On October 11, Hisense Group held a conference on fighting against fraud and corruption, reiterating that corruption and fraud are two red lines that cannot be crossed by all Hisense management teams and employees around the world. The conference reported several cases of fraud and corruption as well as the treatment of the cases. Among them, the case of fraud in SBU Austria shocked us. Stanka Pejanovic, Vice President of Hisense International, Deputy General Manager of Sanden Corporation in Japan, and Deputy General Manager of Hisense Europe Region, is responsible for HR and Organization, Internal Audit and Corporate Security. So, what is her view on the SBU Austria case as well as Hisense’s zero-tolerance attitude toward fraud and corruption? “Youxin” will bring you more details...
Not only SBU Austria,
but also headquarters should bear share of the responsibility
Stanka said Internal Audit and Control of Hisense EU Region was formed in May this year. Their work differs from the classical audit - above all, in terms of their expertise as they are doing reviews not only from financial and compliance perspective, but also considering overall economics and business model of a company and proposing improvements in future management.
According to Stanka, one employee from corporate finance alerted about the prolonged AR due dates in SBU Austria. Unfortunately, prolonging AR due dates took place since the beginning of 2020. After this discovery, colleagues from corporate finance ran some further analyses to verify what was going on. Following this, Internal Audit opened full-scope investigation and CFO Erwin Orthaber was suspended. Based on substantial findings discovered by Internal Audit, in August also CEO was suspended. Later on both the CEO and CFO were discharged.
For the case of fraud found this time, Stanka said, she was not very surprised because “SBU Austria had similar problems (high level of overdue AR, problems in accounting and data management, etc.) in the past. In addition, corporate security department was warning that former CEO (Mr. Grafoner) had not had a good reputation in Austria, but he was hired nonetheless.”
She also added that not all the blame should be put on SBU Austria, and executive areas from headquarters bear their share of the responsibility through their vertical management and monitoring of SBU performance.
Zero-tolerance attitude toward fraud and corruption
is the base for Hisense development
After attending the conference on fighting against fraud and corruption online, Stanka said she saw that Hisense Group places significant importance to this issue and has assumed zero-tolerance position. “The zero-tolerance position is to my opinion the only solution if we want to assure sustained growth and company development and to safeguard the shareholder value. This is also in line with my personal values and business expertise. I believe that more effort should be placed into increasing awareness of all employees, and improving processes because preventive measures are the most important part of managing the overall process. I saw energy, willingness and initiative that the whole Internal Audit and Control process is brought to the higher level in terms of sharing information and experience.”
Stanka reminded that after receiving information about a certain case, all responsible persons within the Group should proactively verify the situation in their area of work and initiate necessary measures. “I also see this situation as a big opportunity to increase our profitability and enhance our employees’ belief in Hisense and Hisense’s values.” Besides, educated leaders and employees, their correct response and speed of the response are key determinants in a fight against fraud and corruption.
Establish an independent whistleblowing platform
before December 1st
After the completion of Internal Audit, former MD and CFO were discharged. Stanka has led the Internal Audit, Control and Corporate Security teams to take the following actions:
Enhance informing: The Internal Audit report is forwarded to HQ IA Department and in this manner also Hisense International is informed. Internally, Hisense EU Region has shared information with key employees at monthly HEG meeting.
Take measures depending on severity of Internal Audit findings in the following in three parts:
- enhance education of employees about the existing and amended internal rules and increase their awareness about the importance of preventive measures for those minor circumstances;
- improve the processes and internal rules with deficiencies;
- establish responsibility of persons involved and take necessary further steps for those serious circumstances.
Stanka explained that in Europe, new Whistleblowing Directive was passed in 2019 and this law will come into force on December 17th, 2021, ensuring stricter standards for all EU companies relating to whistleblowing system. “Our obligation is to establish an independent whistleblowing platform, with assured confidentiality of whistleblowers. We started these activities and the plan is to have this platform ready on December 1st 2021, and to also connect it to Hisense HQ platform and to educate all employees and stakeholders on the upgraded whistleblowing system.”