Global Business

Sunterra Puts CEO on Leave; CFO Leaves

The timeshare company has acknowledged that a former employee is charging that there were accounting irregularities at the company's European opera...
Stephen TaubJune 23, 2006

Sunterra Corp. has ordered Nicholas Benson, its president and chief executive officer, to take a paid administrative leave pending an internal probe into a former employee’s charges of accounting misdeeds at the company’s operations in Spain.

In addition, in the press release announcing Benson’s leave, the timeshare company said that CFO Steve West has resigned, effective June 30. West “has been in discussions with another company for the last several weeks and has decided to accept its job offer,” stated Sunterra. The board named Robert Krawczyk, the company’s controller and chief accounting officer, to replace West as finance chief.

Sunterra has acknowledged that last December it received an E-mail from a former employee of its Spanish unit, alleging accounting irregularities concerning Sunterra’s European operations. The ex-employee had been fired with cause, according to the Associated Press.

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Earlier this year, Sunterra hired outside lawyers to investigate, review, and advise it about the charges. In April, Sunterra’s auditor, Grant Thornton, sent a letter to the Securities and Exchange Commission asserting that the firm “had not previously been provided with this E-mail, or the specific allegations” being made by the employee. The audit firm told the SEC that it hadn’t seen the message during its audit of Sunterra for the year ended September 30, 2005, or when it performed an interim review of the company’s financials for the quarter ended December 31, 2005.

The company’s board tapped James Weissenborn, a director since April 2004, to serve as interim president and CEO. Benson will continue to serve as a director.