Internal Corporate Investigation in China
October 09, 2009
Problem A European manufacturer, based near Shanghai, approached PSA after their long-standing General Manager (GM) abruptly resigned from the company. In the months leading up to the resignation, the management team in Europe had begun to notice increasingly strange behavior from the GM. Rumors from China had also reached them of her conspicuously lavish lifestyle, including the recent purchase of an expensive sports car. When officials visited the factory near Shanghai with the intent of regaining some control over the company finances, discussions with the GM quickly became heated, leading to her suddenly submitting a resignation and walking out. Not only did the GM herself leave, but she took with her a handful of key staff as well, all of whom were later found to have some familial or personal relationship with her. In the ensuing week, the European managers realized the true extent of the problem. Most of the company’s financial records went missing, along with a number of samples and other proprietary information. Even the limited information left behind indicated that a number of strange transactions had taken place, and large amounts of money had been siphoned from the company over a long period of time. Totally absorbed with the day-to-day operations of running the company now that some key staff had left, the European manufacturer turned to PSA to investigate the problem. PSA Assessment & Solution PSA started with the ex-GM, and the rumors swirling around that she was living beyond her means. Extensive research into her credit history, property ownership, car registrations and family background all showed that she did in fact appear to be spending far more than her monthly salary should allow. The next s tep was to find where this excess money could have come from. PSA conducted IT forensic analysis on a desktop computer, seized from one of the key staff as they left. Recovery of deleted files and emails revealed that the ex-GM had been receiving commissions from suppliers for years without the knowledge of management. Further enquiries with the suppliers themselves confirmed this to be true. At this stage, PSA advised the client to bring a locally-based law firm into the situation. This allowed us to jointly plan offensive and defensive legal strategies, to both protect the client and give them the option to take legal recourse against the ex-GM for monies lost. At the same time PSA began, under a suitable context, to negotiate a settlement with the ex-GM on behalf of the client, allowing them to stay focused on running their business. Throughout the negotiation, discreet investigation into the ex-GM’s movements and communications enabled us to be aware of any contact she was making with the client’s current business partners and even staff. Several employees found to still be maintaining strong links to the ex-GM were subsequently let go or removed from sensitive operational areas of the company. Result Negotiations are still ongoing, but as a result of the cumulative evidence of her past misconduct collected by PSA, the client is firmly in the driver’s seat. By outsourcing the entire problem to PSA, the company allowed themselves the freedom to concentrate on getting their business back on track, which they have now done successfully. 
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