Former supply chain buyer's fraud and kickbacks cost Apple $10M

Comments

• Reply 1 of 8

  marccosan Posts: 3member

  March 19, 2022 5:43PM

  Interesting name
• Reply 2 of 8

  zoetmb Posts: 2,654member

  March 19, 2022 6:26PM

  It’s hard to understand how this happens in a company like Apple which must have all kinds of controls.  Even the kickbacks should have been implied because kickbacks aren’t “free” to a company — they result in being charged more.  And Apple supposedly controls product costs quite rigidly. (Although they spend ungodly amounts of money on facilities and other things.)

  
  

  Many decades ago, I got a job at a large media company because my predecessor got caught taking kickbacks.  And they were able to catch him even though this was before much computerization because the way the acquisition process worked was that first we’d have to do a purchase request, which had to have three competitive quotes and it had to be signed by one’s boss as well as their boss (and sometimes even more up the line, depending upon the level of spending). 

  
  

  Then it had to be approved by the purchasing department, which had their own chain of approval.  Once approved, only then did you complete a purchase order, which they re-approved and sent out.  Once you received the order, you signed off on a copy of the P.O. and then the company got paid.  

  
  

  Anything that was going to be capitalized went through a similar but more rigid process as those were expensed to different budgets. 

  
  

  They also had a policy of never again doing business with any company that  paid a kickback. 

  
• Reply 3 of 8

  crowley Posts: 10,453member

  March 19, 2022 7:31PM

  marccosan said:

  Interesting name

  Is it?  Does Prasad means something I'm not aware of?
• Reply 4 of 8

  wood1208 Posts: 2,913member

  March 20, 2022 2:05PM

  In USA,corporations,government and IRS put more trust in people to do right. As a side effect, it give immigrants(not aware of the US laws and it's reach) doing something wrong and a sense of easily getting away is higher than facing consequences. Thought process is when get caught, will handle. Until then just keep ripping the system.
  

  But in US when law enforcement comes after you, you are finished. Unfortunately, some people don't get it until get caught and put in prison and if they put you with general prison population, you know what happens.

  edited March 2022
• Reply 5 of 8

  clementineorange Posts: 105member

  March 20, 2022 3:08PM

  Say hello to your new cell mates Bubba and Pinky.

  
• Reply 6 of 8

  sunman42 Posts: 264member

  March 20, 2022 10:33PM

  wood1208 said:

  In USA,corporations,government and IRS put more trust in people to do right. As a side effect, it give immigrants(not aware of the US laws and it's reach) doing something wrong and a sense of easily getting away is higher than facing consequences. Thought process is when get caught, will handle. Until then just keep ripping the system.
  

  But in US when law enforcement comes after you, you are finished. Unfortunately, some people don't get it until get caught and put in prison and if they put you with general prison population, you know what happens.

  Well, this is white collar crime, so anyone convicted of these offenses probably won’t be going to a maximum-security prison. On the other hand, they may get to meet a higher dollar value sort of thief.

  
• Reply 7 of 8

  sunman42 Posts: 264member

  March 20, 2022 10:50PM

  zoetmb said:

  It’s hard to understand how this happens in a company like Apple which must have all kinds of controls.  Even the kickbacks should have been implied because kickbacks aren’t “free” to a company — they result in being charged more.  And Apple supposedly controls product costs quite rigidly. (Although they spend ungodly amounts of money on facilities and other things.)

  
  

  Many decades ago, I got a job at a large media company because my predecessor got caught taking kickbacks.  And they were able to catch him even though this was before much computerization because the way the acquisition process worked was that first we’d have to do a purchase request, which had to have three competitive quotes and it had to be signed by one’s boss as well as their boss (and sometimes even more up the line, depending upon the level of spending). 

  
  

  Then it had to be approved by the purchasing department, which had their own chain of approval.  Once approved, only then did you complete a purchase order, which they re-approved and sent out.  Once you received the order, you signed off on a copy of the P.O. and then the company got paid.  

  
  

  Anything that was going to be capitalized went through a similar but more rigid process as those were expensed to different budgets. 

  
  

  They also had a policy of never again doing business with any company that  paid a kickback. 

