The company was now 5
years old and sales are over $10M. We employ 45 people and are growing in
double digits. We have had very little staff turnover and most of the employees
have become shareholders. We have been using more subcontractors to get work
done. We always have competitive bids especially as we are located in a
relatively small city.
My accountant came to me
and said that she was concerned that transport costs were increasing to an
unacceptable level. It looked like next year would see a 15% increase. She also
said she talked to friends in other companies and they weren’t seeing the same
cost increases. She suspected that all our bidders were operating in concert to
raise prices. We did a lot of work and found out she was right, they were
taking turns winning but the price always went up.
We talked with our
operations manager and he said he always chose the low bid. We decided to talk
to one of the haulers. What he told us was hard to believe. He said
there was a bidding ring
but that it was organized by our operations manager. He was taking a 5% kickback
on any bid. The hauler in question had refused to pay and was therefore cut out.
After much debate we
called the police. Their investigation showed that our manager was corrupt,
that his brother was involved, and that this had been going on for at least