A Pattern of Bullying

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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

Another Journalist Giving His View

Left in the lurch

WHEN the regional sales manager, sporting the rank of vice president in a multinational company, engages in malpractice in the market, can the latter be held liable? Apparently not in the view of this giant European multinational company whose RSM in Central Luzon and her husband have allegedly duped six wholesalers or major distributors into losing millions in a clever discount scheme. The RSM had been doing great, surpassing the MNC’s sales targets for which Central Luzon bagged the “Best Area Award” in 2007 and 2008. Why she suddenly went missing in the third quarter of 2009 have been recently uncovered. It was discovered that the RSM had instructed distributors under her to give eight-percent to 12-percent discount to a particular client, it turned out connected to her husband. As the distributors themselves were entitled to only a four-percent discount, they stood to lose six-to-eight percent. So they balked but eventually agreed on the RSM’s written assurance — on MNC letterhead — of a refund. Thus, the serial bulk repeat orders for the MNC’s consumer products by the husband-favored customer who, it was soon found out, touted the same discount scheme to Metro Manila wholesalers — enabling them to undersell the MNC’s metropolitan distributors. Talk of a conjugal sting operation, Jose, not to mention that soon enough the checks issued by the husband-favored customer to Central Luzon distributors started to bounce and, worse yet, bounced right back to the missing RSM’s bank account. As even the most shrewdly plan of mouse and man, to paraphrase the adage, has gone woefully awry — the RSM-supervised and gypped CL distributors have had to desperately turn to the European MNC for restitution. No dice, Jose. Aside from token assistance to defray the legal fees, the MNC has abdicated its duty to be its RSM’s keeper, leaving the CL distributors in a lurch. The MNC is renowned for its virtually incalculable resources. Reports say that its 2008 profit from global operation is in the neighborhood of $16 billion. Its products, by the way, include coffee, milk (powder and liquid), coffee creamer, chocolate, ice cream, food and beverage. So, in the Yuletide spirit that hopefully also animates corporate social responsibility, I believe the situation isn’t as forlorn as it seems. A lawyer-friend, 42 years in corporate and criminal law practice, agrees that the MNC properly approached could be persuaded to feel bound by the acts of its missing rogue RSM. Indubitably, he says, the RSM’s dealings with the distributors in Central Luzon were for and in behalf of her employer, given the authority that the MNC has given her. Thus, in light of what has befallen the distributors, it might not have happened if the MNC had counter-checked its RSM’s conduct in the market. Why shouldn’t the MNC be liable for the distributors’ losses if due to its negligence? Paging the Department of Trade and Industry and Securities and Exchange Commission legal departments.

'Manlolokong' multinational firm by Al Pedroche, December 19, Pilipino Star

ISANG multinational firm ang dawit sa kontrobersya. Isang babaeng regional sales manager (RSM) nito sa Central Luzon ang “nang-onse” ng mga distributors. Ang kompanya ay gumagawa ng dairy products. Umaabot sa US$16-billion ang tinubo nito para lang sa taong 2008.

Lima sa anim na distributors nito ang natangayan ng “daang-milyong piso.” Sa marketing setup ng kom panya, ang mga regional sales manager (RSM) nito ay nag-utos sa mga distributors na magbigay ng discount sa mga customers.

Inutusan ng lady RSM ang mga Central Luzon distributors na magbigay ng walo hanggang sampung por syentong diskuwento sa isang “espesyal na customer” na malakihan kung humango ng produkto. Nangako ang lady RSM na ibabalik sa distributors ang sobrang discount. Kaugnay nito, may written commitment ang lady RSM na nakasulat sa letterhead ng multinational firm. Ang mga produktong hinango ng favored customer mula sa Central Luzon ay binayaran ng tseke sa mga distributors. Tapos, ibinebenta ang mga produkto sa mga wholesalers sa Metro Manila.

Noong Hulyo ay nagtalbugan ang mga tsekeng inisyu ng favored customer na ibinayad sa limang distributors. At ang grabeng nangyari, hindi nai-deliver ang mga produkto sa mga wholesalers na nagbayad ng cash advance. Umaabot daw sa P30 milyong halaga ang nata ngay sa isa sa mga distributors. Samantala, hindi naman malaman ng isang wholesaler kung papaano mababalik sa kanya ang P22 milyong ibinigay niya sa favored customer bilang advance payment. Kaya pala, ang asawa ng lady RSM ang nagpapatakbo sa negosyo ng favored customer. Malinaw ang anggulong sabwatan.

Agad namang ipina si yasat ng multinational firm ang pangyayari pero sina bing wala silang sa gu tin sa ginawa ng lady RSM. Wala yatang corporate ethics ito. Kasalanan ng kanilang top executive sa bansa eh ayaw nilang panagutan? Grabe iyan!