  
  

  For what it’s worth, I worked for a US government agency for 33 years, and initially procurement worked pretty much like this — and very, very slowly. Finally responding to the availability of overnight shipping of tech items, those of us who had to purchase items were issued “procurement” cards — standard credit cards on an agency-wide contract, with low individual purchase limits but monthly total limits of some $K. Over time, both individual and aggregate purchase limits were increased to the point that if we had a quasi-emergency need for a new laptop or desktop, we could usually order it with the “P-card.”
  
  We had to keep extensive records, with the volume and detail of those records increasing nearly every year because of fear of fraud and other abuse. Ironically, the only abuses that were ever publicized were a small number of cases from other (non-civilian) agencies where some wise guy decided that buying beers at a roadhouse was a valid purchase — not too difficult for the auditors to catch — and one miscreant who was buying TVs on his purchase card and reselling them off the back of a truck.
  
  Bigger ticket items, of course, required more (eventually digital) paperwork to buy, and strict property tracking (bar code stickers eventually surveyed every year). Certain classes of less expensive items, including at one point individual hard drives, also had to be tagged and tracked, which got a little absurd when we started purchasing NAS systems with racks full of 3.5-inch drives. To put it mildly, the procurement outfits were very sharp on procuring large ticket items, but years behind the curve when it came to the revolution in desktop computing price/performance. All in all, I don’t think the taxpayer was cheated out of very much — except the time of engineers and scientists complying with all the record-keeping requirements.

  
  
• Reply 8 of 8

  Paul_B Posts: 82member

  March 21, 2022 3:04PM

  sunman42 said:

  zoetmb said:

  It’s hard to understand how this happens in a company like Apple which must have all kinds of controls.  Even the kickbacks should have been implied because kickbacks aren’t “free” to a company — they result in being charged more.  And Apple supposedly controls product costs quite rigidly. (Although they spend ungodly amounts of money on facilities and other things.)

  
  

  Many decades ago, I got a job at a large media company because my predecessor got caught taking kickbacks.  And they were able to catch him even though this was before much computerization because the way the acquisition process worked was that first we’d have to do a purchase request, which had to have three competitive quotes and it had to be signed by one’s boss as well as their boss (and sometimes even more up the line, depending upon the level of spending). 

  
  

  Then it had to be approved by the purchasing department, which had their own chain of approval.  Once approved, only then did you complete a purchase order, which they re-approved and sent out.  Once you received the order, you signed off on a copy of the P.O. and then the company got paid.  

  
  

  Anything that was going to be capitalized went through a similar but more rigid process as those were expensed to different budgets. 

  
  

  They also had a policy of never again doing business with any company that  paid a kickback. 

  
  

  For what it’s worth, I worked for a US government agency for 33 years, and initially procurement worked pretty much like this — and very, very slowly. Finally responding to the availability of overnight shipping of tech items, those of us who had to purchase items were issued “procurement” cards — standard credit cards on an agency-wide contract, with low individual purchase limits but monthly total limits of some $K. Over time, both individual and aggregate purchase limits were increased to the point that if we had a quasi-emergency need for a new laptop or desktop, we could usually order it with the “P-card.”
  
  We had to keep extensive records, with the volume and detail of those records increasing nearly every year because of fear of fraud and other abuse. Ironically, the only abuses that were ever publicized were a small number of cases from other (non-civilian) agencies where some wise guy decided that buying beers at a roadhouse was a valid purchase — not too difficult for the auditors to catch — and one miscreant who was buying TVs on his purchase card and reselling them off the back of a truck.
  
  Bigger ticket items, of course, required more (eventually digital) paperwork to buy, and strict property tracking (bar code stickers eventually surveyed every year). Certain classes of less expensive items, including at one point individual hard drives, also had to be tagged and tracked, which got a little absurd when we started purchasing NAS systems with racks full of 3.5-inch drives. To put it mildly, the procurement outfits were very sharp on procuring large ticket items, but years behind the curve when it came to the revolution in desktop computing price/performance. All in all, I don’t think the taxpayer was cheated out of very much — except the time of engineers and scientists complying with all the record-keeping requirements.

  
  

  
  Good for him.  His only mistake was he got greedy.  My misses is a supply chain manager, and I tell her to do the same.  It's white collar crime, and some judges get impressed by the intelligence.  He's got money, and a company like KPMG will approach him.  How many hackers has Apple hired?