Employee fake buybacks, improper accounting, and a special investigation (2024)

Individual wrongdoing, or a problem of the system

The committee’s conclusion was that this was “not organized fraud but wrongdoing by individuals.” Yet the fact that twenty-nine cases surfaced across twenty-six stores and one business division in the same period cannot be laid on the character of individual employees alone. It is more natural to read it this way: because a system in which book-versus-actual discrepancies weighed on evaluations was widely shared, and pressure to avoid them bore down on the shop floor, similar wrongdoing arose independently in place after place. The finding of individual wrongdoing and the question of how to rethink the numerical targets and evaluations that induced it cannot be pulled apart. Correcting the concentration of authority and the weakness of monitoring that the company itself cited is, precisely, work that reaches into that junction.

This affair is also continuous with the founder’s rebate problem of 2007. In a used-goods buyback business, discretion over cash, physical goods and appraisal tends to pool in the hands of the front line and of management, and a slackening of discipline turns easily to private gain. The opaque funds of a single founder called into question seventeen years earlier, and the small wrongdoings of many store employees that piled up this time, differ in scale and in character. Even so, the difficulty is unchanged: governance in this business does not work by central command alone, and the real question is how to run discipline through the discretion held at the edges. An investigation cost far exceeding the damages was, again, a high tuition for that difficulty.