Enterasys sacks three in book-cooking fiasco

Networking vendor Enterasys has confirmed that three Asia-Pacific division employees have been fired over accounting irregularities to the tune of $US4 million in the division's books.

The three employees, Asia-Pacific president Gary Workman, David Bowie and Alvin Heng, had been placed on administrative leave in recent weeks after Enterasys's auditor, KPMG, found the accounting irregularities and contacted the vendor's senior management.

Enterasys immediately postponed the spinning off of its Aprisma Technologies division and instead appointed legal counsel Ropes and Gray and a forensic audit group from Deloitte & Touche to investigate the problem.

The $4 million hole was found in Enterasys's books on the same day the United States Securities and Investment Commission announced it would be investigating the company, but Enterasys management claimed the two incidents were unrelated.

The US office of Enterasys released a short statement, claiming the employees were terminated due to "irregularities discovered by the company in connection with contractual and revenue recognition matters in the APAC operations".

A source close to Enterasys told ARN the three employees were implicated for misrepresenting revenue figures from the various Enterasys offices in the region when forwarding financial information to the US office. Sheldon Speer, managing director of Enterasys Australia, said he understood this not to be the case, and cited one specific sales contract as the source of the problem.

The sackings also shed some light on the recent debacle concerning the employment of former Cisco top dog Gary Jackson, who left Cisco to join Enterasys only to reverse his decision within a month.

Speer said Jackson was under the impression he would be taking the reigns of a $120 million company and driving it to the next level -- a $200 million or $300 million company. What he soon found out, however, was he would first have to rebuild the company before he could even think about expanding it.

"We're fine with his decision," Speer said. "He made his decision early and didn't stuff us around too much."

For the full story on whether Enterasys will survive, read ARN next week.

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