Listed private education provider ADvTECH has uncovered incidents of fraud as a result of changes being implemented through the restructuring of the finance and administrative functions in the schools division.
In a shareholder statement released on Friday, the company said the fraud was perpetrated by a financial manager in the schools division head office and took place over a period of three years beginning in 2015.
“The amounts were not easily identified as they were not individually significant. Whilst not material, in the interest of transparency, the directors have decided to voluntarily disclose this to the market,” the company said.
“These activities have resulted in an over-statement of revenue, an understatement of costs and the theft of cash.The cash component amounts to R5 million, of which approximately R2 million should be recovered as the company has secured a court order freezing the service provider’s bank account, with whom the financial manager colluded.”
“The balance should be recoverable through our insurers. In aggregate, the misstatements and cash loss amount to R48.1million resulting in a R35.5million after tax impact,” it said.
ADvTECH said that a thorough and comprehensive investigation was undertaken which documented the full extent of these activities. Criminal charges have been laid against the financial manager and the colluding external service provider, it said.
“Management deeply regrets this occurrence,” said ADvTECH CEO, Roy Douglas.
“They resulted mainly from head office book entries and will not impact delivery, fees or quality at any of our schools. Management remains committed to the highest levels of corporate governance and to ensuring that any deviations will not be tolerated. We will pursue this matter to the full extent of the law.”