Industry – Agriculture
Territory –Australia
Client – Global manufacturer of agro-tech products.
Special Purpose Audit – A. Yakim was hired to conduct a special purpose audit at the client’s subsidiary in Australia (“the subsidiary”). The audit was requested following the resignation of the subsidiary’s senior officers (“former managers”) who went on to establish an Australian equity joint venture with the client’s main international competitor (“the Competitor”) The audit scope included examination of all relevant records and documents that were collected from the subsidiary’s archives and through array of unique auditing and electronic data collection tools. The audit findings were reported to the client’s Board of Directors and it included the following:
- The former managers, prior to their resignation, conspired to establish a competing company based on the subsidiary’s IP, trade secrets and financial data.
- The former managers, prior to their resignation and during their negotiations with the Competitor, provided the Competitor with a detailed business plan for the joint venture operations. The business plan was based on the subsidiary’s trade secrets, customers’ information and production systems that were embezzled from the subsidiary.
- The Competitor agreed to provide the former managers an equal shareholding and finance to the joint venture’s operations, only after it was convinced that the former managers would bring with them embezzled trade secrets, which would guarantee the success of the joint venture and its financial and commercial prospect.
- In order to benefit from highly qualified personnel, the former managers, prior to their resignation, convinced key employees of the subsidiary to resign and join the joint venture.
- The Joint venture won high-value projects and was in advanced negotiations for further supplying strategic projects.
- The subsidiary lost substantial market share to the joint venture.
- The Former managers’ and Competitor’s acts were considered under Australian law as a fraud and unfair competition.
Our experts were requested to plan and implement a strategy that would stop unfair competition and illegal acts. We formed a dynamic action plan, in co-operation with the subsidiary’s management and a leading law firm. The plan included aggressive marketing campaigns aimed at regaining lost market share and legal actions against former managers, the Competitor’s executives and the joint venture in order to stop unfair competition acts.
Outcome –
- Two years of intensive implementation of the plan led to the cessation of the unfair competition acts and the regaining of the lost market share.
- The former managers were forced to resign from the joint venture and lost their equity shareholding.
- The client was compensated by the Competitor and by the former managers, for damages.