[Whistleblow] Corruption Scandal at Adidas China: Senior Executives Under Fire for Embezzlement and Nepotism

Whistleblowers Expose Corruption Scandal at Adidas China: Senior Executives Under Fire for Embezzlement and Nepotism

Adidas China employees have blown the whistle on serious corruption allegations against senior executives, particularly targeting Judy Li, the Senior Vice President of the Marketing Department in Great China. The employees, who have dedicated decades to the company, have detailed a series of corrupt practices involving embezzlement, nepotism, and workplace bullying. These practices have allegedly caused significant financial losses and tarnished the brand's integrity. The employees hope that bringing these issues to light will prompt the company's senior management to take corrective action.

Key Takeaways

Corruption in Marketing Expenses: Judy Li is accused of using personal rebates and manipulating marketing budgets for personal gain. This includes falsifying analysis reports and collaborating with media companies and agents to hide poor performance and embezzle funds.
Nepotism and Compliance Issues: Judy has reportedly promoted loyal but incompetent subordinates while removing competent leaders who do not comply with her demands. This has created a culture of fear and inefficiency within the department.
Workplace Bullying: Judy’s management style is described as aggressive and punitive towards those who oppose her, fostering a toxic work environment.
Financial Misconduct: The embezzlement allegedly amounts to millions of euros annually, with external suppliers also involved in the fraudulent activities.

Deep Analysis

The report from Adidas China employees paints a troubling picture of the internal operations within the company's marketing department. According to the whistleblowers, Judy Li's tenure as SVP has been marred by extensive corruption, primarily through the misuse of marketing funds. The accusations highlight a systematic approach to embezzlement where personal rebates from media budgets were pocketed, and fake data was used to cover up poor performance.

Judy's close ties with certain subordinates and external vendors facilitated these corrupt practices. For example, Jason, a subordinate, negotiated personal rebates from the SPOMA budget, which constituted 15%-20% of the total budget. This misuse of funds extended to celebrity endorsements and KOL partnerships, where fake partnership fees were used to cash out market expenses.

Moreover, Judy's alleged manipulation extended beyond financial misconduct. She is accused of nepotism, promoting incompetent followers while sidelining or forcing out competent leaders. This practice not only undermined the department's efficiency but also created a hostile work environment. The report describes Judy's aggressive behavior, including shouting profanities and bullying employees who did not comply with her demands.

The allegations also extend to other senior figures within the department. For instance, Retail Marketing Head John Yao and VM Head Cindy were reported to have collaborated with Judy in the embezzlement schemes. The involvement of multiple senior leaders indicates a deeply rooted culture of corruption.

Did You Know?

Adidas China has achieved double-digit growth for over 20 consecutive quarters before experiencing a recent decline, which underscores the impact of effective leadership and transparent practices.
The Marketing Department’s budget for 2023 was 250M EURO, illustrating the significant financial resources at stake and the potential impact of corruption on the company’s finances.
Nepotism and workplace bullying are not just ethical issues but also significantly affect organizational performance and employee morale, leading to long-term negative consequences for companies.
Whistleblowing can be a courageous act that prompts necessary changes within organizations, although it often comes with personal and professional risks for those who come forward.

The whistleblowers from Adidas China have taken a bold step in exposing these alleged corrupt practices, with hopes that their revelations will lead to meaningful reforms and restore the brand's integrity.

Disclaimer:

Disclaimer: The identity of the whistleblowers and the authenticity of the content in this article have not been independently verified by CTOL.Digital. This article will be removed if the allegations are found to be false.

Full Email Sent to CTOL.Digital

Subject: Report on the Corruption of Senior Leaders GCA

Dear adidas colleagues

We are employees from adidas China, who have worked in this company for decades and we all see adidas has achieved double-digit growth in China market for more than 20+ consecutive quarters in the past and also suffered from a decline of business in recent 2-3 years. No matter what the brand changes, we love it from the heart and never abandon it. Recently, it’s happy to see that China’s performance is slowly recovering and we have big confidence to have the brand back to the top. However, it has been discovered that some senior executives in the company are involved in the corruptions and using their power to seize personal benefits. We don’t want to keep silent anymore and hope to draw everyone’s attention to escalate it to the company’s senior management team through this disclosure. We believe that justice will come and make the brand better. The following is a summary of report about Judy Li, Senior Vice President of the Marketing Department Great China.

