Two former managers employed by beverage maker Coca-Cola in China have been detained by police over allegations that they accepted bribes or kickbacks, according to reports.

The two employees of Shanghai Shenmei Beverage & Food Co, which is partly owned by Coke, were both Chinese citizens and worked as middle managers at the bottling firm. One left the company in January 2008, and the other was dismissed after being detained by investigators, according to the report which appeared in The New York Times.

“We can confirm that two former employees at Shanghai Shenmei Coca-Cola bottling plant have been detained by the police. This matter does not involve bribery of government officials but instead allegations that the former employees extracted kickbacks from suppliers and embezzled from the supplier,” said Kenth Kaerhoeg, a Coca-Cola spokesman, said in a statement.

This comes after China state-run news media, Xinhua, reported that “several” employees at the plant were being investigated for allegedly taking bribes, and that the case had been turned over to a local prosecutor. One of the employees detained reportedly worked in the Shanghai operation’s marketing or advertising department, and was accused of taking kickbacks of up to US$1.5 million.

Coca-Cola did not give any further details, but said that beverage maker was cooperating with the investigation. The Shanghai police did not comment.

Original Article: [link]

The risk of fraud or misconduct is expected to either stay the same or rise despite increasingly strong enforcement efforts by authorities around the world, and a rebound in global economies. That is the result of a recent survey conducted by accounting firm KPMG.

Polling around 200 US companies with annual revenues of least US$250 million, the survey found that most respondents believed that fraud and misconduct risks will either stay the same or increase over the next 12 months.

When asked what types of fraud or misconduct posed the greatest risk, 35 per cent said they were concerned about misappropriation of assets through theft of cash, inventory or intellectual property. Slightly less than a third (31 per cent) were worried about other illegal or unethical acts such as bribery, corruption, market rigging, or conflicts of interest, and 14 per cent said fraudulent financial reporting in the form of misstating revenues, assets or liabilities posed the greatest risk. Around 20 per cent said they were all equally threatening.

The survey noted that the type of fraud that companies were most concerned about varied by industry. For example, companies dealing with consumer markets and information, communication, and entertainment were more concerned about theft of assets, while executives from financial services, industrial markets, and healthcare and pharmaceuticals tended to be more worried about illegal or unethical acts such as bribery.

"Despite some very high profile prosecutions and the pledges of rigorous enforcement by various government watchdogs, one of the country’s most troubled economic periods has created a perfect story of increased pressures, new opportunities and dangerous rationalisations to allow business fraud and misconduct to occur," said Richard Girgenti, national leader for the accounting firms forensic global practice.

"Our findings underscore that pressures to stem the tide of reduced earnings through these difficult economic times along with the availability of trillions of dollars infused by the government to stabilise the market would heighten the risk of fraud and misconduct," he said.

A total 75 per cent of executives expected the funding their company allocates to fighting fraud to remain unchanged. Meanwhile, two-thirds cited inadequate internal controls or compliance programmes as a fraud and misconduct risk. Nearly half (47 per cent) said the same for management override of controls, 44 per cent cited inadequate oversight of management by the board of directors, 43 per cent cited collusion between management and third parties, and 27 per cent cited collusion between management and employees.

The report also said that while most respondents agreed that their organisations had protocols in place to address fraud allegations that arise, there is much room for improvement. Over a quarter said their company did not have adequate protocols on how internal investigations should be conducted, and when the board of directors should be alerted.

A third said their company did not have protocols to determine remedial actions, and 38 per cent said their company did not make explicit the parameters for when it should voluntarily report fraud or ethical violations.

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