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Netherlands – Brunel restates financials after fraud

16 May 2013

Dutch staffing firm Brunel International published its 2012 financial statements on Wednesday, following a fraud in America which has resulted in some modifications to the results published earlier this year.

The recruiter found evidence of fraud at its US office, forcing the firm to take a €9.7 million charge as financial results had been overstated. One employee had inflated revenue to make margins look better. Revenue was manipulated for operations in the United States, Canada, South America, Chad and Angola.

Following a subsequent investigation, EBIT in 2012 decreased by €1.8 million. The net result is virtually unchanged from the previously published figures.

The firm tried to reassure shareholders that the fraud had been an isolated event. “Both our own additional internal investigations and the investigation by KPMG confirm our provisional findings: that the irregularities in the figures as reported by our office in Houston were an isolated incident and entirely attributable to a single employee,” said the recruiter.

“In 2012 we received some signals regarding the inadequate quality of the finance department in Houston. It appears that with the appointment of the regional financial controller of Brunel Americas in mid-2011, the necessary segregation of duties between accounting and control broke down, the impact of which was only spotted by Brunel in early 2013. Afterwards it was established that these errors had initially been the result of incompetence, and that in the course of 2012 there was some manipulation of internal reports and the disposition of €350.000.”

Brunel is “very disappointed” about the fraud and has now taken measures to prevent similar occurrences in the future.

CEO Jan Arie van Barneveld said: “We have carried out a root-and-branch investigation of the irregularities, and come to the conclusion that both their nature and scope are restricted to that which we initially uncovered a few months ago.

“And that is a huge relief. As a result of this occurrence, we are now more than ever aware of the importance of strong controls. This period has been an important lesson for us. Brunel will continue to evolve, as our growth and the quality of our controls must develop in parallel.”

In trading today, the company’s share price improved by +0.7% to €34.65, a +4.3% increase from a year ago.

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