ComRoad 'sales' were bogus

Comroad, a technology company listed on Germany's Neuer Markt, sent shockwaves through the market yesterday after admitting almost all of its sales last year were bogus.

A special audit carried out by Rödl & Partner could account for just more than €1m (£615,000) of sales in 2001 – much less than the €93.6m the company said it had achieved. Shares in ComRoad, which could not rule out insolvency, fell 49 per cent, or €0.36, to €0.37 yesterday.

The company, the report suggested, had invented and recorded sales from a non-existent Hong Kong company under the name of "VT Electronics".

"ComRoad processed 96.4 per cent of its stated sales through VT Electronics in 2001. No evidence could be provided that transactions had actually been conducted with this company in 2001 or that this company had existed," stated the Rödl & Partner report.

Since sales had been posted although no money had come in, "it is to be assumed" that "fictitious" invoices had been prepared and that purchase invoices were "falsified", it said.

"These were then posted as sales revenues, sales input and payments on account on the 2001 annual financial statements," the report said. It said it could not find the corresponding sales vouchers for €67.1m of revenue. Moreover, "due to the fact that contact persons were missing or could not be shown to exist," it could not account for a further €25.1m of sales.

The company yesterday removed Ingrid Schnabel, the wife of former chief executive Bodo Schnabel, from its supervisory board. Mr Schnabel, who founded the company in 1995, is in custody, charged with manipulating the shares.