“Ex-VW Official Admits Role in Emissions Cheating,” The Wall Street Journal, August 5, 2017 B3. A former VW “compliance executive” charged with conspiracy to defraud the US, wire fraud, and Clean Air Act violations pleads guilty. He admits he knew about the software used to mislead US environmental regulators. Faces sentencing in criminal case in December.
Hiding information from the government is not a good thing. What was the culture that allowed this to happen? Did people feel a need to do this to compete? Too many car companies have been caught up in such scandals to have it be random.
The shareholders have paid (and are continuing to pay) for the mistakes of the employees of the company. Who else from the company is going to go to jail, or lose his/her job? VW is facing costs in just the US of more than $25 billion and investigations elsewhere. Does the “compliance executive” know of others who also knew? Might he offer up some names before December? People who bought VWs are going to want to recover damages from someone.
Filed under Accuracy, Analytics, Board, Compliance, Compliance, Controls, Corporation, Culture, Culture, Data quality, Directors, Duty, Employees, Governance, Information, Internal controls, Oversight, Oversight, Value
You hire independent contractors to drive under your corporate banner, and pay you a portion of the fees they collect. You buy cars and lease them to the contractors to drive. What could go wrong? The cars catch on fire.
“Uber Knowingly Leased Unsafe Cars to Drivers,’ The Wall Street Journal, August 4, 2017 A1. Apparently, the cars that were leased had been recalled, and not fixed. Who knew what when? Did Corporate in the US know before the fire? Or is this the result of a business model or culture where working around rules is prized above complying with them?
“Two Plead Guilty in Insys Cases,” The Wall Street Journal, July 12, 2017 B3. Insys Therapeutics had an unusual fentanyl problem: bribing doctors to prescribe it. Two saleswomen took the plea.
Notable: one of the women is married to the firm’s former CEO, who was arrested on related charges in December, together with 5 other senior managers.
Does corruption normally run this deep? Where is (or was) the board?
Filed under Board, Compliance, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Management, Oversight, Oversight
One of my common themes is the duty of directors. They get paid a lot of money to act as fiduciaries for the company’s shareholders.
“Warren Keeps Pressure on Wells,” The Wall Street Journal, June 20, 2017 B10. Senator Elizabeth Warren (D. Mass.) is leaning on the Federal Reserve (arguably an independent body) to remove 12 directors who served on Wells Fargo’s Board when the account- cramming scandal was going on. Other problems have emerged at Wells Fargo since then.
The shareholders didn’t/couldn’t vote them out in April, and so far (as I know) the directors haven’t been held personally liable for negligent oversight. So it’s nice that someone is still pursuing the people in charge at the time that (some of the) bad things were happening.
Some executives got fired or their bonuses were docked. The shareholders lost a bundle in fines and penalties paid by the company. It would be nice if the directors were held responsible and accountable — not just to penalize them, but to put other directors on notice of what they are getting paid to do, and for whom.
Would be nice to have a poster child for the director’s duty.
Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Culture, Directors, Duty, Duty of Care, Governance, Inform shareholders, Internal controls, Oversight, Oversight, Protect assets, Risk Assessment, Risk assessment, Supervision
How do you deal with claims of sexual harassment? Have two law firms conduct investigations and fire 20 people. But will that be the end or the middle?
“Uber Fires Over 20 In Wake Of Probe,” The Wall Street Journal, June 7, 2017 B1. Over two hundred claims investigated and no action taken in 100 of them.
Were there supervisors who participated or condoned or who failed to notice or respond? Were there reporting practices and policies in place? If harassment was “accepted” in the Uber culture, who’s to blame? HR? The Board? Management? How long had this been going on? How much will the shareholders have to pay?
A summary of one of the law firm reports is due out soon.
Filed under Board, Compliance, Compliance, Compliance, Controls, Corporation, Culture, Culture, Duty, Employees, Governance, Internal controls, Management, Oversight, Oversight
Directors are a fundamental part of corporate governance, standing between ownership (the shareholders) and management. and owing fiduciary duties of care and loyalty to the shareholders. It’s not an honorary role.
But what if they are willfully or negligently blind when major problems arise, and don’t even know enough to ask management about them?
“Theranos Directors Missed Red Flags,” The Wall Street Journal, May 31, 2017 B1. Retired Admiral Gary Roughead and former Secretary of State George Shultz apparently failed to ask key questions, or any questions at all. Hard to claim protection of the business judgment rule when you don’t make a judgment.
I thought all I had to do was show up and cash the checks. You mean I needed to understand what the business did? I have no background in this business. What do you mean the insurance may not cover me?
Filed under Board, Controls, Culture, Directors, Duty, Duty of Care, Governance, Inform shareholders, Internal controls, Oversight, Oversight
Executives do go to jail. “Ex-VW Official to Stay in Jail,” The Wall Street Journal, May 26, 2017 B3. The official was head of the environmental and engineering office. VW had already pleaded guilty to criminal charges in connection with the diesel emissions scandal. So the company AND some executives are criminally charged! Guess Sally Yates meant it. At least for foreign companies. But no directors have been sued. Yet.
“FBI Holds Memos for Now,” The Wall Street Journal, May 26, 2017 A4. Congress wants the memos that ex-Director Comey wrote, but the existence of the special counsel (also the ex-Director) and Congressional “inquiries” have muddied the waters. Whose information is it, anyway? And can’t we all look at them together? Right after Mr. Comey testifies? Interesting that the FBI can withhold non-privileged memos, whatever their weight may be.
Chairman doesn’t go to jail. “Leader of Brazil’s JBS Steps Down,” The Wall Street Journal, May 27, 2017 B1. The bribing scandal in Brazil’s meat-packing industry removes the chairman and his brother from the Board (although the brother remains as CEO). The chairman signed a plea bargain in exchange for criminal immunity. Curious about the culture at the company after the plea deal.
Filed under Board, Compliance, Compliance, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Employees, Governance, Information, Internal controls, Investor relations, Management, Oversight, Oversight, Ownership