piece of string?"

"This is a matter now for our auditors to get to the bottom of. We need to know how it happened, how it wasn't found for so long."

Discovery

Accounting irregularities originally amounting to $3 million were discovered during audits in the six months to December 31, 2011, and were included in the company's loss for that period.

But fresh information received recently by Hastie prompted further investigations which revealed even larger irregularities, the company said in the statement.

"These irregularities date from the financial year 2009 and appear to have resulted from the deliberate actions of a current employee (on suspension) and that, potentially, some current and former senior management may have participated in the irregularities and failed to apply the required standards of financial supervision and review," Hastie's statement said.

Hastie said it would take a charge of about $20 million to its current financial year profit as a result.

The company said it had referred the matter to the corporate watchdog, the Australian Securities and Investments Commission (ASIC).

Hastie said it expected to release more information once it investigations were complete.


Read more: http://www.smh.com.au/business/hastie-suspends-employee-after-20m-irregularities-20120525-1z8os.html#ixzz1vqeqmRiv