SOUTH African food service company Bid Corporation Ltd has uncovered fraud involving manipulation of accounts and misappropriation of inventories in a Chinese unit.
On Thursday, Bidcorp said it would take a series of charges to cover the cost.
The fraud in the Miumi food division of its Angliss Greater China business was uncovered in late June 2021 by its internal surveillance and control processes, Bidcorp said, adding that the employees who it believed were involved in the fraud had been suspended or fired.
“It is apparent that this fraud has been going on since about 2016 and has involved the manipulation of accounts receivables, prepayments, and the misappropriation of inventories, the result of which these balances have been progressively overstated over the past six years.”
Bidcorp said the size of the resulting impairments, approximated at R501 million ($33m) in respect of receivables and prepayments, R202m in respect of inventory and R36m in respect of unrecorded liabilities.
It said it was confident of some future recoveries from insurance, from the perpetrators and from other third parties involved.
Bidcorp said its best estimate was that the loss attributable to the current financial year ended June 30 was about R119m, while R95m relates to the previous year and the balance to the years before this.
A detailed forensic investigation by accountants Ernst & Young (China) Advisory Ltd will reveal the full detail in due course, it said.
Bidcorp said all employees of Miumi involved in the matter, as well as certain minority shareholders, who were also general managers of the business, had been suspended or their employment terminated, with new management put in place.
The business has been significantly scaled back and all wholesale activities, where the fraud occurred, have ceased, the company said.
REUTERS