Enterasys Fires Asia-Pacific Execs Under Investigation

Enterasys Networks

The employees had been on administrative leave since Feb. 1, when Enterasys discovered irregularities in at least one contract, valued at $4 million, in its Asia-Pacific unit.

Enterasys said that while preparing its fourth-quarter earnings it discovered that its independent auditor, KPMG, was provided with a version of the contract with terms that supported revenue recognition, while the vendor's own version of the contract did not.

The company said the review of its Asia-Pacific operations is still ongoing and that it won't be able to form any conclusions until the review is complete.

The company and some of its affiliates also are under investigation by the Securities and Exchange Commission, but that investigation appears unrelated to the accounting problems, according to Chairman and CEO Henry Fiallo.

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Enterasys also said that it does not expect to release earnings for the fiscal fourth quarter and 10-month year ended Dec. 29, 2001, before late March. The company delayed its earnings report, originally scheduled for Feb. 5, when it learned of the Asia-Pacific situation.

Since the review of the Asia-Pacific region began, Enterasys appointed Roger Wolf as its new vice president of finance for the Asia-Pacific region. Wolf, to be based at Enterasys' offices in Singapore, will be responsible for overseeing all financial operations throughout the region. Enterasys also said on Feb. 15 that Gary Jackson, who was appointed as the company's new president of Asia-Pacific operations in January, would not be joining the company.