Category Archives: To report

Was your ride late?

“Chicago Sues Uber For Lag in Reporting Data Hack,” The Wall Street Journal, November 28, 2017 B4.  Following the disclosure of the year-old breach of 57 million accounts, Uber is sued for consumer fraud and deceptive business practices, among other things.

There is the breach.  And then your response to the breach.  And then the regulators’ and the customers’ and the shareholders’ response to the breach.

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Filed under Communications, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Investor relations, IT, Oversight, Protect assets, Security, Supervision, To report, Value

Wells Fargo, continued, again

“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.

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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

Another one bites the dust

“Steinhoff’s CEO Resigns Amid Accounting Probe,” The Wall Street Journal December 7, 2017 B3.  Off-balance sheet accounting leads to resignation of CEO of parent company of Sleepy’s (a mattress brand), and a drop of 62% in share value.

Where was the Board?  Where were the auditors?  Trying out the company product?

Who pays the price of management’s failure?

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Nissan, too

“Nissan Report Faults Management,” The Wall Street Journal, November 18, 2017 B3. Factory workers falsified inspection data.  Nissan recalls 1.2 million vehicles.  Did management press too hard when setting targets?

Everyone on the manufacturing floor knew the inspections were being done by under-qualified workers, and hid it from the inspectors.  Management was clueless.  Practice was the norm for nearly 30 years.

Would your culture allow this to happen in your company?

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The hits just keep on coming

“Faked Data at Issue Again in Japan,” The Wall Street Journal, November 25, 2017 B1.  Mitsubishi Materials continued to ship car, plane, and power-plant parts to 200 customers (including in the US) while factory workers were fudging quality data on rubber gaskets and copper products.  As is common, they sat on the news for a while.

This follows similar stories about Kobe Steel and Nissan Motors.  So much for the much-vaunted quality initiatives in Japan.  These types of problems “have deep roots in Japan Inc.’s governance problems,” which rely on decentralized and largely independent operations.

If there’s a problem somewhere else in your industry, you probably have it, too;  you just haven’t found it yet.

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Filed under Accuracy, Board, Compliance, Controls, Corporation, Culture, Data quality, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Managers, Oversight, Protect assets, Supervision, To report, Vendors

Keeping secrets

“SEC Accuses Long Island Town of Fraud,” The Wall Street Journal, November 24, 2017 B11.  SEC alleges town failed to tell bondholders about special loan deals.  Town feels victimized, as the town board didn’t know of the special deals.

If you have a duty to disclose certain information, and don’t disclose it, that is called either “failure to disclose” or “fraud.”  Or a failure of management.  There are certain things that, as a director, you are supposed to know.

Board members are fiduciaries.

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Filed under Accuracy, Board, Communications, Compliance, Compliance, Corporation, Data quality, Directors, Duty, Duty of Care, Governance, Inform market, Inform shareholders, Investor relations, Oversight, Supervision, To report, Value

After a Whistleblower

“Whistleblower Alert Scrutinized,” The Wall Street Journal, November 24, 2017 B6.  A year ago, the CEO gets a letter from an employee saying the company is committing fraud by overstating some metrics.  Investors are later told the allegations are without merit, and invest $500 million.  Now the investors are suing.  We’re told that that suit is without merit, even though it looks like some metrics were overstated.

How do you handle continuing to operate your business after a whistleblower puts you on notice of potential wrongdoing?  What audiences do you need to communicate with?  Shareholders, government regulators, lenders, employees, others?  What can you say without stumbling over an inconvenient truth or two?

 

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Filed under Accuracy, Board, Communications, Compliance, Compliance, Corporation, Data quality, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Investor relations, Lawyers, Protect assets, To report