Media and Crisis Management
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Media and Crisis Management

Embezzlement – How to Deal With It

Posted on: July 28th, 2012

Crisis Management: Embezzlement – How to Deal With ItCrisis Response

So much to talk about! (From 2007).

Embezzlement is the unpublicized scourge of business. Several clients and I have grappled with it publicly, but many more friends running small companies have suffered quietly after being ripped off by one of their own. They usually don’t recover the money, and culprits often are eerily unrepentant – as though thievery were some twisted entitlement. The $10,000 to $50,000 shortfalls can be crushing. The crime usually attracts attention only when losses are high or victims are public agencies.

Let’s begin with the embezzlement of a Habitat for Humanity operation near me.  If there is any solace for Habitat’s loss of at least $200,000 it is that leaders did a textbook job of addressing it. They blew the whistle on themselves – essential to retaining credibility. They’re fixing the problem: firing the employee believed responsible, turning the case over to authorities, implementing new safeguards, and bringing in an independent accounting firm to review procedures. They’re reassuring stakeholders: news reports said Habitat privately contacted donors, builders, homeowners, prospective homeowners and others to assure that no public funds were involved and that 10 current projects would proceed. They didn’t sugarcoat it and said their survival depends on expense cuts and donation increases.  One promising indicator that they handled it right: the builders association pledged to continue working with the agency.


Krispy Kreme arose from of its communications abyss. Good. This former client has been distressingly silent for many months following a collapsing business model, plummeting share prices, store closings, layoffs, ousted CEO, SEC investigation, and myriad lawsuits. I almost fell over when I saw that interim CEO Stephen Cooper, a turnaround specialist, gave an interview to Winston-Salem Journal reporter Brian Louis. Cooper discussed long-delayed financial reports (he hoped to meet a deadline), closings (more may come), and the future (new marketing, a possible sale down the road.)

Plugging the huge hole in the Krispy Kreme financial, SEC, and legal doughnut is a monumental task that necessarily limits how much you can say. Nevertheless, the company’s been an information black hole for months. Stockholders and those who have despaired of this long-loved company deserve some news. Oddly, CEO Cooper reportedly said, “It’s not as if the company just decided one day to be opaque.” Please keep talking, Mr. Cooper. If Krispy Kreme doesn’t define itself then others will.


I personally believe the Avian Flu pandemic threat is being at best, hyped; at worst, demagogued. Some political pronouncements suggest this health tsunami’s rolling our way and woe be unto the unprepared. If you read and listen carefully, experts are more circumspect. Some call the warnings “hype”. These pandemic alarms are frightening most of us, and compelling larger businesses to draft expensive flu crisis plans. With this much noise, they have no choice. We will all be immensely grateful if the plans go unused and a 1918-like epidemic does NOT happen, but angry if we learn this was a “Wag the Dog” alert to make up for a slow Katrina response.


Finally, I too am distressed that former New York Times reporter Judith Miller was too cozy with Washington insiders using WMD to justify the Iraq War, and that the Washington Post’s Bob Woodward waited two years to tell his editor an administration source had leaked CIA analyst Valerie Plame’s existence to him. Nevertheless, this leak investigation could ultimately force reporters to be witnesses in trials of Scooter Libby and others for alleged lying to investigators. Woodward underscored this when he said that his testimony to the grand jury was a first after 35 years as a reporter. I hope the press as prosecutorial tool worries you. Journalists are as flawed as the rest of us, but they can’t protect us when confidential sources go silent for fear of reprisal

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