Client. Leadingmanufacturer of cleaning products acquired by European group.

Problem. Newmanagement received reports of a police investigation alleging fraud and taxevasion during the previous management’s tenure. The investigation related to agraft scheme involving the supply of raw materials for manufacturing packagingfor cleaning products.

The company was in the midst of ahigh profile legal dispute between shareholder groups competing for managementpower. The interim court appointed CEO had received denunciations of several fraudand corruption scams. If he failed to investigate the alleged scams, he couldlater be held responsible.

Solution.The investigation revealed that the company was paying for raw materials fromnon-existent companies. These companies were fronts for a gang comprisingdirectors of the client company and the principal’s of a major packagingsupplier. The raw materials had not passed quality control and was often neverdelivered.  Mismanagement and weakinternal controls permitted the fraud to develop and go unnoticed. Theexecutives and third parties responsible were identified. Wolfe Associates’ reportsformed the basis for, and were attached to, criminal complaints to the StateProsecutor demonstrating that the company was the victim of fraudulent andimproper conduct.

The names of those involved havebeen withheld for reasons of confidentiality.

Is your company the victim ofmismanagement by incompetent or corrupt executives? Is the company losing moneythrough transactions which do not make commercial sense, which benefit thirdparties and which prejudice the company? Wolfe Associates can investigatemismanagement, negligence and improper conduct, identify vulnerabilities ininternal controls and processes and recommend corrective measure.

Tags: Corporate Corruption. Briberyand kickbacks. Graft benefitting executives. Tax evasion.

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