CEO fired after ‘fake CEO’ email scam cost firm $47m
- 26 May, 2016 09:29
FACC's board on Wednesday fired Walter Stephan, CEO of the Boeing and Airbus supplier, due to errors made in connection with what it called a “president fraud incident” that the firm discovered in January.
FACC said Stephan’s role had been revoked with “immediate effect” because he had “severely violated his duties, in particular in relation to the ‘Fake President Incident’.”
'The attackers tricked FACC financial controllers into wiring €52.8m to fraudsters during what appears to be several transactions. FACC said that its share price had fallen 38 percent since the incident.
The company was able to halt €10.9m of the funds at recipient banks, but said it didn’t expect to recover this in the near future. It recorded a €41.9m loss from the incident.
The fraud also left FACC with an operating loss of €23.4 million, compared with a €18.6 operating profit had the incident not occurred.
Business email compromise (BEC) or CEO email fraud has cost businesses $2.3 billion over the past three years between October 2013 and February 2016, according to recent figures from the FBI.
Fraudsters may establish a bogus email address to pose as the CEO and then convince a subordinate in the finance department to wire funds to an overseas account under the pretence it is due to a known supplier. The FBI has warned that fraudsters target firms with international suppliers.
This appears to be along the lines of what happened to the firm.
Before being stood down, Stephan told investors at the firm’s full year results on Wednesday,: “The fraud did not take place via our Internet or IT system but by means of a simulated email correspondence under my name, which does not require any hacking.”
In February FACC sacked its chief financial officer, noting that the fraudsters had targeted the financial accounting department. The company had not identified malware related to the fraud and said it was pursuing damages and insurance claims.
US toy maker Mattel recently revealed a narrow escape from a CEO email fraud campaign after a financial officer was duped into wired $3m to a bank in China. Mattel was able to put a halt on the transfer and recovered the funds.