Sinotel Technologies says three finance department staff of its the Xbell Union Communication (Beijing) subsidiary in China have been arrested and are under investigations for making fraudulent and unauthorised payments.
The payments were allegedly made by an employee named Wang Yuxiao and two other employees between June to December 2011 for 4G research and development equipment and software amounting to about RMB105.4 million ($21 million). These included purchases for fixed assets of RMB31.7 million, intangible assets of RMB31.2 million as well as other receivables amounting to RMB42.5 million.
Sinotel said it has successfully recovered RMB16.4 million from Wang and his accomplices. The group also expects to recover the balance of RMB89.0 million by April 30 as the police has managed to trace the whereabouts of the balance amount.
An investigation was launched by Sinotel from end of March to 7 April 2012 immediately after auditor Baker Tilly TFW LLP highlighted to the company that they were unable to complete certain procedures relating to the purchase of 4G research and development equipment and software in Xbell.
Sinotel has temporarily ceased all further purchase orders for 4G research and development equipment and software and promised to undertake a review of its internal control procedure so as to prevent a similar occurrence in the future.
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