[TusharK]

Some executives from Maruti Suzuki’s purchase department are under the scanner following allegations of financial misconduct.



According to media reports, Maruti Suzuki has launched an inquiry on the basis of a complaint filed by a whistleblower. It is alleged that some executives provided benefits worth crores to some vendors and supply partners by sourcing parts from them at an inflated cost.

Maruti Suzuki has hired the accounting firm KPMG to conduct a detailed forensic audit. Reports also suggest that laptops and mobile phones of those under scanner have been confiscated to look for activity records that could assist in the probe.

Maruti Suzuki has neither confirmed nor denied these reports. KPMG also did not comment on the matter.

Source: ET Auto

Link to Team-BHP News

[chennai-indian]

My cousin's husband quit Maruti because of this. It is not just the purchasing department. The issue is with safety too. He could not stand sub-standard parts being signed off, so he quit in disgust

[The Rationalist]

I would be surprised if anyone is surprised about this news. I worked for a corporate hospital group and they used to purchase equipments (syringes, catheters, central lines, ventilator tubings) and drugs with the highest margin with no regard to quality. Purchase managers and higher ups were hand in hand in this and made a fortune. Mind you, the margins on some are to the tune of 500% and upwards . Corruption is notoriously deep seated in our mindset, people who do this shit make a big noise when they hear politicians take commission! According to me politicians are sardines swimming with whales.

[Imran.Syed]

I come from a Procurement background and this practice is prevalent all over the world unfortunately. It is very hard to not give into our personal greed when the returns can be so enticing.

Not only do Procurement Managers do this, all levels of procurement and many times even the CEOs and the stakeholders do it. It is almost impossible to stop that behavior and practice.

[AutoDowntowner]

Not surprised at all. In my previous company, I saw how difficult it was getting into this huge OEM for business. The sitting old lobby inside, won't allow new, better suppliers to come in. My company had to go beyond limits, ethics & what not to get the business. I can not write more here.

[RedTerrano]

Meh!
All this has been done before. The Maruti executives should pull a Suresh Kalmadi, and claim dementia to get away with it!

Jokes apart, purchasing substandard parts at inflated prices is one thing. But don't they (manufacturers / govt authorities) pull off random vehicles from the shipping yard and confirm they comply with all the norms? Or does the vehicle manufacturer self certify when it comes to QA?

Common sense dictates an independent body should be doing the verification.
e.g. Govt has a weights and measures dept. which (at least on paper) will inspect and certify your neighbourhood grocer is using the correct weights, and his 1 Kg weight is actually 1 Kg.

[Shreyans_Jain]

This happens everywhere. In every corporate. It is actually near impossible to do continuous or sustained business with any of these large companies without adequate connections and palm greasing. Actual working on ground is very much in the stereotypical sarkari fashion. Just that, these people can be fired.

People in purchase and quality make an absolute killing. And they don’t let you work otherwise.

[ranjith_cbz]

The fact that no one here is surprised or shocked demonstrates how prevalent this practice is across all industries and how disconnected Maruti's senior management is about their procurement operations. All the internal oversight, checks and balances have failed to prevent this from happening and it took a whistleblower to to bring this to them. I hope they protect the identity of whistleblower and don't go after him/her.

The general perception of Maruti in public markets is that their business operations are super cost optimised and beyond reproach. I hope the investigation brings out the financial misconduct(fraud) and punitive action is taken against the guilty. There should be some serious legal measures against financial frauds happening right from funded startups to public companies.

[five46]

That explains why the same Power Windows and Mirror controls are being used from the time I used to see Jungle Book on DD1 and today when I see it on OTT.

[srini1785]

I've see this trend in almost all private companies. Being a Sales professional, its almost a daily occurrence . At some point, we just have to give in to their demands. Most often, we have ways of not directly dealing with such customers and use intermediaries to deal with them while our end of the transaction looks clean and legit. Complaints to higher ups aren't effective since those who indulge in such misconduct often work in groups spread across multiple departments. So a quality guy would reject your component for no apparent reason and the purchase guys will show you the dog or the finance guy would just block your payment. So you get the message and engage someone to talk to them. That said, there are some companies which have a good whistle blower system which prevents such malpractices. Display boards everywhere warn employees of termination in case of misconduct.

