Sunterra Corp. will restate results going back more than four years. The vacation ownership company made the announcement after determining that it underpaid taxes withheld in Spain on wages paid to employees of Sunterra Europe.
The shortfall was discovered during an internal review after a former employee alleged accounting irregularities concerning Sunterra’s European operations. Officials at Sunterra said the company later paid $3.1 million to Spanish tax authorities. The company will be required to pay an added $900,000 to cover fees and interest connected to the underpayment of the withholding taxes.
Officials warned that as the independent inquiry progresses, more items could be identified which could affect the company’s financial statements and operations beyond the tax item. Sunterra also said it would miss its May 10 quarterly filing deadline because of the restatement and reported that the company has no relationship with an independent registered public accounting firm.
Sunterra dismissed Grant Thornton on March 21. The company and its former auditor are locked in a dispute over when the auditor learned about the whistle-blower’s accusations.