Monday, June 2, 2008

Corporate Fraud and Disgrace

There are many strange ironies in the corporate world.

In the USA these days there is a point in the development of mega corporations when their sheer size induces ethical oblivion. The laws of the land and the laws of common decency simply do not apply. There are many examples, Enron, six time winner of Fortune magazine's "America's Most Innovative Company" award; where executives contorted financial deceptions involving irregular accounting procedures bordering on fraud led to bankruptcy and disgrace.

Similarly MCI used creative accounting practices to hide declining earnings and forestall downward pressure in the stock's price by painting a pretty picture of financial growth and profitability. AIG the world's largest underwriters of commercial and industrial insurance made a US$126 million settlement with the U.S. Securities and Exchange Commission and the Justice Department late in 2004 and in 2006 paid a fine of $1.6 billion in settlement with the New York State Attorney General's office.

How does eBay fit into this culture of corporate ablepsia?

There are red flags.

1. eBay has reached the point in corporate development where it believes its own propaganda.

2. eBay which has historically taken the stance in litigation that it is "only a venue", is apparently now confused about who its customers are and what the role of a venue is. Websters defines venue as the place where an action is laid. Lorrie Norrington, President, eBay Global Marketplace Operation "We’ve been very clear that sellers who deliver bad experiences to our buyers make it difficult for everyone." expanded the definition at the PeSA summit.

3. It is astounding to see the arrogance, incompetency and downright foolishness exhibited at upper management levels of this corporate behemoth, Brian Burke - Director of Global Feedback Policy, Simon Smith, Managing Director of eBay Australia (regional VP) and rounding out this unholy trinity Richard Ambrose Head of Trust & Safety for eBay UK who in a recent interview with BBC Radio said's much much more likely that a buyer will be trustworthy and won't need to be vetted ..'s very very rare that buyers don't pay ... I think most sellers are behind this change and there are only a small minority who are concerned
Maybe Mr Ambrose should go read TameBay normally a very pro eBay blog.

4. Stock prices are sliding -7.8% in 12 months, compared to Amazon's +18.1% and Google +17.7% over the same period.

5. Resignations: Meg Whitman, Matt Halprin, eBay's Vice President in charge of Global Trust & Safety after less than 7 months in the job, and Jim Ambach, VP Seller Experience. Cristina Hoole head of PR for PayPal in the UK.

6. Accounting changes which do nothing to increase transparency. Millions of dollars of executive stock sales. What do they know they aren't telling?

7. Extreme customer (the person who pays for the service eBay offers) dissatisfaction combined with declining sell through rates and stagnant active user growth in eBay core online auction marketplaces. Active site boycotting in USA, Australia, UK, France and Italy.

8. Seemingly senseless and poorly planned policy changes, executed with very little warning & resulting in devastating consequences to the customer base. There is no polite way of saying eBay is often caught being less than truthful, such deception erodes customer trust, (customers are the ones who pay fees for the services eBay offers) surely not a good thing for a trust based business.

Taken singly these are minor indicators. En masse, they are red flags.

Finally I would like to recommend a visit to a 2007 blog entry by eBay Strategies Scott Wingo

It seems that Scott has a better Crystal Ball than eBay does.

Or maybe he just knows what he is doing?

Y'all come back and be sure to click VICTORIOUSLY on any interesting links in the sidebar!

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