Sometimes you work with people who are bad. Most of us have no filter for that, no way to process this. We are brought up with a belief that if we are not good, we want to aspire to be good, we want to become better. If we work harder, smarter, faster, with more compassion and empathy, we will be fine in the end. We believe convenient self-affirming bromides that confirm this, and live on the hope that things will always work out for the better.

As CFO, our role is to ensure that the company gets the truth. Mostly in the numbers, the numbers which boil down to ebitda, cash flow, profit and loss vs. budget, plan and past performance. And a myriad of ancillary reports used to control expenses, labor cost, purchases, inventory and people. Getting the numbers right is the primary focus. Commentary is important, but not as important as getting the numbers right.

I like numbers, and I like people. Numbers don't intrinsically lie, but some people do. Every system needs to be designed to ensure that the lies people add, the spin, is seen as the spin and not as a fact. The problem is that some people are just plain bad. And no system designed by a human can defeat the relentless nature of someone who succeeds by bad behavior. Elon Musk’s remark, “What I see all over the place is people who care about looking good, while doing evil,” is something we all see every day. No surprise really that many folks, if not most of your co-workers, actually care more about looking good, than being good. As CFO you need to create a system of unbiased, impartial controls that ensure that how things are matter more than how things look.

Elon Musk uses the term evil. Can an evil actor get onto your corporate team?

Actually, it is kind of easy, because to create a great team in a company you need to create the conditions for a very high trust level in a company. A true team trusts each other, feels safe to share ideas, and works together to solve problems and develop new opportunities. Unfortunately, what makes a great team is also favorable for corruption. Why?

Because a great team works from a high-trust level, a dishonest influence, especially from a leadership role outside of the team, finds the team ripe for manipulation. A narcissist wolf clothed as an executive can create a poisonous environment with just a few easy tricks. First, gain the trust of a trusted team member, just one crack is enough to begin the process. Just one weak link, and the damage starts.

Once upon a time a Sales Director befriended an Accounting Manager. He was your typical 50 year old sales guy with a sketchy career history. After a few arrests in his mid-20's, he had supposedly "gone straight" and built a career in Sales. He had never finished his degree work and had held a series of short tenure jobs. Blaming others for his history of misdemeanors and dodging related court dates. Leading to those arrests. Actually, the charges were pled down to misdemeanors, the usual. A long history in sales jobs, finally getting a Director title in his late 40's at a small company that let him go while having a record growth year. Sketchy, but he was hired anyway, as he charmed his way past the recruiting director who just had too many open recs on his desk to care much about the background check for the "smooth" guy he had briefly interviewed. The interview notes a joke, the candidate didn't give one coherent answer to the 3 questions asked to every applicant. But a warm, likable body who looked like a Sales Director was enough. And so, he was hired. In retrospect it was clear that each of his previous employers had been part of his concerted effort to whitewash his dark past. NONE of them would have hired him back. We didn't know that, because no one ever checked the references he also failed to provide. But he was a charmer.

A few months after hire, at a company offsite team- building event, this Regional Sales Director began chatting up the 40ish Accounting Manager who was just returning to her career after bringing up her 2 kids to the point they could get home from school alone and take care of themselves daily. He played her, and gained her trust one step at a time. First he used all of his charm to be seen as a "friend". A sympathetic ear. Who understood her personal issues- taking care of her boys and a husband who was working 60-hour weeks/weekends to keep his own job that barely supported the family. As he plied her with company drinks at a relaxed resort unlike any she could afford, he seemed like a wise counsel who agreed with her feelings of underappreciation and how unfair it was that she had to do it all for her marriage. All of those sales skills that create synthetic trust, were turned on his target. The resentment she had for her husband's inattention and her mundane home life morphed into a focus on him. As he happily delivered drink after drink, she was feeling better. She thought "this guy gets me, he appreciates me." So guess what happened?

In her defense, it did take him a few days to do this, but that is all it took.

Back at the office, he started submitting expense reports missing backup. As a favor for him, she let it go. Soon, he was taking her to lunch, and vouchering it, without the approval of his manager. She saw his Director title, and assumed this was okay. After all, it was in his budget to entertain folks, wasn't it? Drinks at lunch were part of the meal, he convinced her that in sales, this is okay. But she knew there was a company policy forbidding alcohol before 5:00 PM. "Except", he said "in sales." She had seen this approved before. So- she let that go, too. More favors ensued, they started taking more time off together for longer weekly, work lunches. Then dinners. Nice places her family could probably have only rarely afforded to go. He vouchered these meals as if they were sales client meetings, usually with no client name. Or used one from a dop in visit earlier in the day. His Manager depended on the accounting manager to review these expenses and flag the ones that looked "odd". The quintessential sales exec who never looked at any invoice under $500 and expected his sales team to be spending $1-2K per month on clients. He saw client names, and the receipts. And never looked at the related work and mileage logs, or questioned the missing client names.

It was not enough money, so he thought of new ways to rip off the company. He would add a $100 extra gratuity after agreeing to split it with the server. He used the company card to order stuff on his personal Amazon account, that looked like legitimate office supplies, and returned them for credit to his personal account. The invoices and receipts looked fine. And with his willing accomplice, the accounting manager, set up a bank account for them using a dba that was similar to a major vendor. Phony invoices were paid, Checks going into the phony account. A few thousand dollars a month into this bogus account. As they used it for other checks she was providing to him.

"No worry baby, I've done this before. And you are worth it."

Exciting, risky and romantic. Taking time off together, they went to casino hotels for the day. She of course, had to put in for her time off. He was just out "selling." Her family had no summer vacation, she had used up all of her accrued time off.

It ended when a woman working with her who had overhead parts of phone conversations and started noticing her odd time off patterns. Another employee by chance saw them at a lunch at their usual place, about 12 miles distant from the office. Her co-worker in accounting looked at the bank reconciliation and noticed the deposits going into 2 different accounts for what looked like the same vendor. The account numbers the real vendor used for deposits were different. It all blew up.

What was learned? Well, folks can never assume that everyone in the company is trustworthy. Nor can CFOs, Controllers, Accountants, Payroll Managers, Accounting Staff or Internal Auditors have personal relationships with company team members whose performance in any way is controlled, monitored and/or evaluated by information from that accounting team. Company fraternization may not always lead to the disaster that I saw. And some people can be objective with their friends, but face it, who doesn't do favors for your friends? Or want to? That influence is too much, it clouds objectivity and the accounting department needs to always be the neutral party. But nobody in accounting should be buddies with anyone in the company.