M&E specialist had announced £2.8m was missing from its accounts
Building services contractor T Clarke has agreed an out-of-court settlement following the discovery of fraud at one of its subsidiaries.
The firm said it will “receive aggregate cash payments of £1.43m on or before 31 December 2017 against a former employee and related parties”.
T Clarke announced last October that it had uncovered financial irregularities in the accounting function of its wholly-owned subsidiary, DG Robson Mechanical Services (DGR), saying that “funds in excess of £2.8m have been misappropriated by an employee over a number of years”.
The settlement announced today is only half the sum T Clarke alleged had been stolen last October.
However, it added: “The company continues to pursue other third parties in order to recover the balance of the misappropriated funds. It is too early at this stage to estimate the quantum of any further recovery.”
T Clarke said in March that “the total cost of the fraud, including investigation costs, is £3.3m, of which £1m had already been expensed in prior years. The 2015 income statement has been re-presented to include £500,000 costs relating to the fraud. The cost in 2016 includes £400,000 fees incurred in investigating the fraud and pursuing civil and criminal remedies.”
The M&E specialist, which brought in “expert professional advisers” to help with its investigation, said the fraud incident was contained within DGR, which has since been integrated into its London business.
In its results for 2016, T Clarke announced increased revenue of £278.6m (£242.4m), with profit before tax up slightly to £3.7m (£3.5m). Net cash stood at £9.3m (£6.7m). It will announce its interims on 8 August.
Chairman Iain McCusker said: “I am very disappointed we had to report the discovery during the year of a significant fraud at one of our subsidiary companies. The management response on discovery of the fraud was swift, decisive and appropriate. An independent and comprehensive review of our internal controls and procedures was commissioned immediately.
“As a result of the review, a number of recommendations were made which will further strengthen our controls and are in the process of being implemented. The board is satisfied that the fraud was limited to the subsidiary company in question and that the full extent of the fraud has been identified. Legal proceedings are ongoing.”