Why not subscribe?

Saturday, December 20, 2008

Another financial fraud -- IT Factory

If you are receiving an award from the accounting firm of Ernst and Young, it's bad form not to show up. It's even worse form not to be showing up because you are fleeing the authorities because you've been engaging in -- accounting fraud!

Evidently, 95% of the "business" done by the Danish software firm IT Factory, run by Mr. Stein Bagger, wasn't really real business but fake transactions done with fake companies set up by Mr. Stein Bagger.

Unlike the fraud Bernie Madoff -- who seems to have been using a fake accounting firm -- IT Factory had Deloitte as their accountants, although Ernst and Young seems to be obviously looking to get the business. That's why you give people awards.

But the comedy here comes when a blogger [note, not the press or the auditors] questions IT Factory's financial figures and Mr. Bagger's credentials. As a result, we have this bit of theatre:

"...she began to question Mr. Bagger about boasts that he had a Ph.D. from San Francisco Technical University. She asked how that was possible when no such university exists. Mr. Bagger came up with an elaborate plan.

On the pretext of developing talking points for college employees to answer phone queries about academic records, he hired Vicki Lang, an American artist and actress living in Copenhagen, to play the role of an official at San Francisco State University, an institution that does exist. "If I'd thought about it, I might have said: 'Oh, this sounds strange,' but I was just happy to have a job," recalls Ms. Lang.

He wrote a script for a dialogue between himself and Ms Lang, who, as a university official, would explain that his nonexistent college had been folded into San Francisco State and confirm that he had a Ph.D. in international business. Mr. Bagger then told Ms. Lang he'd like to test the script over the phone on the afternoon of Oct. 29. He called Ms. Toft, the skeptical blogger, to his office for an interview at the same time.

When Ms. Toft showed up and started asking questions, Mr. Bagger announced that he would call San Francisco to prove that he was telling the truth about his Ph.D. Ms. Toft, smelling a rat, told him not to bother: "I knew him too well." "