Home Depot confirmed yesterday that it terminated four purchasing managers nearly two weeks ago for allegedly taking over $1 million in kickbacks from suppliers.
Reportedly, the three lower-level managers were taking large bribes from flooring vendors out of Asia in return for featuring these vendors’ products in Home Depot stores.
Home Depot is cooperating with law enforcement authorities who are looking into the situation – prosecution against these employees is a possibility.
The company released a statement adding to their stance on the situation:
“Maintaining our ethical standards is of utmost importance to the Home Depot and is something we enforce strongly.”
O RLY?
Unfortunately, crashing housing and home renovation markets aren’t the only things buffeting Home Depot. The company has also been fighting ethics, compliance and governance scandals on multiple fronts:
(1) Paying a CEO $225 million while employees were continually laid off and the stock declined (Nardelli, who was later terminated after he refused to answer questions at the annual shareholders’ meeting).
(2) The subject of wrongful termination lawsuits by former employees in Maryland and Alabama who claim that they were fired in retaliation for blowing the whistle on Home Depot, accusing the company of pumping up its financials with fraudulent product return procedures (which the SEC is now investigating).
(3) Admitting this past December that the company had engaged in improper stock option backdating for 26 years.
Commentary: We talked to a number of companies that have done business with Home Depot, and many of them repeated stories that indicated a broad culture of ‘browbeating’ and unreasonable demands being made by purchasing personnel at the company. Interestingly, such culture doesn’t appear to be limited to store merchandising – it extends elsewhere in the company as well. For example, we heard about the IT department demanding free products from vendors for the company simply so the vendor can promote Home Depot as a client.
We are also told that the company has virtually ZERO ethics and compliance training or programs.
