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Netherlands – Shareholders demand answers from Brunel after costly fraud

07 March 2013

Dutch staffing firm Brunel International (BRI:AEX) last week reported a fraud at its US office and the firm now has to explain itself to shareholders who demanded answers. A financial trading update last week revealed the dubious dealings.

Brunel found evidence of fraud at its US office, forcing the recruiter to take a €9.7 million charge as financial results had been overstated. Jan Arie van Barneveld, CEO of Brunel International, said 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, he said.

Given a -22% decline in the company’s share price, the Dutch shareholders association, VEB, said the company had to recover the confidence of its investors. A letter from the VEB said the recruiter had provided insufficient information about the fraud. The group of shareholders now asked the firm to provide more details on the scam.

It wants to know when Brunel first noticed the “accounting irregularities” and asked how internal controls could have failed to spot the fraud. The VEB also questioned on what basis Brunel could claim that the incident had been an isolated case, especially as an investigation into the matter is still ongoing. Shareholders are keen to find out when the internal investigation will be completed and when an update can be expected.

The VEB has more than 48,000 members, including both private and institutional investors.

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