The outcome to the investigation by Phosphagenics (POH) into alleged fraud involving its former chief executive, Esra Ogru, has raised more questions than answers.
The biotech claims that Ogru and another recently dismissed employee had misappropriated $5.7 million from the company over the past eight years.
The “invoicing irregularities” had been picked up by its newly appointed chief financial officer, Anna Legg.
Ogru is a well-regarded member of the biotech fraternity and the news has shocked the industry, particularly because the apparent motive appears to be plain greed as sources told Eureka Report that Ogru does not appear to have gambling, drinking or other financial problems that could explain the alleged behaviour.
While Phosphagenics believes it can recover a “substantial part of the misappropriated funds”, shareholders should be questioning why the company board and its auditors had failed to pick up the alleged long-running fraud.
The chairman of Phosphagenics, Jonathan Addison, had been the head of the company’s audit, compliance and corporate governance committee until May 2010 and Ernst & Young is the company’s external auditor.
Deloitte Forensic, which was hired by Phosphagenics, found that four other external parties were involved in the alleged fraud.
Ogru was suspended from her official duties at the company on July 1 and she resigned as an executive director on July 22. Ogru was unavailable to comment. She has yet to publicly respond to the allegations.
Phosphagenics is part of the Uncapped 100.