GE, fresh from the embarrassing disclosure that the Board didn’t know about the two-jet policy, is now being questioned by the SEC over its accounting practices.
“GE Faces An SEC Probe of Accounts,” The Wall Street Journal, January 25, 2018 A1. Questions arise over how GE accounted for revenue on long-term projects.
How did the Board miss this, too? The new CEO must be beside himself. Welcome to the party.
Filed under Accuracy, Board, Compliance, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Employees, Governance, Inform market, Inform shareholders, Internal controls, Oversight, Oversight
It’s a bad sign when you establish a covert unit.
“Uber Formed Covert Unit to Steal Trade Secrets, Ex-Employee Says,” The Wall Street Journal, November 29, 2017 A1. According to a former security employee, Uber “had a team dedicated to stealing [competitors’] trade secrets and helped employees dodge regulators’ scrutiny.”
This information was in a letter read to the jury in the Alphabet/Uber trade secret litigation. Ouch.
What does it say about the company’s commitment to compliance with law (including the rights of others)? Are RICO charges far behind?
If Uber loses the case, will shareholders sue the directors who allowed this to happen?
Filed under Board, Compliance, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Management, Oversight, Oversight, Supervision
“Wells Fargo Bankers, Chasing Bonuses, Overcharged Clients,” The Wall Street Journal, November 28, 2017 A1. Only 35 of 300 companies had been charged only what they had agreed to. Four foreign-exchange bankers fired.
Who is surprised? The culture at the company was potentially fatally defective.
Why hasn’t the Board been held liable? The directors utterly failed in their fiduciary duties.
Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Protect assets, To report
“VW Manager Sentenced in Fraud,” The Wall Street Journal, December 7, 2017 B2. The head of VW’s environment and engineering office in Michigan was sentenced to seven years and to pay a $400,000 fine for his role in the emissions-cheating scandal.. He’s the second VW exec to get prison time.
He actually offered the “I was just following orders” defense.
What was the culture?
Would you hide something stupid from the Board?
“GE Board in Dark on CEO’s Use of Extra Jet,” The Wall Street Journal, October 30, 2017 B1. As if it weren’t bad enough that the CEO flies on the company plane, it appears that he brought a second plane along, just in case.
Now why would you keep that secret? Even after an internal complaint several years ago? How do you define waste? Who thought that this was an appropriate use of the shareholders’ money?
Might there be gaps in the compliance program? If this slipped through, what else is out there?
Filed under Board, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Employees, Governance, Information, Internal controls, Oversight, Oversight, To report
If you find one roach, likely there are others you haven’t found yet.
“Wells Fargo Fires Four Amid Probe of Currency Business,” The Wall Street Journal, October 21, 2017 A1. Apparently, there was/is an issue with WF’s foreign exchange business. Thus, problems were not confined to the retail customer side of their business.
Does this suggest that the problems in the retail side (account cramming, among others) were due to a culture problem or a tone at the top? Did/does WF have a problem getting its employees to act ethically? Why?
If Wells Fargo were serious, what would they do/have done? Merely firing the wrongdoers you catch apparently isn’t enough. What have the directors done to fix, beyond changing the CEO?
“Kobe Steel Discloses More Reporting,” The Wall Street Journal, October 14, 2017 B3. Falsification of quality documents is much more prevalent than first reported at Kobe Steel. Twice the number of customers now involved. 500.
Once you find a rotten apple, one can make certain assumptions about the rest of that barrel. It’s a culture issue, at its core.
Filed under Accuracy, Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Data quality, Definition, Directors, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Oversight, Policy, Protect assets, Protect information assets, Third parties