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Wednesday, 13 February, 2002, 09:36 GMT
ABB launches pension probe
An ABB manufacturing plant
ABB's profits have taken a heavy knock
Swiss-Swedish engineering group ABB has launched an investigation into whether it granted two former executives far too much in pension and other benefits.

The firm paid some 233m Swiss francs (96m; $138m) to former chief executives Percy Barnevik and Goran Lindahl, but has now admitted the approval process for these payments had been "unsatisfactory".

ABB said it would seek restitution of amounts paid in excess of obligations.

The firm, which on Wednesday also announced a net loss of $691m (482m) for 2001, needs every penny it has at present.

ABB's bottom line has been hit hard by ballooning provisions for asbestos liabilities, relating to a US subsidiary.

Asbestos bill mounts

At the end of January, ABB almost doubled the amount of money it was setting aside against asbestos claims.

Percy Barnevik, former chief executive of ABB
Mr Barnevik may have to pay back benefits
It added a charge of $470m to its 2001 accounts, taking its existing asbestos provisions to about $940m.

The source of the asbestos liabilities is Combustion Engineering, a US subsidiary that now faces some 94,000 compensation claims in relation to asbestos in products supplied until the mid-1970s.

One analyst recently predicted that ABB's total payouts from asbestos claims could eventually amount to $3bn.

Sagging profits

Without the asbestos claims, ABB may well have recorded a net profit in 2001.

Before provisions and other charges were taken into account, ABB earned some $279m last year.

But that figure was only one-fifth the size of the previous year's earnings, as demand from ABB's industrial customers tailed off.

See also:

30 Jan 02 | Business
ABB doubles asbestos liabilities
29 Jan 02 | Business
Asbestos rumours drive shares
16 Jan 02 | Business
ABB asbestos claims 'set to soar'
23 Nov 01 | Business
ABB boss in surprise resignation
24 Oct 01 | Business
ABB issues second profit warning
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