Ausdrill discovers $10m ‘long-term sophisticated’ fraud

Ausdrill has uncovered fraudulent activities relating to an “unrelated invalid supplier” and is working with police to investigate further.

The mining services company believes an Australian-based employee has authorised payments totalling around $10 million to a supplier that did not exist for over eight years.

The employee has been summarily dismissed.

Ausdrill only discovered the fraudulent payments “through compliance with the company’s policies and procedures” recently.

“We are announcing this matter in accordance with our approach of full transparency and our stated objectives of enhanced governance and audit,” Ausdrill managing director Mark Norwell said.

“Since commencing as managing director, one of my priorities has been on enhancing Ausdrill’s governance and operating principles, and I am satisfied that immediate action has been taken upon becoming aware of the situation.

“We are now completing a comprehensive review to understand how this long-term sophisticated fraud occurred and how we can further enhance Ausdrill’s systems and controls.”

Ausdrill has undertaken a preliminary internal investigation and appointed accounting firm Ernst & Young to commence a thorough forensic review.

It became the second largest mining services company after purchasing Barminco in a $271 million deal in October 2018. The acquisition delivered 45.6 per cent more revenue from operations to $640.2 million and 33 per cent rise in underlying net profit after tax to nearly $40 million during the first half of the 2019 financial year.

The theft would have no material impact on Ausdrill’s reported results or 2019 financial year guidance, the company said in an ASX statement.

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