For Fraud Examination
The Fraud of Digi Corporation
Suramanian Krishnan, better known as Kris Krishnan was once the CFO of Digi Corporation based in Plymouth, Minnesota. He was a graduate of Bangalore University who further studied at Minnesota State University and finished up at the Wharton School of Finance. His career began back in 1979 at Hansen Company as a CPA, and he soon moved though several positions as an International tax manager at Eco Lab and Director at Valspar paint. His last appointment prior to Digi was at Lawco Financial, as CFO of a private investment-banking firm that provided financial advisory services.
He self describes himself on his linkedin.com page as, ” An international leader and visionary who sets the course for organizational growth and transformation. Develops and drives strategy through external alliances, internal relationships and high performing teams. Champion of various enterprise wide initiatives. Recognized for aligning all objectives across functions including: operations, technology, sales and marketing, and finance to the mission of the organization. Leads organizations through global M&A evaluation and integration activity. Kris is known for getting things done with a sense of urgency and focus. Kris works effectively with people across cultures especially in the Asian and European markets. In business discussions in Asia and the Middle East, uses Eastern cultural thinking combined with the Western way of doing business.” (Krishnan) This makes you ponder what the Western way of business exactly might be.
He landed on the doorstep of Digi Corporation back in January of 1999 as the Vice President of Finance and endured an almost 12-year tenure ending as CFO and Treasurer. Digi is a Minnesota based company that distributes Internationally a large variety of wireless products so that computers can communicate with one another and provide efficiency; they also provide cloud computing platforms as well as a multitude of other products such as modules, microprocessors and satellite communication products.
In the end at Digi Corporation, Krishnana suddenly resigned when an internal audit was investigated and even admitted that the resignation was a difficult choice although it was in everyone’s best interest. Three others followed his lead and resigned also; they were from the APAC (Asia Pacific American Coalition) region and were located in Hong Kong.
The resignation was prompted by suspicion in the violation of several laws including the Foreign Corrupt Policy Act; which prohibits American companies from bribing overseas for business. This act was signed back in 1977 and amended again in 1998 as “Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.” (Wikipedia)
One of the primary responsibilities for Krishnana at Diji Corporation was to write and implement a fraud policy for their code of conduct as it incorporates a strong sense of corporate ethic. The fraud policy usually is a deterrent for fraud committed by employees however, since Krishnana had written it he knew too well of the loophole he could use. Essentially, for five long
years Krishnana had been submitting his expense reports though APAC’s Hong Kong office avoiding the Chief Executive Officer’s approval. He had approved his own cash payments with no documentation and approved his own travel and entertainment expenses as well as those of other employees. While doing this, he also approved and signed off on the company’s quarterly and yearly financial statements, signed and sworn statement that indicated he was not aware of any fraud within the company, although he had been the one committing it. Two primary objectives of the SEC were compromised.
“The securities laws broadly prohibit fraudulent activities of any kind in connection...