ABB has disclosed the preliminary results of a company enquiry into accounting irregularities at its Italian subsidiary.
ABB launched its inquiry into the activities of the subsidiary earlier this year following the discovery of the accounting irregularities during an internal audit review.
The inquiry uncovered an overstatement by the medium-voltage business in Italy of its earnings before interest and taxes (EBIT) of approximately $70 million from the first quarter of 1998 through the first quarter of 2004. That corresponds to 1.4% of ABB’s total reported consolidated EBIT during the period.
According to the company, the annual impact on EBIT over the period ranged between about $2 million in 1998 to a maximum of some $20 million in 2002.
The company inquiry also uncovered two ‘improper payments’ made in 2001 and 2002 in connection with the award of a power equipment contract in Italy.
ABB said that it had disclosed the irregularities to the Italian authorities as well as the US Securities and Exchange Commission (SEC) and that it would take corrective action regarding its consolidated results for the period in question.
ABB said it intends to publish restated consolidated figures later this year.