What i have observed is that most PSU's have become more vigilant while the situation in private sector has worsened. I know of large private companies which are even bigger bureaucracies than most PSUs. In PSUs your pension can be scrapped and benefits can be withheld if you have a vigilance case against you even after retirement. In private sector there only sacking you and nothing more.

If i remember right, Volvo had sacked a few employees for accepting gifts from vendors.

[GTO]

It's a publicly listed company. The ramifications will be very high. I expect police complaints, FIRs, arrests & court cases. Those who are guilty can rest assured that their careers are finished. Sad to hear how commonplace this is, from BHPian posts.

[The Rationalist]

GTO, nothing is going to happen! I worked for a public listed corporate. I was fired when I fought against 80 hour work weeks, imagine the plight of patients who would be treated by a doctor who is working 12-14 hours a day. I can confidently say that the number of people who die due to medical negligence is very high and the only difference when compared to a Western country is that here it's too easy to cover up one's mistakes. Indian doctors think they are super human beings who don't make any errors if they work for more than 8 hours a day and treat more than 50 patients a day. There is no accountability in our system. It's truly a miracle that our life expectancy is 65+!

[GeeTee TSI]

Procurement and frauds are some of the biggest risks which any management would be wary of. It is imperative to instill an ethics and compliance culture and absolutely no exceptions mindset across the organisation (not limited to procurement alone) as award of any contract is a team decision with multiple stakeholders.

This news just screams lack of governance in this regard, the system is usually not one (in private sector corporates) where one or two mischief makers can fiddle and get away with something. Quite surprising (and disconcerting at the same time) as we are not talking about some a quagmire of political interference here, nor a new company with yet to be established policies and codes

[trail_lover]

Lets face it. There is corruption in the private sector too. Just as other Team-BHPians indicated, it is pointless blaming politicians, bureaucrats, government rank and file for corruption, when corruption has become ingrained in the society. Parliaments and governments are a mere reflection of society. The people over there didn't descend from some other country or planet.

Japanese companies usually have very robust systems and processes, but people in them are still able to find loopholes and benefit by tricking the system. If this is the case, then think about the Indian OEM, it will definitely be worse. However, such corruption doesn't come to light unless a whistleblower risks his/her entire career to bring it out. The reason: There are rotten eggs right from the highest level of management to the lowest level employee and they are all hand-in-glove.

I'm 100% sure that in ALL car manufacturers there is corruption but in varying levels of intensity. Just that it has come out first from Maruti Suzuki (MS) here in India. If there was a diesel-gate by VW, and an entire Nissan Carlos-Ghosn episode, then it can certainly and will happen with manufacturers in India.

The real horror for all of us, is how these irregularities and fraud negatively impact the products we use in our day-to-day life. For paying someone a kick-back or bribe, the suppliers will definitely load the loss somewhere, like reducing quality, durability of the part, or increase the price of the parts, which is eventually loaded on the customers.

We are already paying exorbitant taxes on cars in India, and now to know that the ex-showroom price build-up consists of a mark-up for corruption, is really sad and makes us want to hold-back or drastically cut-down expenditure on cars!

Let us remember, that car makers extensively benchmark competing products in the segment by stripping then down, and replicating many parts and systems in terms of design and cost to stay competitive. In order to stay cost competitive in the Indian market, many a OEM are just replicating MS in terms of cost-cutting. So what happens in MS will affect the entire automotive space in India for sure whether it is noticeable or not.

[wildsdi5530]

Originally Posted by The Rationalist

Indian doctors think they are super human beings who don't make any errors if they work for more than 8 hours a day and treat more than 50 patients a day.

Unfortunately true. The patient who will happily pay Rs. 1000/- for cab fare to come for consultation, Rs. 5000/- for over priced medicines and Rs 900/- for pizza/ ice cream afterwards cribs about paying Rs. 400/- to the doctor.

The average fees in cities is about Rs. 150/- and in Rural areas Rs. 50/-. Of course he has to see 50 patients to to earn a meal. And because of the various ethics and govt. rules, he cannot even take a cut from the pharmacy margins. The medical shops happily substitute the medicines for low quality ones with high margins as they have no accountability.

And 8 hr a day would be a dream for any medical professional. Starting from the 1st year of training. They have to work atleast 16-18 hrs a day to even make ends meet.

That's why many doctors practice as a hobby and make their living by business.