Retailers Susceptible to Embezzlement
By David Dorf on Dec 29, 2008
Last week both Fry's Electronics and Best Buy found leaks in their respective ships in the form of embezzlement. A VP at Fry's convinced the company they'd save money letting him handle vendors directly. He then proceeded to take $65M in kick-backs over the course of three years, spending much of it in Las Vegas casinos where he already had a reputation with police.
The Best Buy saga isn't much different. A couple owning a company called Chip Factory managed to underbid and overcharge Best Buy for computer parts by having the manager of vendor-relations in their pocket. Between 2003 and 2007 they allegedly netted at least $31M from their lucrative scheme.
I suppose its pretty easy for a buyer to overpay or overbuy and take a little something for his troubles. Audits are part of the answer, and job rotation is probably a good thing as well. Occasional background checks would have unearthed lavish lifestyles not in sync with pay-grades, but apparently none of these precautions were followed. I guess SOX doesn't plug all the holes.