Finance company Marac is to take a $2.5 million hit on an unauthorised business loan which was covered up for several years and was only revealed as the company improved its audit process late last year.
Marac's chief investment officer, Craig Stephen, yesterday refused to comment on whether the discoveryof the loan had anything to do with the temporary disappearance last week of the company's chief risk officer, Grant Atkinson.
Atkinson was found on Saturday in a dishevelled and slightly disoriented state outside cricket clubrooms in the Huapai Domain, northwest of Auckland. He is understood to have been sleeping rough.
Marac said an internal audit of its lending had uncovered "an irregularity in relation to one particular business loan" dating back to 2003.
"The circumstances behind that irregularity have only recently been ascertained, but it involves lending that is outside the company's internally prescribed practices. The circumstances do not appear to have involved personal gain."
Stephen said the company had uncovered evidence suggesting the loan details had been suppressed.
Marac had established that the loan was authorised by an individual who would stay with the company for the time being pending the outcome of an investigation. It was too early to say if charges would be laid.
Marac said it would make an after-tax provision of $2.5 million for the loan in its first-half results, out soon.
But Stephen said the loan was for more than that amount. There was some prospect of recovering the money, "and we'll pursue them to the extent we're able to".
Despite flagging the $2.5 million provision, Marac said it still expected to meet its earnings forecast for the full financial year.
Last year, Marac wrote off about $60 million on property loans, forcing it and parent Pyne Gould Corporation to go to shareholders for $270 million in fresh capital.
