How Sukanto Tanoto Handles Malpractices Part 2

Following from the previous post, a question was asked about how Sukanto Tanoto handles malpractices in the company.

After having the experience of a betrayal by his senior management, Sukanto Tanoto felt the need to ensure that the same situation does not happen twice. Even though there is no certainty  when it comes to dealing with human behaviour, but there has to be an effort put in place to minimise the risk of such situation happening again.

Question: What did you do in order to send the signal to the others that you would not tolerate this kind of practice? 

Sukanto Tanoto’s reply: At that time there were only three businesses, banking, Indorayon and plantation. In plantation there were licensing issues, and some malpractice in the accounts division in Medan. So I had to clean up the Medan accounting mafia. In 1988/1989, I sent Suresh, Tinawati, and few non Hokkien speaking staff to Medan in order to clean up the accounting function.

But in the history of the group there have been some other stories of malpractices in Kerinci (Kerinci is in Indonesia, where the APRIL pulp and paper business of RGE operates in) and recently in Sateri (one of the companies under the RGE group that is in dissolving wood pulp and viscous staple fiber segment, listed in Hong Kong Stock Exchange). As an example, one of Sateri’s marketing managers did not follow my order to sell the pulp at a certain price. He sold at a lower price without telling me and probably he got some kickback from the customer.  I ceased his contract but if it had happened a few years ago he would have been sent to jail. I cannot forgive what happened in this Sateri case. The lesson I get from these stories is that we cannot rely on one person. We need checks and controls.

Sukanto Tanoto founded RGE Pte Ltd, comprising of a group of world-class companies focused on resource-based manufacturing industries. Assets held by RGE companies exceed US$15 billion with a combined workforce of 50,000 people in the whole world.  RGE companies are involved in various business segments including:

Checks and controls are very crucial corporate governance effort that cannot be neglected in any company that has more than 1 employee. It becomes dangerous when a company becomes over-reliant on a single individual, whether in terms of information possession of control power for operations. This is the same for any other companies in the world regardless of their nature of business or industry they operate in.

One other way to help to reduce the risk of malpractices is hiring the right people with strong integrity and spirit of excellence at the point of recruitment. Ensuring that each new joiner has the basic same alignment of character and moral values will help to reduce the future possible occurence of malpractices. This is of course not a foolproof plan, but it is definitely helpful as a starting point.

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