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Rs.172mn fraud at Sierra Cables

14 May 2014 04:41 am - 0     - {{hitsCtrl.values.hits}}

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A fraud amounting to approximately Rs.172 million has been detected at Sierra Cables PLC, a unit of Sierra Holdings, the company informed the Colombo Stock Exchange yesterday.

"The board of directors of Sierra Cables PLC wishes to announce that it has been informed that there have been significant misstatements in the financial statements of the company for the years 2010/11, 2011/12, 2012/13 and 2013/14," the company said in a filing.

It further stated that subsequent to the suspicions raised, an inquiry was initiated and KPMG was required to give a preliminary report.

"The preliminary report of KPMG indicates a discrepancy, tentatively amounting to approximately one hundred seventy two million rupees, between the value of work in progress as reflected in the General Ledger as of the 31st March 2014 and the amounts indicated by a physical verification thereof," the filing said.

The board has been further informed by KPMG that it needs to conduct further investigations into other areas of relevance.

In the meantime, the board is of the opinion that there could be other significant matters in the accounts especially in relation to recording stocks.

In light of this, Sierra Cables director board has requested the Colombo Stock Exchange and the Securities and Exchange Commission to immediately suspend trading of the company share, until the company is able to issue a more definitive disclosure on the extent to which the its financial statements need rectification or adjustment.

"The board wishes to state that it will vigorously take all requisite action against those responsible for any improprieties if revealed in the investigation," the filing noted.

Meanwhile, according to brokers, above average Sierra Cables share trading volumes were seen in the Colombo bourse during the last few days, before the company director board requested the share to be suspended yesterday.

Just a day before the trading suspension, the number of Sierra Cable shares traded stood at 17.5 million, the highest volume during the last three years. Even more interestingly, just before the trading suspension was announced yesterday, 5.6 million of Sierra Cables had been traded.

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