NEW YORK – Hampshire Group Ltd. has terminated the employment of chief executive Ludwig Kuttner following a three-month investigation into alleged fraud.
Hampshire also terminated Charles Clayton, executive vice president and treasurer. Both had been placed on administrative leave in June as an investigation into misuse of company funds was commenced by the audit committee of its board.
Hampshire said Monday that its investigation was ongoing, but that preliminary findings indicated that, “among other issues being reviewed, Mr. Kuttner submitted expense reports for approximately $1.45 million over a period of approximately 10 years, a substantial portion of which were fraudulent or not substantiated in accordance with company policy.”
Michael Culang continues as interim CEO of Hampshire, one of the largest U.S.-based sweater marketers, and Jonathan Norwood as interim treasurer.
In a statement, chairman Michael Jackson commented, “The board and management will not tolerate the type of wrongful conduct brought to the attention of the audit committee as part of this investigation or any other type of improper conduct. We expect our officers and employees to conduct the business of the company at the highest level of business ethics.”
Hampshire said on June 22 that it had commenced an investigation into the possible “misuse and misappropriation of assets for personal benefit, certain related party transactions, tax reporting, internal control deficiencies and financial report and accounting for expense reimbursements” among “certain members” of management.
In addition to Kuttner and Clayton, it placed Roger Clark, vice president and principal accounting officer, and two administrative assistants on administrative leave.
The status of Clark and the two assistants couldn’t be learned on Monday.
Difficult market conditions throughout the year had driven shares of Anderson, S.C.-based Hampshire down from a 52-week high of $26.35 in Nasdaq trading. Since the investigation into ethics violations commenced in June, however, shares have dropped from $15.44 to Monday’s close of $12.66.