The board of directors of Let’s Eat, Inc., a large food and beverage manufacturer, asks a CFE Certified Fraud Examiner (CFE) to investigate a potential bribery scheme involving one of its senior managersVice-Presidents, Marshall Smith. Mr. Smith recently contracted with a relief organization to supply food and water to a region of the world that was devastated by a massive earthquake. The board suspects that Let’s Eat is paying bribes to get the supplies into the region, and it wants the CFE to look into the matter and report back.
The CFE interviews Mr. Smith, who explains that he accepted the contract with the relief organization as a charitable effort, and that he expects to break even on the contract. He also tells the examiner that the drivers who deliver the supplies are given cash to keep with them so that when they are stopped by the local militia, they can pay whatever is demanded and continue their mission. Smith says that these special payments are a cost of doing business. He also mentions that in the past, drivers without cash were murdered.
The CFE is sure that none of the money is flowing back to Mr. Smith, whose only motive is to get the supplies delivered. Also, the operation is expected to be completed within the next few months.
The CFE considers whether he should report the special payments to the board or keep silent.
Please answer the following questions about this case:
1. If you were in the examiner’s CFE’s position, how would you feel if earthquake victims died from dehydration or starvation as a result of not receiving the supplies?
2. What good might come out of the examiner CFE reporting the special payments to the board?
3. What harm might result if the examiner CFE overlooked the special payments?
4. What legal considerations should be taken into account considered by the CFE?
Ans; 1) If I were in the place of the examiner's CFE's position, it would be really very sad and disturbing for me to see the earthquake victims dying from dehydration or starvation as a result of not receiving the supplies. I would try to solve this case as early as possible and try to take quick action by finding a similar food organization who can reach out to the victims at a very short notice keeping in mind the ultimate priority to save the earthquake victims.
2) If the CFE examiner informs the board of directors of Let's Eat, Inc., as the special payments are made against the code of ethical regulations. This will surely cancel the contract of the relief organization under the Foreign Corrupt Practices Act, which states that irrespective of the situation a company cannot overlook or support a bribery case to conduct its business and Mr. Smith will lose his job as it should be.
3) If the examiner CFE overlooked the special payments than the business will be conducted with unethical code of fraudulent practices and Mr. Smith will still be continuing his job in spite being indulged in a fraudulent case and this might further lead to more bribery cases in the near future by him.
4) The CFE examiner should inform about the bribery case immediately to the board of directors which will further terminate the contract of the relief organization and should also look into the fact that immediate measures are taken to help the victims suffering from earthquake by finding out other organizations who can supply instantly when needed.
The board of directors of Let’s Eat, Inc., a large food and beverage manufacturer, asks a...