Where was internal audit?
The top ten customers totalling some 40% of the revenue did not have a contract, neither any basic terms and conditions and the prices in the system were input based on what the SVP sales said….troubled waters, fisherman’s gain.
Some people believe that shareholders do not care what happens internally in the company provided they get benefits. Volkswagen shareholders are not thinking the same. The share price fell 46% at the onset of the scandal and nearly a year later has only recovered a 20%
Once the contracts were in place…..Prices were updated in the system so invoices were accurate and there were no delays in their payment. This boosted the cash flow and ultimately benefited shareholders. Operations could plan in advance the service and quality levels required for these customers, so they were able to respond efficiently. This meant no more extra hours, no more bottlenecks or emergencies in operations. This ultimately benefited shareholders.
There are still some people that believe there is nothing wrong with no having any contracts in place. Maybe because they are the only fishermen?
they are going to send all the money to one of the PA’s personal bank account, for her to take the money in cash from her bank account and bring it to the office to put it in the red envelopes.
We are giving one employee an additional full bonus, and then we expect that this person will take all that money in cash to do what? I do not think this is something so small, it sounds so dodgy that it can be perceived as something illegal, even if this money is fully used on the red envelopes, Caesar’s wife principle should apply.an email should be sent by the CEO, informing all employees, that they will get a red envelope the following day.
With all this, we have evidence of the payment approved by the CEO, the money been retrieved from the company bank by a person with legal powers to do so in presence of HR and another email informing the employees about the red envelope
The lesson from this real example is that, even a good gesture can be completely undermined and bring a company into trouble, if the way of doing it looks suspicious and dodgy. Since the recent bribery and corruption scandals (e.g.: GSK China, FIFA, etc) companies should pay more attention to cash payments. Doing the right thing in the right way it may take some effort. In this real experience this involved drafting official emails, the Finance Director appointment with the company bank, etc. This effort should be compared to the effort deployed explaining cash payments without much evidence on top of any reputational impact (regardless of whether the cash payment was for valid reasons or not).
how it would look like if it was to appear in a global newspaper and you had to provide an explanation to the media. I am still trying to find ways to explain the sizeable payment to the PA’s personal bank account for her to retrieve the money in cash….