Swedish-Swiss ABB insists fraud not to blame for auditor switch after 16 years

AFP - [email protected]
Swedish-Swiss ABB insists fraud not to blame for auditor switch after 16 years
Ulrich Spiesshofer, CEO of ABB Group. Photo: Ennio Leanza/AP

Swiss-Swedish engineering giant ABB said on Monday it was replacing its auditor Ernst&Young after 16 years, but insisted the shift had nothing to do with embezzlement discovered at its South Korean subsidiary.


ABB said its board intended to appoint Ernst&Young's competitor KPMG as its external auditor as of its financial year 2018, following a year-long tender process.

"The proposal is subject to shareholder approval at ABB's 2018 Annual General Meeting," it said in a statement.

The announcement comes after the company announced in February that it had discovered "a sophisticated criminal scheme related to a significant embezzlement and misappropriation of funds" at the South Korean unit.

READ ALSO: Swedish-Swiss ABB uncovers $100 million fraud

ABB, a top player in the global electrical engineering sector, was subsequently forced to significantly revise down its net profit for 2016, after taking a pre-tax charge of $73 million (65 million euros).

But the company insisted Monday that its decision to switch external auditors had nothing to do with that discovery.

"We initiated a comprehensive external auditor tendering process in spring 2016 -- way before the embezzlement and misappropriation of funds in South Korea happened," ABB spokesman Domenico Truncellito told AFP by email.

"There were several factors that impacted that decision," he added.

Following the announcement, ABB saw its share price inch up 0.29 percent to 24.37 Swiss francs a piece in late morning trading, about en par with the rise of the Swiss stock exchange's main SMI index.


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