In: Accounting
Imaginary story
You have just been appointed as the Finance Director for South East
Asia of a large multinational bank (the Bank of Northeastern
States), based in the United States and headquartered in Boston,
Massachusetts. You have been posted to a recent acquisition of a
Stock Market listed manufacturing plant, Peninsula Transport
located in a small township some 40 kilometres outside the capital
city of Indonesia. Your instructions are to asset strip the
acquired company then close it down within one year.
Two weeks into your appointment and having just arrived in Jakarta
you are given a company provided apartment and have spent several
days unpacking and settling in with your family. Today is your
first day at work and Mr Mohamed, the incumbent CEO a man who has
inherited the company from his father informs you that he knows
exactly why you are in Indonesia and begs you not to close his
company. As the day progresses, you begin to realise that before
the $ 100 million acquisition, the factory had been a wholly owned
family business that had served the community for more than four
decades and employed just under half the town’s available workforce
of three thousand people. Indeed, there were many families, some
with three generations in current employment with the company. In
addition, you also realise that many small and medium local
enterprises support the factory and that to close it will devastate
the entire community. The CEO claims that he and his family are
victims of a conspiracy to close the factory and sell the land to
build real estate on it. He shows you a newspaper report from
several years ago that clearly depicts the land surrounding the
town being earmarked for development under the government’s plans
for the future of the area. This involves building several thousand
residential units and expanding the township into a commuter suburb
serving the capital city.
Mr Mohamed informs you that he has rejected several offers from the
government and has successfully fought them in the courts and
obtained ‘heritage status’protection to overturn a local government
order for compulsory purchase of the land from his family who have
owned it for several generations.
The local CEO also informs you that he has evidence of bribes and
gifts being made by the Bank of Northeastern States to local
politicians, as well as substantial donations to National People’s
Party, a political party who are the incumbent government. It is
very clear that there is a trail of corruption leading all the way
back to your employers in Boston. That night you call your CEO at
Northeastern Bank to inform him and are shocked when he responds
with threats against you and your family that if you don’t do as
instructed you will be arrested and thrown in jail by local police.
The next morning before you leave for work, you are paid a
clandestine visit by a senior police officer and he also informs
you in a veiled threat that your situation in Indonesia leaves you
and your family very vulnerable. At this point, you realise that
you have been lied to by the Board of Northeastern States Bank and
that they are partners in a web of corruption worth tens of
millions of US Dollars involving local Indonesian politicians and
local police.
You find yourself in a dilemma. If you follow through with your
instructions you understand that you will be responsible for the
social consequences of closing the factory and will be just as
guilty as those who are involved in the conspiracy. If you don’t
you will be fired and face an uncertain future in which you and
your family, having already been threatened, leaves you in no doubt
of the consequences of being arrested and detained in a foreign
country where you have no rights.
Two questions to discuss:
1) What should you do?
2) Why would you do that?
I will take this task as after understanding entire case as I see win-win situation for both parties. By looking at scenario its conclude its more in financial negotiations.
I will have those action plan in place
o First of all will I considerable better negotiated amount to Mr. Mohammed for his company. I will assure that none of his employee are Job less. (As detail plan below) Bank is more interested in Land for real estate development not his transport business.
o I will hire best developer for real estate development, If possible in-house, locals to avoid cost & create Job.
o I will enforce team of local in lined with Mr. Mohammed to avoid post acquisition riots, social or political disruption. Raised by misunderstandings, wrong means, rumours.
o I strongly understand geographical position of Heritage Structure of Mr. Mohammed company & no doubt see possibility of over booking of real estate within One Month of Announcement.
o Don’t want to disrupt it Heritage value or point of business for Mr. Mohammed company. Hence I will make sure that those both are retained in development plans.
§ By Underground warehouse for Mr. Mohammed,
§ High rise vertical structure for Development.
o I am sure above plan will add lots of value to All Mr. Mohammed by giving more cash & renewed real estate, Bank profitable margin sale of real estate & Government by giving desired infrastructure & life style.