The Maytag Mystery
May 24th, 2015
We received another bundle of paperwork from inside CSA, the heading on the pages read “Confidential - Internal Use Only.” That’s a good sign.
One page in the pile came with a note: “This document is proof of misrepresentation of funds as this project is not an actual project performed at CSA by its employees”.
Well, maybe, but we’ve learned that CSA documents are often deceptive. Even if we have a full record set on a given project, what actually took place in that project might still be unclear. A lot of CSA records are contradictory, filed incorrectly or entirely missing. Entire contracts have gone missing from their files, including PS Knight’s original contract. We had to send them a copy of their own contract after they lost their copy. Then they lost the replacement copy. Then we sent them another copy. Seriously folks, they actually lost their own contract -the same contract- twice. In this context, we’re deliberately cautious when interpreting CSA documentation.
On the surface, our new bundle of documents tells a pretty easy tale. An appliance manufacturer needed some products safety tested, CSA acquired the products for testing, conducted the tests, drafted the report and issued the invoice to the manufacturer. Easy as cake.
Then come the problems. First, the project file identifies a CSA secretary as being an employee of the manufacturer. Clearly, she wasn’t working at both places. But this secretary, acting as the manufacturer’s employee, issued the “vendor” payment of ~$17,000USD.
Officially, the money was to “cover the purchase of 1 dishwasher & 7 refrigerators from Sears.” That’s an average just over $2,000USD per appliance.
We researched the model numbers. It turns out that the actual average retail price for these units was $1,437. The estimated cost for the whole purchase was therefore $11,971. The CSA’s charge of ~$17,000USD is an overcharge of roughly 30%, and this isn’t a mark-up, the $17k is booked as the cost of the appliances. We’re also pretty sure CSA gets wholesale discounts from wherever they purchase products for testing. Their testing division does test a lot, after-all. Beyond this, the manufacturer supplies the products for testing, not the retailer they sell to. Regardless, and if nothing else, this is awfully sloppy invoicing by an Agency that should know better.
Alright, setting aside the silly pricing, we may presume that these appliances were purchased for safety testing. The file shows that the funds were transferred under Job Type 06, being “Custom Testing.” So far, so good.
Was the project cancelled? “NO”, said CSA, in all-caps. Indeed, it was not cancelled, “the project was already closed” by the date of the filing. It “was” already closed? So what happened to the appliances?
The mystery deepens. The $17,000 was to cover the purchase of appliances from Sears, right? For testing, right? Well, that is a mystery, because those appliances couldn’t be sold at Sears unless they had already been certified as tested. The CSA acknowledged as much in their records. Alright, so did these units require retesting? “NO”, said CSA, in all-caps.
The staff assigned to this project? Zero. The total hours recorded for the work involved? Zero. So there was no actual testing done on these appliances. Yet the invoice was issued and the funds flowed.
As for Sears, they could legally sell these appliances because they were already tested and certified. They had no need for testing, neither did the manufacturer, and no testing took place. The appliances also did not need retesting, CSA’s admitted that, remember the “NO”, in all caps? The purpose of this project and the payments made are officially listed as “Not Applicable.” Yet Sears got their payment. Or did they?
There is no indication anywhere in the project file of CSA actually taking receipt of any of these purchased appliances, only paying for them. Likewise, there is no indication that the payment was ever made to Sears. Actually, the same CSA secretary, while acting as both the manufacturer’s employee and a CSA staffer, issued both the vendor payment of ~$17,000 and the CSA invoice to that same manufacturer for ~$17,000. Does that seem right to you?
And who approved these transactions? Well, nobody. The approvals are listed as “NOT APPLICABLE”, in all-caps.
There was no approval, no sign-off, no need for any payment to acquire already tested appliances for retesting that even CSA admits wasn’t necessary yet, at the end of all of this, the manufacturer paid over $17,000 to CSA.
This is awfully odd, isn’t it? It’s also awfully common, we’re advised that this sort of thing is “not an isolated incident,” that inside CSA offices these mysteries occur “regularly.”
Some employees “thought that CSA management was engaged in money laundering.” As much as RestoreCSA would enjoy blasting them for this, it’s not likely that CSA management was laundering money in $17,000 increments. If nothing else, laundering at that rate is highly inefficient, it’s too much money for an undeclared transfer, yet not enough to justify the risk. Frankly, though we’re hardly advocating it, if one really wanted to launder money it’s not hard to shift much larger sums in much quieter fashion.
We already know that CSA’s accounting is, shall we say, creative. They’re spending nearly $70,000USD per business day on travel. Apparently. But that’s a really big number just for travel, it just doesn’t compute. One well-placed CSA staffer advised that CSA travel costs aren’t really for travel. “Rich Weiser [VP - US and Mexico] stated to me that it was normal for CSA to shuffle number [sic] around” between departments. Normal maybe, but it’s not at all legal. There’s a wealth of stories emanating from CSA’s accounting slush-box but so far, for all that’s going on, it doesn’t look like money laundering.
To paraphrase Desmond Glazebrook, in this case it’s more likely that “the secretary advanced herself a short-term, unauthorized, unsecured temporary loan from the company’s account and invested it unluckily.” All this was booked late in the fourth quarter. Opportunities abound.
This all seems a sordid mess to sort out, but CSA doesn’t think any sorting is needed. As they said in the project’s Summary Report, “The profit centre is consistent amongst all objects.” Well, there you are, that clarifies everything.
Note: The appliance manufacturer is not Maytag. We are not disclosing the manufacturer’s name.