Microsoft Fast, Dagens IT, and Deloitte Accounting
June 17, 2009
Dagens IT is a Norwegian information service (Dagens Næringsliv). On Wednesday, June 17, 2009, the article “Føler seg lurt av Fast” appeared here. My Norwegian is not too good, but I have the source story and a comment from a reader in Scandinavia.
From my vantage point in rural Kentucky, the gist of the Dagens IT write up is that an allegation has arisen that Fast Search & Transfer recorded sales that were possibly not solid sales. I think this means that revenue booked may have been false.
The firm’s auditor at the time was Deloitte. The story seems to suggest that the accountants from Deloitte were somehow fooled or in some other way unable to ferret out the real money from the phantom money reported by Fast Search & Transfer.
I ran the Dagens IT story through Google Translate, and I received a rendering of what struck me as a key paragraph:
The reason is that Fast Search & Transfer 2006-manipulating accounts. Contracts for over 100 million turned out to not be real. At the same time was over 30 million paid to directors in the Fixed-system via straw companies.
The authorities in Norway are exploring this allegation. One of those of interest is the present head of the “new” Microsoft Fast unit in Norway. Dagens IT said:
Neither the CEO of Fast, Bjørn Olstad or former CEO, John Markus Lervik, answered yesterday the DNS [official inquiry body] requests.
Deloitte, the accounting firm, seems to be one organization who had access to the company’s financial information. Microsoft, as part of its due diligence, may have had access to similar information. Given the type of issues involved with phantom sales, how thorough were the reviews of Fast Search’s financials.
Microsoft paid about $1.2 billion for a company that, if these allegations are true, may have been smaller than the financial statements issued prior to the buy out suggested. The next question is, “Why would a company with a blue chip client list and strong PR face charges of inventing revenue?”
Maybe the Fast ESP technology, not just the Fast Search management, deserves a closer look? Another question I have is, “What did Microsoft know at the time it paid a premium for Fast Search & Transfer?”
Stephen Arnold, June 17, 2009
Comments
One Response to “Microsoft Fast, Dagens IT, and Deloitte Accounting”
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off or on target?
Stephen E. Arnold on July 8th, 2008 8:45 am
“I rely on primary research for the most part. I have heard some back chatter that the author of the DM essay is sometimes off target.”
Was that statement based on primary or secondary research?