Fraud destroys fantastic company
Royal Imtech from Gouda, The Netherlands, is an international company for technical services. The turnover in 2014 was 3,9 billion euros. Worldwide Imtech has 22.000 employees of whom 7200 work in The Netherlands. The company, which was 150 years old in 2010, was an exemplary business on the stock exchange until 2014.
In 2014 it became apparent that the top management of this immense company had lost the oversight on the financing of thousands of projects. In Poland, Germany and in Switzerland there was considerable fraud: forgery, bribery of officials and fraud with counterfeit bills. The CFO and CEO did not have oversight over cash flows and twisted the facts about a huge investment. The company was punished by the stock exchange with share prices falling to €0,28 (It once was €15,00).
In 2015 it’s over. A Dutch judge has declared the company bankrupt. The curator is now looking for buyers for business units and, at least has been able to maintain 10.000 jobs.
For the employees the loss has been a drama. As one employee says: ‘It’s very sad that a big company like Imtech, where I happened to have had a very fun and meaningful job, has gone down in such a short time’.
Integrity means security in advance
Does a firm policy of integrity and SCR prevent such aberrations?
It probably would have, if the risks of fraud and deceit were traced in advance. Now the company bought a lot of foreign companies in a short time without paying sufficient attention to the existing cultures and everyday practices. In Poland there was a conflict of interest. In Switzerland the company pampered civil servants. In Germany there was forgery. Now the facts are well known, there is nothing left to do than to go to court and do forensic investigation. This is too late and too slow without any financial perspective.
The energy and carelessness of the former Executive Board and Supervisory Board has resulted in uncertainty and unemployment for a high number of professional employees, just as previously was the case with fast growers such as AHOLD and ABN-AMRO. This has resulted in high social costs because of the delay in going-on projects and reputational damage; and, last but not least, the costs for unemployment fees are for the tax payer.
Integrity means carefulness and taking the interests of all stakeholders into account, also in the long term. That doesn’t mean quickly doing business, but keeping the risks under control. This competence should be decisive for members of the Supervisory Board and within the Executive Board a critical voice is essential. To put it in different words: each Board needs an integrity expert with eloquence!
Henk Bruning
