Kraft Heinz Massive Accounting Fraud Explained

In this video we go over a massive accounting fraud at Kraft Heinz.

#WallStreetMillenial

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[g.williams]

Your company can make $200 billion in pure profit every year for a decade, yet your investors will be upset because there isn’t any growth. It’s the worst system ever.

[dadadit]

Marvelous incentives for executives to commit such fraud when they are rewarded with million dollar bonuses and no threat of jail time. Watch for much more of this in the future, if higher fines/penalties and jail time are not rendered.

[kevinbyrne]

$100, 000 fine? Apparently accounting fraud is regarded as a misdemeanor.

[admiralmyxtar]

Funny how you can fraud your investors for 5 years and get penny fines (both a company and CEO), while if you, a civilian, try something much more innocent you can go to jail for years if not for life.

[dogaarmangil]

3:04 Surprising to hear that cutting procurement costs (i.e. asking for lower prices from suppliers) is the main course of action that Kraft Heinz came up with for reducing costs. When two companies merge, the biggest cost saving potential generally lies in removing redundancies in the production departments of the merging companies. If there are no redundancies in production departments or if you hesitate to remove redundancies in order to prevent employee discontentment, or bet on future growth for justifying a redundant workforce, then those are potential red flags.

[dietisnotdifficult]

The problem is not dodgy accounting, the problem is the idea that profits / sales can continue to rise infinitely.

[MBarberfanlife]

I forgot about Toshiba...they really fell off a cliff. I bought a Toshiba laptop right before the Great Recession and I kind of liked it.

[frevazz]

Anytime private equity purchases controlling interests in a company that acquired company becomes worst on every way except for those few running the private equity firm. These guys bought a profitable company yet run it like they are barely getting by, all for the enrichment of those private equity execs. Product, customers, employees all fall to the side… in this case 3G Capital and Berkshire Hathaway, they cut everything to the bone.

[chancerNW]

I felt sorry for the poor sods working in procurement, the pressure must have been awful. Invariably that will push decent employees into desperate and questionable measures.

[davidjma]

Cost cutting is often like burning furniture to stay warm. Eventually you run out of furniture. I worked for both companies. Tony O'Reilly COO of Heinz had the best idea: drive out costs and use the funds to invest in brand. Not just drop it on the bottom line. That way you get lean costs AND growth. Smart man

[glennchartrand]

The company is obsessed with cutting costs instead of product quality.
Yeah....They might want to take a good hard look at how that turned out for Boeing.

[Lulu-viwb]

“Manipulating numbers “ is a accounting tactic widely used by all businesses. Fraud is when business got busted.

[hugolindum]

This is all done for two reasons:
1. Executive bonuses in the 10s of millions;
2. If caught no punishments.

[yolo_burrito]

Paying off the SEC is like a parking ticket. They really need to add at least a zero to those fines.

[raybod]

Jail time for executives and shutting down businesses for racketeering charges will solve business crimes.

[peccatumDei]

All this took place under CEO Bernardo Hees.  I never worked for Heinz or KraftHeinz, but I remember taking an instant dislike to him when he became CEO.  I sensed that his statements where as phony as his smile in the photo, and his actions soon proved me right.

[kevinw]

When the company engaged in deceitful practices to falsify profits, I am wondering if it would also cut corners on food safety requirements in order to maximize margins. My kitchen has a lot of their products. Should I worry?

[andrewdubose]

“Massive accounting scandal?” A $200m adjustment on $33.4B in COGS is pretty immaterial tbh.

[leonardgrant]

I was working for the Mondelez and it was the same story, all about short-term saving cuts wherever they can on whatever can be saved, and the long-term goals were basically not existent. if there will be some Mondelez company scandal I have no idea but I would not be surprised.

[franks]

The Sr. Officers should all get minimum mandatory jail time of 6 months.