Too good to be true

Internal Auditor, August, 1996 by David McNamee

Our office scrounge was Eddie Marshall. We were convinced that there was nothing he couldn't fix and nothing he couldn't find for us if we needed it. Eddie was our jewel. When asked how he came up with that spare piece of furniture for me in the face of a budget freeze, he said, "Forget it! It was nothing." If WordPerfect was acting less than that, Eddie recovered my file, all the while explaining how I needed to be more careful in making regular back-ups of my work. I always vowed to make back-ups every Friday before I left for home. I felt to do otherwise would hurt his feelings.

Eddie became our personal computer coordinator when the office first became automated. Eddie lived up to his reputation and found a guy that beat everyone else's prices. We became extremely grateful for those savings, since we spent much more than we expected on items like software, memory chips, supplies, cables, and training classes.

As our PC coordinator, Eddie ordered all the supplies, and he installed systems and spares as needed. We converted an old records storeroom into "Eddie's Shop," where he stored all the spares and supplies and unpacked and tested all the systems we bought. Each system required some customizing to suit the versions of hardware and software we were accumulating and to suit the person for whom the system was intended.

Eddie was so good at his job that PC coordinators in other departments would come around to get his advice on how to fix this or that or where to buy what for the best price. Eddie took such a strong proprietary interest in his work that he was rarely out of the office. Besides, no one else really knew anything about the nuts and bolts of computers like Eddie knew them. He was always working late, tinkering in his "Shop."

One day, when Eddie was sick and out of the office for a week, Rose Park, one of the other PC coordinators, stopped by "Eddie's Shop" to order some special-length cables. She told us that Eddie had mentioned that he bought his from a company called Specialty Cables. Eddie raved about the supplier, she said, because they would make the cables in any length at a fair price and deliver them in 24 hours. Since she had just received a shipment of six new workstations for her group and needed the vendor's name right away, Rose and I searched the accounts payable records for the office copy of the invoice from Eddie's cable supplier.

Most company purchases required an individual requisition/purchase order that was subjected to various levels of management approval. However, our organization's accounts payable process did allow a number of blanket purchase orders for such diverse commodities as bottled water, office supplies, temporary office help, airline travel, and computer supplies. Authorized employees would call or fax orders to the approved suppliers and distributors, who would promptly deliver the goods or services and then issue a monthly summary bill for each ordering department. Accounts payable routed the summary bill to the department coordinator who verified that the goods or services had been received. It was an efficient process that saved us time and money on common purchases.

Since the purchase of computer cables fell under the blanket purchase order for computer supplies, Rose and I were looking through the file of monthly summary bills for our department. Rose quickly spotted the Specialty Cables invoice. The company name was printed on the bill, and there were a dozen entries for cables of various lengths and connections. Satisfied, Rose copied down the name, telephone number, and address of the vendor, and we put all the invoices back in the file.

The next afternoon, Rose Park came to see me in my office, carrying a handful of papers. "Take a look at these," she said ominously, "and tell me what you see."

There were several monthly summary bills from Computers Inc. and from Specialty Cables Company. I looked at them carefully, but I couldn't see what Rose wanted me to see. "I give up. What's wrong? We spend a lot of money on computer supplies every month, if that's what you mean."

Then Rose compared the entries for cables and connectors on the Computers Inc. invoice against the entries for special-length cables on the Specialty Cables bill. "The connectors and the total length of raw cable are virtually the same on the two sets of invoices," she explained. "I wouldn't have noticed, but when I called Specialty Cables to place my order, Eddie answered the phone! I was so shocked that I hung up. Eddie has been selling me cables he makes up with materials he buys for the company at Computers Inc.!"

When Eddie returned two days later, I called him into the office for a chat. When I confronted him with the invoices and the fact that we knew Specialty Cables was Eddie Marshall, he readily confessed.

Eddie had shopped around for the special cables, but the suppliers' prices were quite high. He then came up with the idea of just making them himself. Because he had no spare time on the job, making the cables meant he was frequently late for dinner and had to come in on weekends to finish his work. He wasn't receiving any compensation for this overtime, and his wife was after him for working for "free." That's when he decided to set up Specialty Cables Company.