Blind Ambition Case

6228 Words25 Pages
Copyright 1995 McGraw-Hill, Inc. Business Week October 23, 1995 SECTION: COVER STORY; Number 3447; Pg. 78 LENGTH: 6127 words HEADLINE: BLIND AMBITION BYLINE: By Mark Maremont; With Joyce Barnathan in Hong Kong HIGHLIGHT: How the pursuit of results got out of hand at Bausch & Lomb BODY: Ba dan. In Cantonese, the words mean ''white sheet.'' But for employees at Bausch & Lomb Inc.'s Hong Kong operation, they had another meaning: According to high-ranking sources familiar with the unit, ba dan signified a white invoice with phony sales recorded on it. And there were plenty. During the late 1980s and early 1990s, Hong Kong was the star of B&L's international division, often racking up annual growth of 25% as it rocketed to about $ 100 million in revenues by 1993. Trouble was, in recent years, some of the reported sales were fake. Under heavy pressure to maintain its phenomenal record, sources allege, the Hong Kong unit would pretend to book big sales of Ray-Ban sunglasses to distributors in Southeast Asia. But the goods would not be shipped. Instead, the secret ba dan invoices, which B&L headquarters never saw, would instruct staffers to send the goods to an outside warehouse in Hong Kong. Later, some B&L's sales managers would try to persuade distributors to buy the excess. And some of the glasses, sources suspect, may also have been funneled into the gray market; buyers could profit by shipping them to Europe or the Mideast, where wholesale prices were higher. But by mid-1994, Hong Kong was having trouble keeping up its juggling act. Tipped off by falling revenues and soaring receivables -- since no one was paying for many of the glasses booked as sales -- B&L sent a team of auditors to Hong Kong. They discovered significant irregularities, including half a million pairs of sunglasses stashed in a warehouse. B&L's
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