The China Marketing Department is a crucial function with huge resources and budget to drive brand awareness and business sales. The head of the Marketing Department manages a big amount of MWB budget including media exposure, brand activation, SPOMA, retail marketing and member activation. Taking 2023 as an example, the total GCA MWB budget is 250M EURO including SPOMA (35M), Brand Activation (55M), Retail Marketing & Trade Meeting (10M), etc. However, the whole working scope are all involved by corruption. After the former Marketing SVP Christian Pan was managed out by the company due to integrity problems in 2018, Judy, who was working at another company at that time, realized that it’s a great opportunity for her career, and she got this job and was directly promoted to SVP. Pls refer to the below details

Corruption on huge marketing expenses

adidas cares about the brand image and spends a big amount of marketing budget on media investment and marketing communication to elevate the brand awareness every year. As one of Judy’s usual approaches, she uses personal rebates (3%-5% of total media budget) provided by advertising agencies and asked media companies to issue the analysis reports with fake data to cover the bad media performance. At present, we are using an agency under WPP. This global advertising agency, the Chinese branch, recently had been involved in a series of corruption issues to issue fake rebates to distribute profits to executives and a board of personal rebates. Judy and her team did not immediately change the partners like many other brands such as GSK, SWATCH but to continue to hide the issue to ensure personal interests are not compromised.

adidas spends tens of millions of euros annually on SPOMA, which also means there is huge room for embezzlement and black case work. Judy assigned Jason, a close subordinate and who previously worked with her to directly liaise with Judy’s proposed partners and negotiate for personal rebates (15%-20% of total SPOMA budget) in private. Due to Judy’s own relationship with celebrity agents, when signing celebrity endorsements and KOLs, she reached out to the agent company to fake the partnership fees and use personal rebates to cash out adidas market expenses together with the agent.

When former Procurement Head Simon Wang was fired due to corruption issues, someone simultaneously reported Retail Marketing Head John Yao and VM Head Cindy worked with external vendors to cash out the marketing expenses and using spot rebate to give Judy, Yao, Cindy in cash. (20%-25% of total retail activation/VM budget). But Judy suppressed this matter and cooperated with Procurement director Fangfang to change the name of the vendors in the warehouse to continue the business which are the same agencies with different legal names in the pool (Peijc Advertising, Shanghai Huijin Intelligent Technology and Shanghai Peijia Yinghe Advertising Production owned by the same family or friends).

Nepotistical and dismiss those not being compliant

For Judy, the people responsible for execution and operations are very important to her. Since Judy returned to adidas in 2022, she has managed out the leaders who are not obedient for her and promoted her extremely incompetent followers who are fully subject to her to the key positions. The former colleague and her close friend. He was reported by Judy as marketing SVP for corruption. At that time, Judy had an affair with the lobbiend GM to protect him and promoted him from SD to VP as the return of the loyalty. Previously, there was a great industry leader David Tang for SPOMA, who’s working very hard to build the new business model and but was extremely difficult to manage due to his fame and experience who was extremely followed by her subordinate Jason. Eventually, through HR, David was forced to leave and Jason was obviously promoted to Head of SPOMA to be directly led by Judy and using her name to participate in business. Retail Market’s head John Yao also had serious corruption issues, receiving millions of cash from suppliers and physical items such as LV handbags to Judy and Jason. Due to the working scope of Trade Meeting was changed to Cindy, for a long time the marketing department has been ruined by Judy, Jason, John, Leo, Shenny, Fangfang and other subordinates assigned to achieve personal ambitions and interests.

Workplace bullying

Judy’s personal style is that the people she favors, they will prosper, and those who oppose her will perish. It’s often for us to see FF **king word shouted from her mouth. For instance, when discussing the brand matrix report, Judy shouted at the members who were not doing what she wants and ask her subordinates to leave the office immediately. Once she wanted to manage out the target employee, she would ask the team members to isolate the target person and forced the target people to be difficult to manage to leave. Her subordinates have been PA for many years by her and it’s well known that the people will get protection from Judy once they pleased her or make her happy, and to be managed out if not following her to leave. Meanwhile, she asked her team NOT cooperate with other department such as Digital/Ecommerce or Transformation team due to politics issue.

In summary, when Judy served as SVP for adidas China, the embezzled millions of euros into her personal pocket every year, which became increasingly rampant. Her external affiliated suppliers are also very arrogant and threatened/intimidated employees who worked at the way not to do business with adidas, they may not get extra protection fees to Judy. We hope adidas will pay attention of what we have disclosed. We do love adidas and hope the company can survive. We are attached with the attachment with detailed and relatively complete evidence below.