Americanas assumes fraud in earnings – 06/13/2023 – Market

Americanas’ financial statements had been defrauded by the company’s previous management, according to a report by legal advisors presented to the company’s board of directors. The statement from the retailer, which is in judicial recovery, was made this Tuesday (13).

Americanas stated that the effect of adjustments arising from fraud on the company’s results over time is still being determined, but that management expects the impact on the most recent results to be significant.

The report, presented on Monday (13) to the company’s board of directors, was based on documents delivered by the independent investigation committee and supplementary documents identified by management and its advisors after meetings with the committee.

The document also indicates the participation in the fraud of former chief executive Miguel Gutierrez, who left the company in December 2022, as well as other former directors and former executives, and states that there were efforts by the previous board to hide the actual result and equity situation, according to the material fact of the company.

It was not possible to immediately obtain a statement from Gutierrez.

Americanas revealed in January the discovery of accounting inconsistencies of around R$ 20 billion. The accounting gap started a crisis in the company that made it file for bankruptcy.

According to Americanas, the information in the report, associated with the work to redo the historical financial statements, led to the understanding that the fraud occurred predominantly in operations such as cooperative advertising budget contracts and similar instruments (“VPC”).

These commercial incentives usually used in the retail sector “would have been artificially created to improve the company’s operating results as cost reducers, but without effectively contracting with suppliers”, according to Americanas.

“These launches, made over a significant period, reached, in preliminary and unaudited numbers, the balance of R$ 21.7 billion on September 30, 2022.”

In addition to the VPC operations, Americanas said that the previous board contracted financing for which the company is a debtor to banks, without due corporate approvals, all of which were improperly accounted for in the balance sheet on September 30, 2022 in the suppliers account.

Purchase financing operations —withdrawal, forfait or confirming risk— add up to R$ 18.4 billion and working capital financing operations reach R$ 2.2 billion, in preliminary and unaudited numbers in both cases.

Americanas said that entries reducing the account of suppliers arising from interest on financial operations were also identified, which should have passed through the company’s results over time, totaling, in numbers that are also preliminary and unaudited, a balance of R$ 3.6 billion.

The company stated that the definitive accounting adjustments will be reflected in the audited historical financial statements that will be resubmitted once the work is completed.

Also according to the material fact, the board of directors instructed the company and advisors to present the report to all competent authorities and evaluate the measures aimed at reimbursing the damages caused by the fraud.