The Case Study
Consider this case involving the Company and a distributor, Forefront IT Trading Corp., owned by Filipino investors who are now complaining of unfair and unethical business practices by their foreign partners. In a disgusting display of corporate bullying, the multinational refused to pay Forefront's more than P12 million in collectibles unless it signed a Release and Quit Claim dropping all other legitimate claims. This when a ranking official of the foreign firm had promised, verbally, the settlement of all just and reasonable claims.
The amount consisted of close to P1 million in withheld expanded value-added tax (EVAT) for 2007 that the multinational should refund to Forefront, plus P11.07 million representing performance incentives, advances made by Forefront for the company's promotional activities and cost of products taken back by the multinational.
The multinational allegedly took back the products in Forefront's possession after terminating the distributorship agreement when the latter protested the meddling and unprofessional conduct of the multinational's sales official assigned to it. The distributor had wanted a replacement.
It turned out that the multinational's sales official was carrying on an extramarital relationship with a Forefront executive, a married man. She exploited this relationship to secure unusually large orders of her employer's products and even slow-moving items that Forefront had to dispose of even at cost, even to the extent of forgoing profits. Santa Banana, she even succeeded in passing on to Forefront some poorly paying accounts not included in the original agreement. All these eventually resulted in huge losses to the distributor.
This came to a point where Forefront experienced difficulties in meeting its payroll, the 13th month pay for December 2007, and separation benefits for some 80 employees who had to go as a result of severe financial stress.
When advised of the affair and the resulting conflict of interest situation, the latter simply dismissed the matter as "a purely personal affair between two consenting adults," and ignored the request that their sales official be replaced. Yet, the multinational's own Corporate Business Principles and Code of Conduct states, among other things, that the company "requires its management and employees to avoid even the appearance of impropriety in its business relationships on behalf of the company."