Big Frauds

$100 million mystery behind Mr. Oh's embezzlement

On February 22, Swiss-based global engineering group ABB announced it was the victim of a $100 million internal embezzlement scheme in its South Korean subsidiary. The money and the alleged perpetrator vanished, and an international manhunt is so far unsuccessful. To the best of my knowledge, this is the largest case of employee embezzlement. (See Switzerland’s ABB hit by $100 million South Korean fraud, by John Revill, Reuters, February 22.)

What makes this case even more interesting is that the suspect, named in the media as 57-year-old ABB Korea Treasurer Myeong-se Oh, was a 25-year veteran of the company. According to the Reuters article, he was the treasurer, the former head of compliance and one of two integrity ombudsmen for the 800-employee ABB Korea at the time of the alleged fraud. In other words, the company entrusted Oh with the treasury plus training on ethics and how to report incidents of potential fraud — either through an ethics hotline or directly to him.

And it was with such a spotless background that Oh embarked on what ABB termed a “sophisticated criminal scheme” that cost his employer dearly. According to the Reuters article, ABB’s group chief executive described the alleged fraud as “shocking news.”

Although this case is far from resolved, I think it’s helpful to look at what we know so far and try to answer the question: How did Oh single-handedly embezzle $100 million over two years from a company that generated only $500 million in annual revenues?


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