NEW YORK Sims Metal Management Ltd. has launched a probe into the overvaluation of inventory at its Long Marston and Newport scrap facilities in the United Kingdom, it said.
The company, which has base operations in New York and Sydney, believes the inventory value at those sites has been overstated by about Australian $60 million ($63.4 million), it said. Preliminary findings suggest "control failures and potential fraudulent conduct by local and regional plant management responsible for technology and downstream processing systems" could be to blame for the miscalculation.
Sims has formed a special committeeled by chairman Geoff Brunsdonto oversee the investigation, which is in progress. The committee is also working closely with Sims legal counsel and external auditor.
Sims will give more information on the inventory adjustment and a potential goodwill impairment when it reports its half-year results on Feb. 15, it said.