M&E specialist had announced 拢2.8m was missing from its accounts

黑洞社区 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 鈥渞eceive aggregate cash payments of 拢1.43m on or before 31 December 2017 against a former employee and related parties鈥�.

T Clarke that it had uncovered financial irregularities in the accounting function of its wholly-owned subsidiary, DG Robson Mechanical Services (DGR), saying that 鈥渇unds in excess of 拢2.8m have been misappropriated by an employee over a number of years鈥�.

The settlement announced today is only half the sum T Clarke alleged had been stolen last October.

However, it added: 鈥淭he 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.鈥�

T Clarke said in March that 鈥渢he total cost of the fraud, including investigation costs, is 拢3.3m, of which 拢1m had already been expensed in prior years. The 2015 income statement has been re-presented to include 拢500,000 costs relating to the fraud. The cost in 2016 includes 拢400,000 fees incurred in investigating the fraud and pursuing civil and criminal remedies.鈥�

The M&E specialist, which brought in 鈥渆xpert professional advisers鈥� 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 拢278.6m (拢242.4m), with profit before tax up slightly to 拢3.7m (拢3.5m). Net cash stood at 拢9.3m (拢6.7m). It will announce its interims on 8 August.

Chairman Iain McCusker said: 鈥淚 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.

鈥淎s 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.鈥�

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