A man was hired to manage a faraway subsidiary. He alone submitted reports on the status of the factory, and he sent dividends back to the owners.
He began cooking the books, not for any malicious reason, but because the owners refused his request to reduce dividends and increase contigency reserves.
A few years later, there was a disaster. The factory was severely damaged in the worst monsoon in decades. He sent word that the factory was lightly damaged in the disaster, even though it would take months for his report to make it to the owners.
He used the extra funds to repair the factory and blamed reduced profits on the damaged local infrastructure.
In... (read more)