Elders alleges $24m fraud in live cattle division
Elders has revealed the findings of a forensic investigation that began in October over discrepancies in the accounting and valuations of its live cattle business.
It comes amid a period of turmoil for the Adelaide-based company that included the sudden exit of chief executive Malcolm Jackman.
Elders hired PPB Advisory and lawyers Herbert Smith Freehills to complete the investigation into overstatements in the 2012 financial year and first half of 2013.
"PPB Advisory found that the discrepancies were supported by falsified documentation and journal entries and misleading management representations made to senior management and external auditors," Elders company secretary Peter Hastings said in a statement.
"PPB Advisory has identified evidence that attributes responsibility for the overstatements to a handful of individuals who were then employees of the trading business unit."
The investigation was launched the same day Elders announced that seven senior employees from its live cattle business had resigned. Ruralco, which has twice tried to merge with or take over Elders, poached the traders on October 1 to set up its own live cattle division.
This has put pressure on Elders' live export business.
Elders has launched legal proceedings against four of the rebel traders to protect itself against "irreparable harm". It has asked the court to stop them from poaching clients and demand they return confidential information.
But the lawsuit does not mention alleged accounting irregularities.
Mr Hastings said: "In respect of the individuals identified by PPB Advisory ... Elders will consider its position after receipt of the final reports," adding "Elders will not hesitate to refer matters to the relevant authorities where applicable."
Elders initially said the discrepancies would not affect its financial outlook. But three days later the company said it expected its net profit to take a hit, valuing the discrepancies at $18 million.
The situation worsened two weeks later when Elders posted a $505 million loss.
Frequently Asked Questions about this Article…
Elders has uncovered an alleged $24 million fraud in its live cattle exports division, involving discrepancies in accounting and valuations. This fraud is attributed to a handful of individuals who were employees of the trading business unit.
Elders discovered the fraud through a forensic investigation conducted by PPB Advisory and Herbert Smith Freehills, which revealed falsified documentation and misleading management representations.
Elders is considering legal actions and may refer the matter to authorities. They have already launched legal proceedings against four traders to prevent client poaching and protect confidential information.
Initially, Elders stated the discrepancies wouldn't affect its financial outlook. However, they later revised this, expecting a hit to net profit and valuing the discrepancies at $18 million.
The investigation was conducted by PPB Advisory and Herbert Smith Freehills, who found evidence of falsified documentation and misleading representations.
The fraud allegations came during a turbulent time for Elders, which included the sudden exit of CEO Malcolm Jackman, adding to the company's challenges.
Ruralco, which has attempted to merge with or take over Elders twice, poached seven senior employees from Elders' live cattle business, putting pressure on Elders' operations.
Elders is considering its position regarding the individuals identified by PPB Advisory and may refer the matter to relevant authorities, indicating potential legal consequences.
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