You are the director of international operations for a leading clothing designer based in Tokyo. Your firm recently formed a 50/50 joint venture with an African manufacturer. On a recent trip to the joint venture’s factory in Africa, you uncovered discrepancies between the financial results sent to the Japanese parent company and those sent to the local parent firm. Further investigation has convinced you that the local venture’s top management is keeping two sets of accounting records to facilitate the diversion of funds to personal bank accounts. What do you do? Do you confront your local joint venture partner directly or find another solution? Might you devise a policy that encourages the local partner to be honest in its financial reporting? If so, how do you go about doing this? e-1