Game 1 : Investigate the Whistle Blower Complaint in Manyfraud Tampines Pte Ltd

This is simulation of an audit and investigation case where the participants get to play and find out the suspect of a fraud. There are various crues and tips within the case where the participants need to crack and find. This game is being played in our Investigation related courses. Let us know if your are interested in playing this game.

Your objectives:

**Task 1: ** You have been tasked to resolve the EP complaint AS#874 that related to Manyfraud Tampines. Based on the above information and documents provided, make a presentation detailing how you will do the investigation covering communication, investigation strategies, investigation methodology, selection of investigation team, investigation tactical plan, etc, with reference to Company policy or industrial best practice. (Time allocated: 45mins)

**Task 2: ** Based on above information, documents provided and your investigation plan, conduct a brief inquiry with 2 relevant employees at their workstations with intention to secure more information and evidence. The interview is limited to 15mins, as the employees are very busy. You may want to structure your questions beforehand. (Time allocated: 45mins)

**Task 3: ** Based on above information, documents and data provided perform document review and data analysis to identify red flags and exceptions (Time allocated: 45mins)

**Task 3: ** Based on the above information, documents provided, your investigation plan, and information as well as evidence you secured during your earlier inquiry (ie. Task 2) with the employees, formulate your next step to prove or disprove the case. Conduct an admission seeking interview with the identified suspect. Time for the admission interview is 30mins. (Total Time allocated: 90mins)

Case Facts

A. Introduction

Manyfraud Tampines Ltd is a Singapore registered electronics circuit board manufacturer. Manyfraud Tampines has its main facility in Shenzhen, China, with a dynamic workforce of over 22,000 employees. The site offers a diversified range of products spanning from applications of network infrastructure, high-end servers, automotive applications, mobile phones to electronics organizers. Manyfraud Tampines also has a few PCB production lines within its compound.

In second quarter of 2008, as a major step forward in its “Vertical Integration” strategy, Manyfraud officially announced the acquisition of Dailyfraud Corp., a fast-growing company dedicated to design and manufacture printed circuit boards. This move has significantly improved the sourcing, supply chain & manufacturing process as the former China branch of Daily & Happy Fraud, is located in the vicinity of Manyfraud Tampines.

Alberto Jorge (Alberto), the current general manager (GM), leads the site, as well as the newly acquired Dailyfraud plant, with an estimated workforce of 500 indirect labors (IDL) and 21,500 direct labors (DL). Alberto scored outstanding performance during his 7 year tenure in Manyfraud Pasir Ris unit. Alberto is one of the trusted GMs in the region and Corporate has high hope on his performance in Manyfraud Tampines. As Alberto reviewed the company’s 2010 financial reports, which showed stable growth for the second half of the year, with the total revenue of RMB 45 million, he is satisfied with the company’s current performance, especially given the volatile economic climate and the challenging outlook for the industry. However, the site is facing a severe shortage of direct labor, especially around the Chinese Spring Festival.

B. Workforce and Recruitment

To overcome the shortage of labor force, Alberto held a manager meeting to discuss about the recruitment of new DL to cope with the current situation in February. Team Dailyfraud had also recently announced an employee referral program, but the response was not encouraging. Thus it was decided that the site will engage outsource labor agency to supply DL. Two weeks after the manager meeting, Annie, human resource (HR) manager, submitted a draft labor agency contract to Alberto. As Alberto has little knowledge of Chinese, the only language used in the contract, he inquired Annie on the terms and the conditions of the draft contract, which supposedly to be signed with the Human First Labor Agency (HFLA) (stated in the draft contract).

Alberto was told by Annie that HFLA was a medium size labor agency and have been in business for 15 years in Shenzhen. Alberto requested for the quotation summary, which Annie provided to him 1 week later. Alberto found the successful bidder, i.e. HFLA, in the quotation summary and was charging the most competitive price. Satisfactorily, Alberto approved and signed the contracts in two copies, in English and in Chinese.

