http://www.teamliquid.net/blogs/viewblog.php?topic_id=395278
Still in 2001
"You put him in a coma?"
A small room: not Baosen's, although he'd wheeled his oversized, padded, chair in through the walnut door. No wall mementoes, just a tea set on a long center table and hanging blinds layered on a large interior window overlooking a two-story lobby. The chief filled up a windbreaker, his one arm drawing triangles, fleur de lis, and idle doodles across a legal pad. The company lawyer huddled behind in an ill-fitting suit, with an obvious sense of non-belonging, as if he was an acolyte brought into the discipline a wayward priest. Shenghan took the hot seat--straight across from his boss, a blackened eye tracing the vertical bands of white and dark behind Baosen's creased face.
"Yes."
Baosen lit a cigarette, motioned for the lawyer to speak. "Shenghan, you're being given a last chance to apologize. When you were questioned by the Officer Bao last night, you repeatedly refused to display contrition. Normally, you would have been held at the police station and likely suspended from this company. But you're a fine executive, and, privately, both Officer Bao and I are convinced that your actions at the hotel were relatively blameless. You were provoked, Shenghan."
Baosen paused, leaned forward with the pack of Hongtashan filters in his outstretched palm. Shenghan took one, but it remained unlit. They shared a stare--then Baosen turned to the lawyer. "Would you please excuse us a moment?" He stood and walked a wide circle around the table, avoiding Shenghan's seat.
As soon as the door closed, Shenghan started to talk. Baosen cut him off with a wave of his hand. "I'll be frank with you, Shenghan. Most of the people sitting in this building already view Gu Zhenlun with a certain degree of sympathy. He's the one in the hospital, after all." Baosen leaned back, tightened his lips. "What's more, this recent outburst has likely put the brakes on any future plans of advancement you may have had in the company. You're on thin ice already. Sign this letter, admit you were wrong, and let's move on."
Shenghan slumped, fingered a teacup, and looked to one side. He felt as if the walls were closing in on him, crushing him, and yet falling away at the same time. The table and Baosen suddenly blurred, his eyes refusing to focus. Shenghan realized he was tearing up. Then he gritted his teeth, blinked hard, and spoke. "Alright. I'll sign it."
"Good. Now that we've gotten that out of the way, could you go into greater detail about what Chen Zhuo mentioned to you last night?"
Shenghan took a deep breath, composed himself. "Sure. Zhuo said he'd be able to do it, if we solved a working capital problem. Our accounts receivable have gone up two hundred and thirty-five million over this past week, to three-ninety."
He pointed at the legal pad. "Could I have that for a second?" Baosen tossed it over. Shenghan found a fresh page, drew out a grid and filled it with numbers, and then passed it back. "This dataset shows the increase by firm. As you can see, six companies are responsible for over ninety-seven percent of that increase." Shenghan paused, let Baosen absorb the numbers, then delivered his conclusion. "Together, they owe us two hundred and twenty-eight million yuan."
"And you just noticed this? I thought you reviewed the numbers before sending them to Zhuo."
"Gu added these six companies in yesterday--and told nobody about it. The six companies all do the same thing--manufacture specialty chemicals using our production lines and factory space, in exchange for a rental fee." Shenghan leaned forward, eyes hardening into little glass beads. "Then I found something funny. The same guy--his name is Xuan Yifeng--runs all six. I asked Gu Zhenlun's operations and sales teams if they'd ever met him, they all said no."
Deep furrows formed above Baosen's eyebrows. "Xuan Yifeng... don't know the name."
"Me neither. Isn't that weird? Mr. Xuan signs two hundred million in contracts with us over a three-day period--obviously he's a whale of a customer, and he's also renting our factory space to make his own product--and Gu Zhenlun doesn't mention him to the rest of the management team or even his own sales or ops guys?"
Baosen shook his head. "Hang on a sec. So what you're telling me is, some bastard out there owes us over two hundred million yuan, and you put the only guy who knows how to solve this problem in a coma?"
Shenghan blinked. Then he leaned in close, dropped his voice to a leaden whisper. "Actually, I think Xuan and his six companies don't exist--or if they do, they only exist on paper. I think Gu Zhenlun's just making up sales numbers to hit his projections. Maybe he set up some shell companies to make the story more believable, maybe not. Either way, he's dumping fake invoices from those six firms into accounts receivable--and then patching things up by shifting cash in from other contracts at a later date. Except this time, we asked Zhenlun for his numbers before quarter-end, so he didn't have the cash to shift around."
Baosen chuckled. "Look, I know Zhenlun slept with your girlfriend, but accusing him of fraud when he's unconscious--don't you think that's a little over the top?"
"I'm not," Shenghan interjected. "Look at our plants--two-thirds of them are running double shifts. Several of those are even running at max capacity: twenty-four hours a day, seven days a week, fifty-one weeks per year. Where the hell is Zhenlun getting enough room to rent out whole production lines to someone else?"
Baosen sighed, then drew a small foil packet from his shirt pocket and popped out a pill, washing it down with a cup of tea. He stared off for a moment--then sat up and spoke. "Could we just write the whole thing off?"
Shenghan blinked in surprise. "Sir, we could. But... sir... Zhenlun's screwing the company. Aren't you going to--"
Baosen dismissed Shenghan's objection with a wave of his hand. "Not yet. We can't afford letting anything that resembles duplicity leak out. It might frighten our friends at American Bromide." He paused, stared up for a moment, then stared back at his subordinate. "Shenghan, how badly would a write-off affect our enterprise value?"
"Two hundred twenty eight million is about a quarter of our EBITDA, so at worst, it would knock about a billion off our EV. If I can somehow convince the bankers that this is a one-off event, they might take out less than that--say three or four hundred million."
"Forty percent of that is between one-twenty and one-sixty. I can accept that." Baosen's fingers went up to brush his hair.
Shenghan kept frowning.
"Cheer up. I know you're not happy about my gentle treatment of Zhenlun, and how people will likely misunderstand the situation between you and him." Baosen leaned forward, earnestness written all over his face. "But this firm--at the end of the day--is a meritocracy. I'll move Gu Zhenlun off the deal team. Do a good job there, and who knows what might happen?"
Read part 13 here:
http://www.teamliquid.net/blogs/viewblog.php?id=396501