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K&S reveals new fraud worth $7.1 million

Company seeks insurance recompense 13 years after former CFO was arrested for $22 million crime

 

K&S Corporation is the victim of a $7.1 million fraud, the company states in its half-yearly financial report.

Rubbing salt in the wound is the possible loss of another $1.9 million in “expenses, claims costs and potential liabilities” relating to what is the second multi-million dollar fraud at the firm uncovered in 13 years.

“Victoria Police have arrested and charged two former employees and their investigations are continuing,” the K&S says of the latest issue.

The company does, however, have crime insurance and is in talks with its insurers over a claim.

Action to measure the extent of the losses were undertaken by accountancy McGrathNicol and a preliminary forensic accountant’s report provided on February 17 last year and used as the basis of K&S’s claim.

Former company secretary and CFO Dennis Craig Telford stole about $22 million through electronic funds manipulation, about half of which went on gambling and luxuries in the five months leading to his arrest in April 2002.

The crime led to the majority owner, the late Alan Scott, suing bookmaker Sportingbet for $2.8 million.

K&S says this latest issue spans an eight-year period between 2007 and last year, with $400,000 of the total stolen in the first half of this financial year.

Telford lost an appeal to reduce his sentence of 14 years with a non-parole period of nine years, meaning the new fraud began just the following year.

The alleged new crimes continued through legal negotiations K&S conducted with its then-auditor, KPMG, which was resolved through mediation in 2009.

Sources involved in the case note Telford had been “particularly devious” and had used fabricated contracts to cover his tracks.

ATN is awaiting further information from K&S, while Victoria Police McGrathNicol were unable to comment on the matter.

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