Annie is supported by 4 HR assistants who take care of payroll, compliance, recruitment, and training. Annie is also supported by 1 HR supervisor (Jane Lee) who handles DL benefit, labor contract management, company canteen and transportation matters.

Recently, the Corporate HR compliance team enquired the unusually high DL cost in last few quarter (since Chinese Spring Festival) when compared to the productions output/ volume. Annie replied in the self-assessment audit form: “The recent increase of DL cost is due to the increased of number of new and inexperienced DL provided by the outsourced DL agency”. The HR compliance auditor found the explanation a bit strange and does not make sense. But he did not search further.

**C. Operation and Environmental **

Due to increase in production volume, more industrial wastewater has been discharged, recording a 19.5% increased since 2009, rising from 264 megalitres per annum to 315 megalitres per annum in 2010. The effluent generated contained 10% solids and was directed to the wastewater treatment plant where solids were removed by sucker trucks. The plant often stopped when the build-up of solids overflow.

David Chen, the Environmental, Health and Safety (EHS) manager proposed to Alberto some corrective measures focusing on process Kaizan, staff training, and installation of a hydrocyclone-technology machine to reduce water use and improve solid waste disposal. However, Alberto thinks it is too early to commit the capital expenditure. as the economy has just started picking up, although the operation result is better than Q1 year 2010, So he decided to postpone the plan after various rounds of unsuccessful persuasion by David.

Things went on smoothly until Dec 10, when the Guangdong Environmental Protection Bureau (EPB) officers visited the site. The Chief Inspector, Liu Li claimed that the water discharged significantly exceeded the allowable limit, and ordered the site to stop production and shut down within 2-weeks until the site has upgraded the facility. In addition, the chief inspector said a total of RMB 100,000 fine would be imposed.

Alberto immediately held a meeting with his direct reports, including Smith Kim (Admin manager), Li Yuan Yuan (Operation Director), Chen Xiao Li (Program Director), and Xiao Xiao (Financial Controller). Contingency plans were set out to reschedule MRP, production lines, customer order, suppliers’ delivery and DL workload. During the meeting Smith Kim said he had good relationship with the head of EPB and he would see how he could resolve this problem as soon as possible. The EPB penalty ticket and the shut down order never arrived, although inspector Liu Li had visited the site several times thereafter to collect the effluent test reports. Liu Li was quiet about it. Alberto and Li Yuan Yuan were relieved to know that the EPB did not take any action. Alberto then told David that all his Kaizan and CAPEX plans were no longer needed.

End of facts.

Whistle Blower Report #AS-874 Download

Download other documents and data for the case study here.

  • Access will be given during the class.
Documents and Data to be reviewed
A1 - Management Team
A2 - Candidate of Team Members
A3a - GM and AM Travel and Expense Claim
A3b - GM and AM Travel and Expense Claim
A3c - GM and AM Travel and Expense Claim
A3d - GM and AM Travel and Expense Claim
A3e - GM and AM Travel and Expense Claim
A4 - Contract for Labor Agency Service
B1 - ISO14001 Daily Fraud
B2 - Quotation Summary
B3 - Focal Review - Jane
B4 - Jane's Personnel File
B5 - May Payroll Summary
B6 - Company Search
B7 - Regulation on Environmental Wastewater
C1a - Quotation HFLA
C1b - Quotation MP
C1c - Quotation ZN
C1d - Certificate HFLA
C1e - Certificate MP
C1f - Certificate ZN
C2a - Mobile expense Apr
C2b - Mobile expense Mar
C2c - Mobile expense May
C2d - Phone Records
C3 - May Payroll Summary unhidden
Z1 - BOD resolution fake2
Z2 - BOD resolution fake1
Z3 - Brazil Shipping Document
Z4 - AQ Invoice
Z5 - Authorization
Z6 - PO example