Editorial of People's Journal. It's obvious that they are talking about our fave bad MNC, Nestle.

The buck stops here

Wednesday, 25 August 2010 18:55

There are numerous instances when erring employees make appalling decisions that put the reputation of the entire company in jeopardy. Even worse, there are instances when embezzlement or fraud is committed while serving in an official capacity. During times like these, it would be so easy for a company to put the entire blame on the erring employee. But those who value “relationships more than contracts” — as the world’s greatest investor, Warren Buffet, put it — take command responsibility and find ways to rectify the situation. Often, this comes at their own expense, but the welfare of their customers and business partners comes first. There is actually a legal principle which applies to situations such as these, namely the rule of “apparent authority.” Apparent authority states that a principal is responsible for the acts of an agent where the principal, by his words or conduct, suggests to a third person that the agent may act on the principal’s behalf, and where the third person believes in the authority of the agent (for instance, by virtue of a high-ranking position, long employment history, and representations such as official calling cards, letterheads, etc.) On the other hand, there are other firms that refuse to acknowledge this doctrine, and continue to avoid accountability at all costs. One such corporation, a giant multinational engaged in food and beverage products, has gained notoriety in the business community. It finally reached a point wherein the country’s largest bank eventually sued the MNC for its passive involvement in a billion-peso scam. Unlike other cases where victims were not financially crippled by acts of fraud, the scheme perpetrated by the multinational’s regional sales manager left several of their Central Luzon distributors entirely bankrupt. Indeed, entire families found themselves mired in insurmountable debt. Conceitedly, the company has absolved itself of all blame, notwithstanding the fact that management was fully aware of the problem yet still urged banks to lend money to the Central Luzon distributors (thus the lawsuit). More disturbingly, a very similar case occurred not too long ago, wherein another one of their sales managers ran away with approximately P100 million and left the distributor holding the bag. Let us recall that one of the cornerstones of President Aquino’s economic agenda is to boost the growth of small and medium enterprises and promote entrepreneurship. Accordingly, companies need to be reminded that the buck does not always stop before it reaches them.