Due to an insufficient segregation of duties, one employee found an illegal backdoor to steal $103 million from his employer. A major conglomerate ABB has admitted that an employee, Oh Myeong-se, took advantage of serious mismanagement to create fake contract documents and siphoned $103 million of the firm’s cash. ABB only noticed that huge sums of money were missing after an employee disappeared.
Managers failed to maintain sufficient segregation of duties in the treasury unit of its subsidiary in South Korea, and did not provide enough oversight of local treasury activities, ABB CEO Ulrich Spiesshofer and Chief Financial Officer Eric Elzvik said. “Management has concluded that these deficiencies in the operation of ABB’s internal controls constituted a material weakness,” the executives added.
The suspect was believed to have fled to Hong Kong with the enormous cash loot. At the moment the police were still trying to find him and to bring him back to South Korea. As for the company, it is an expensive learning lesson regarding a lack of segregation of duties. “The entire ABB group—all 132,000 of us—will have to live with the consequences,” Group Chief Executive Ulrich Spiesshofer told staff in a letter after the company said it had uncovered significant loss of money.