Wood Group Under Scrutiny: Investigating the Culture of Financial Misconduct

The UK’s Financial Conduct Authority (FCA) is conducting a probe into engineering powerhouse Wood Group after a concerning independent review identified significant ”cultural failings” in its accounting practices. This inquiry will cover the timeline from January 2023 to November 2024. In light of the findings, a spokesperson from Wood Group indicated their commitment to full cooperation with the investigation.

The issues at hand came to light when the firm disclosed a necessary restatement of its past financial accounts in April. This admission was followed by a delay in releasing results for the 2024 financial year, prompting a suspension of its shares on the London Stock Exchange.

A detailed review conducted by Deloitte highlighted ”material weaknesses and failures” in the company’s financial culture, particularly within its projects business unit. It pointed to ”inappropriate management pressure” to uphold past positions, and pervasive ”over-optimism” along with a lack of evidence regarding accounting judgments. This damaging overview suggested that these failings had allowed critical information to be withheld from auditors, exacerbating doubts about the company’s financial reliability.

In response, Wood Group emphasized that it has implemented significant changes and taken proactive steps to rectify identified shortcomings since the review period. Nevertheless, the company is also facing a possible takeover by Sidara, a Dubai-based firm, which had initially proposed a £1.56 billion bid that fell through a year ago. Sidara has recently offered approximately £242 million, but the formal offer has encountered repeated delays due to uncertainties surrounding Wood’s financial disclosures.

In a twist that compounds the challenges for Wood Group, it has been confirmed that the firm will exit the FTSE indices effective July 2, following several months of suspended trading. This marks a notable decline in the company’s position and further jeopardizes its status as an investable entity.