29 Pages Posted: 21 Oct 2008
MiniScribe manufactured disk drives for personal computers. It stumbled during an industry shake, but was rescued by a turnaround specialist. The turnaround appeared to be spectacular, but it was only an illusion. After four years of reported successes, the company announced that all prior financial statements were inaccurate, and enormous losses wiped out all equity. In the ensuing investigation, it came out that a large number of employees had caved in to apparently extraordinary pressure for results and had adopted a number of fraudulent schemes to increase profits. Perhaps the most bizarre scheme was to package bricks, and ship them as disk drives. Sixteen individuals were sanctioned by the U.S. SEC, and the investment bankers and accountants were sued for substantial damages.
Marge Norman stood at her office window overlooking the loading docks at MiniScribe's Singapore production facility. New to Singapore and new to her position as Plant Manager (the title effective December 1, 1987), she had recently been promoted from her job as a development engineer at the company's facility in Longmont, Colorado. MiniScribe manufactured and distributed a wide variety of hard disk storage devices for personal computers; competitive pressures in the industry had forced the company to set up off-shore manufacturing facilities in Singapore and Hong Kong. Marge had been enthusiastic about her transfer and promotion, although she had some underlying doubts. She had been born and raised in the Midwest, and had lived in several cities in California working in the high-tech industry since her graduation from college. At MiniScribe in Longmont, she worked first in the plant and then in the Headquarters R&D unit where she had been for the last four years. Marge had acclimated herself to the idea that advancement in the computer industry meant frequent relocations, but she was sure that the change from Longmont to Singapore would require more than a little adjustment. (Longmont was a town of 50,000 people north of Denver and Boulder, Colorado.) Still, as much as she would miss the skiing in the Rockies and as much as she was concerned about the cultural adjustment to Singapore, Marge was very pleased with the move. Life in Longmont had been a bit limited. And, while she had enjoyed her work in engineering she also wanted the opportunity to work in management. MiniScribe, especially the new facility in Singapore, offered a unique opportunity for gaining the kind of management experience she sought.
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Keywords: ethical ethics issues fraud computer industry securities and exchange commission SEC corporate goverance
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