KREUGER’S FRAUDS

Timaru Herald, Volume CXXXVII, Issue 19451, 28 March 1933, Page 2

KREUGER’S FRAUDS

HOW HE KEPT THEM SECRET. AMAZING DISCLOSURES. How Ivar Kreuger, the Swedish "Match King," was. able to keep his vast frauds secret for so long is revealed in the final' report of Price, Waterhouse, and Co., the London auditors, states the "London Daily Telegraph." It shows that the manipulation of accounts went back at least as far as 1917. The fraudulent practices assumed larger proportions in 1923 and 1924, and culminated in the fabrication of £21,000,000 of Italian Government Bonds. Dealing with Kreuger's ability to conceal the irregularities, the report states: —

“Neither these earnings nor any other facts developed by our examination lend any support to the view that Kreuger possessed business ability so extraordinary as to warrant the grant to him of the freedom from control or disclosure of his actions which he enjoyed. “The perpetration of frauds on so large a scale and over so long a period would have been impossible but for (1) the confidence which Kreuger succeeded in inspiring; (2) the acceptance of his claim that complete secrecy was essential to the success of his projects. “The absolute power with which

Kreuger was vested gave him complete domination of the entire group. Indeed, he conducted the entire business as though he was unaccountable to no one.

“The frauds could not have been consummated without assistance (wittingly or unwittingly) of some of his associates, including some of the officers of the holding and financial companies, nor could they have been concealed if either the audits of the companies had been co-ordinated under single control, or if the audits, though not so co-ordinated, had been carried out in all cases with proper honesty, efficiency and independence. “It is apparent that the employment of different auditors for different closely associated companies, restrictions in the scope of examination, subserviency, if not complicity, on the part of some of the employees and some of the auditors, and forgery of documents in order to meet demands for evidence confirmatory of book entries, contributed to prevent such audits as were made from resulting in exposure.” The report shows that of the total of about £150,000,000 raised by the group, approximately £24,000,000 was withdrawn by Kreuger, while £35,000,000 was paid in interest and dividends. The excess of reported earnings over real earnings in the period of 144 years covered by the frauds was approximately £55,000.000.