Wednesday, December 23, 2009

A Pattern of Bullying

Emil Jurado.gif

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Several months ago, I wrote about this food multinational corporation that was bullying one of its Filipino distributors. Considered the world’s largest food and drink company, this multinational had terminated its contract with a distributor and had threatened to do the same with another distributor. The reason stated was conflict of interest.

The alleged conflict of interest was based on Distributor 1’s shareholders’ discovery that one of its executives, a married man, was having an affair with a sales executive of the multinational. The relationship led to double the amount of discounts on the multinational’s goods given to retailers (such as groceries) by the executive. This led to brisk sales, but at a loss to the distributor.

The multinational made money all right because it sold its brands, and their executive got recognition and financial incentives because of her performance. However, all these were at the distributor’s expense. Even more disturbing, an independent audit showed that there were “phantom deliveries” of products to the distributor, non-existent goods, but still paid for because of the connivance between the parties to the illicit affair.

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When the distributor brought up the illicit relationship to the multinational executive’s superiors, they shrugged it off as an affair between two consenting adults. This was despite the company’s Corporate Code of Ethics that enjoins its management and employees to “avoid even the appearance of impropriety in its business relationships on behalf of the company.” In the code, there is also a provison that says “sanctions will be applied in the event of misconduct or abuse of established corporate standards.”

Well, sanctions were applied all right, but to the wrong party—my gulay, to the distributor!

Eventually, the multinational had a dialog with the distributor to settle their differences. Nothing came out of it.

As it turned out, this was not an isolated case. Another sales employee of the multinational coerced five Filipino distributors of the company in Central Luzon to pass on goods to Metro Manila wholesalers at 8 to 10 percent discount.

Manila distributors like Distributor 2 could not compete with such low prices, but because the multinational forced it to “hit targets at all costs,” it had no choice. In the process, it lost money.

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My gulay, the distributors later found out that the customer offering preferential discounts was the executive’s husband. They discovered this when the checks they were given by the customer bounced. Upon investigation, the checks were traced to the executive’s account. And the distributors were not the only ones left holding the bag. Just when the couple’s scam was discovered, the executive’s husband got cash advances from the Metro Manila wholesalers for goods they never got. One of them even lost P22 million.

When the distributor approached the multinational for redress, the company did not accept any responsibility and instead offered to help only as far as paying for the distributors’ legal expense to sue. However, independent lawyers say the executive, by her verbal or written orders, some in documents with the multinational’s letterhead, bound the company to take responsibility by virtue of the doctrine of “apparent authority.”

What do you do with a bully who runs roughshod over its distributors? You take him to court!

By Emil Jurado, Manila Standard

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