Being an executive of many years standing and a CA(SA) at that, I submit that I am a fairly good judge of character. Sure, I’ve got it wrong but generally I trust my instincts and they mostly do not let me down.

So here is a sorry tale of extreme executive manipulation.

My client, Jackson (not his real name), approached me about 2 years ago to coach him. I connected with him whilst he was working for a large multi-national based in Europe. He told me that he planned to return to SA within the near future and was interested to know what the job market looked like. He was a CA(SA) with a master’s degree in finance and was 5 years post-qualified at the time. Our connection was congenial and professional. In a strange way I was impressed with Jackson’s firm and clear presentation which was confirmed when we finally met up.

We agreed on a coaching program and I was very impressed that he had landed himself a very impressive job as the CFO of a listed company. Stories like this are ammo in my business because it helps in showing my clients that anything is possible if you put your mind to it.

Jackson found the coaching very valuable. In the process, he put himself forward as a Top 35 Under 35 candidate for the competition run by the ASA magazine. He qualified as a finalist and his new employer was suitably impressed.

Needless to say, in our time together, I saw the quality of this humble and yet astute and competent executive. I had no doubt that he would shine brightly in his new role. And I was proved right – Jackson was quickly absorbed into the executive inner circle and was lauded by all concerned including the Board and the financial press. The share price responded in sympathy by rising nearly 300% over a very short period of time. What an amazing success story.

Imagine my horror when a year later Jackson contacted me to tell me that things were not working out and could I help him find a new job. When we met it emerged that catastrophe had struck – Jackson had been in conflict with the CEO who had suddenly accused him of trumped-up charges and unceremoniously pulled his authority. She reallocated his reporting lines and left him to complete a menial task of getting the tax returns of smaller group companies up-to-date. She further accused him of gross in subordination, undermining her authority and failing to carry out his duties.

To me something looked seriously amiss. My immediate reaction was that the CEO was up to no-good and Jackson was getting too close to discovering her fraudulent activities. It was the only logical explanation. He was seriously distressed and explained that her behaviour was erratic a disturbing. Although she was a very domineering personality who demanded things to be done her way, this “my-way-or-the-highway” was more than extreme. I know that the narcissist personality is quite capable of such displays of arrogance but could not believe that it was playing out in such an intense way. Furthermore, Jackson explained that he contacted the non-executive chairman of the Board and expressed his concerns about the CEO’s behaviour. The chairman’s reaction was disappointing as he supported the CEO and inferred that Jackson was not performing as expected.

None of this made sense to me because, as mentioned earlier, I trust my intuition and Jackson still remained, in my mind, a highly professional and competent executive, mature well beyond his years. But now the facts seemed all too clear and I reached a point where I had to err on the side of logic and conclude that Jackson had genuinely over played himself and stepped over the edge. Nonetheless I still could not connect the allegations being made against him with the client that I had grown to respect and like.

And then suddenly, out of the blue, Jackson contacted me and requested that we meet. Since our last connection things had got even more out of hand. He advised me that he had resigned from the job as he could not deal with the stress and humiliation. Since our previous connection the CEO had suspended him, pending a disciplinary inquiry concerning his gross incompetence. He was, however, smart enough to cut his losses and engage the services of an astute labour lawyer. Hence, he was able to negotiate a relatively reasonable disengagement package. He gracefully resigned with the understanding that both parties would abandon any further disruptive allegations and thereby avoiding any further reputation damage.

But it did not end there – worse was still to come!

A few days ago, Jackson was browsing the weekly financial press when he discovered an article on the company discussing its prospects and share price potential. The journalist referred to the latest financial results which had recently been released. Usually such assessments focus on sustainable earnings. Accordingly, it was highlighted that the comparative figures had been materially adjusted downwards to account for substantial impairments that had not been reported in the previous year’s published financial statements. This, the journalist concluded, was as a result of the incompetence of the previous CFO (referring to Jackson by name) who had recently departed. Any analyst worth his/her salt, could see that these impairments were cleverly moved to a restatement of prior year’s results thereby getting it nicely off the table and out of the quality of earnings. What a great way to save the day especially when you can subtly implicate the previous CFO who was no longer there to defend himself – nice move! And clever.

Again, I was horrified. It just did not add up. As I asked questions to gain more clarity I learnt that the CEO had been fired soon after Jackson left. All the allegations that he had made against her proved to be accurate. She turned out to be a corporate psychopath of note. The claims about Jackson having fudged the figures was as a result of substantial write-downs that the newly appointed auditors insisted upon. These related to ageing inventories, goodwill valuations and investment impairments. As Jackson pointed out, everyone on the Board including those on the audit committee were fully aware of these issues and has ignored Jackson’s recommendations to impair these items. In the end all, including the auditors, agreed that, in the context of understanding the financials, such impairments were immaterial.

So, here is a strange inexplicable set of circumstances that seem to have been created by a out-of-control narcissistic executive who could not deal with being challenged.

But, being the old dog that I am, this just made no sense. And then it struck me. The most classic of all frauds is a form of insider trading: Create an environment whereby the share price seriously tanks and then buy up a substantial quantity of shares at penny-stock prices. Because the fundamentals are solid (which only you know for sure) you walk away with good value shares at a fraction of the price. This was further strengthened a strange attempt by the CEO to ensure that the auditors were changed for a medium-sized firm to one of the Big-4. This made little sense if the CEO was up to no good. But put my conspiracy theory in place and it all makes sense. What better way to crash the share price then shocking investors with massive impairments? That would surely tank the share price!

This is the only explanation that makes sense. In my view this is what the CEO planned. She set Jackson up as the fall-guy, brought new auditors in to seriously rock the boat and then waited whilst the share dwindled down on shockingly poor results.

Maybe someone should look to see if she was purchasing shares through a blind trust.

Of course, the whole plan backfired – she failed to realise that comparatives could be restated and hence reduce the impact of the negativity that those impairments might have had.

The moral of this story: be careful that you are not being used to promote someone else’s agenda. Be warned. In the executive space, you are always vulnerable to this. Be sure to manoeuvre the situation to your advantage. And remember that the executive game is always “WHAT’S IN IT FOR ME?” Play it this way and you will have an inside track on your colleagues’ intentions.

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