Graft scheme involving corporate executives. Diversion of funds. Payment of bribes. Kickbacks

Client. Leading manufacturer of cleaning products acquired by European group.

Problem. New management received reports of a police investigation alleging fraud and tax evasion during the previous management’s tenure. The investigation related to a graft scheme involving the supply of raw materials for manufacturing packaging for cleaning products.

The company was in the midst of a high profile legal dispute between shareholder groups competing for management power. The interim court appointed CEO had received denunciations of several fraud and corruption scams. If he failed to investigate the alleged scams, he could later be held responsible.

Solution. The investigation revealed that the company was paying for raw materials from non-existent companies. These companies were fronts for a gang comprising directors of the client company and the principal’s of a major packaging supplier. The raw materials had not passed quality control and was often never delivered.  Mismanagement and weak internal controls permitted the fraud to develop and go unnoticed. The executives and third parties responsible were identified. Wolfe Associates’ reports formed the basis for, and were attached to, criminal complaints to the State Prosecutor demonstrating that the company was the victim of fraudulent and improper conduct.

The names of those involved have been withheld for reasons of confidentiality.

Is your company the victim of mismanagement by incompetent or corrupt executives? Is the company losing money through transactions which do not make commercial sense, which benefit third parties and which prejudice the company? Wolfe Associates can investigate mismanagement, negligence and improper conduct, identify vulnerabilities in internal controls and processes and recommend corrective measure.