CEO Investigation – European Chemical Company
The U.S. subsidiary of a European company requested an internal investigation of its former CEO who had recently been fired for acting without Board authority. The investigation revealed the CEO had taken several additional steps without the knowledge of the board including firing its sales force and replacing them with independent sales agents, diversion of its proprietary product formulations to a joint venture partner without a licensing agreement or other protections of their IP and the payment of bribes to several customers’ employees in exchange for their specifying company products for use in the automobile manufacturing process. The bribes included paying the monthly mortgage of one of the plant employees and cash payments for a second employee. The results of the investigation helped the audit committee to better understand the former CEO’s actions and implement several changes to the internal controls and compliance program.