Arrow hit for $13m by 'isolated' fraud

Fraudsters siphoned cash by aping company executives

Arrow expects to record a $13m (£9m) charge in its current quarter after crooks siphoned cash from its bank account by successfully impersonating a company executive.

Although the distributor gave few details, it was quick to stress its investigations have so far indicated it is an isolated event not associated with a security breach or loss of data.

The disclosure came as Arrow trounced expectations for Q4, with sales at its Enterprise Computing Solutions (ECS) arm booming 22 per cent in Europe in local currencies.

Arrow said it had discovered it had been the target of the fraud on 22 January. A company executive had been impersonated, which resulted in unauthorised transfers of cash from a company account to outside bank accounts in Asia, Arrow said.

On a Q4 earnings call, CEO Michael Long said Arrow was unable to answer questions on the incident "because our investigation and law enforcement agency investigations are ongoing".

The lack of detail makes it hard to draw conclusions on the nature of the fraud, said Bob Tarzey, director at analyst Quocirca.

"Nothing in what [Arrow has said] says it has to be privileged access," Tarzey (pictured below) said.

"All we know is they managed to get access in some way to that money by appearing to be an executive - it could have been online or over the telephone."

Arrow's disclosure comes just a month after accounting giant Deloitte warned that a scam known as "fake president" fraud is on the rise. This involves fraudsters aping a senior executive or a trusted partner, to con companies into parting with cash.

Arrow said the incident will lead it to record a one-time charge of an estimated $13m in its first quarter as it unveiled strong Q4 results that smashed its expectations.

Net profit in its final quarter leapt 36 per cent year on year to $158.3m as sales rose six per cent to $6.75bn.

Adjusted for the impact of acquisitions and currency effects, Q4 sales rose four per cent, with both ECS and Arrow's global components business topping the high end of expectations.

"Our strong execution during the fourth quarter drove record results," Long said.

Global ECS sales rose 10 per cent to $3.08bn. European ECS sales rose seven per cent, or 22 per cent rise on an adjusted basis, on the back of "strong" growth in services, software and networking.