Today, OfficeMax (NYSE:OMX), the timber and paper company previously known as Boise Cascade, announced the resignation of its CEO, Christopher Milliken. But before getting to the meat of the issue -- major accounting irregularities -- the firm spends an entire paragraph of the announcement thanking Milliken for his contributions.
Is this as close as we can get to straight talk from corporate America? Last month, it was the resignation of the president of OfficeMax's retail division, a move that the company said was "unrelated to the company's current investigation into allegations of impropriety regarding vendor promotional payments." Sounds to me like it might have been a case of gettin' out while the gettin' was good.
Let's be clear. We're not talking about accounting "errors," as I've seen them labeled in the press. Skip the softening verbiage at the top, and read the statement. We're talking about at least one situation in which employees actually fabricated supporting materials to fudge their sales reporting. Where I come from, we call that lying, whether you do it to help yourself, or to help your company play catch-up in the race with Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP). And the only reason the firm caught on is because a retailer complained about the wrongdoers.
Now the firm says that rebates and other vendor payments weren't recorded in the proper accounting periods, necessitating three quarters' worth of fiscal restatements. The $4 million-$6 million tab may not look like much, but shareholders need to ask themselves whether this is the end of the drama.
Yes, OfficeMax is doing the right thing by cleaning house. But the question for investors is: How deep does this go? Were the six sacked employees the operators of some rogue sales cabal, or are we seeing a symptom of an entrenched culture of desperation and deception? Remember, for every outright fraud, there are a dozen other legal ways to pull the wool over investors' eyes. Given the firm's mediocre performance, how much of your hard-earned investment buck do you want to bet on this team?
For related Foolishness:
- Things looked mediocre only a few weeks back. But even that was better than now.
- See why Staples is outrunning its rivals.
Seth Jayson wonders why no one carries cuneiform supplies anymore. At the time of publication, he had positions in no firm mentioned in this story. View his stock holdings and Fool profile here. Fool rules are here.
