This month's case study looks at a company faced with media reports of corruption, and a cheif executive who must lead from the front despite being in the dark

IT WAS 5.40am on Monday morning when Barry Curtin's mobile rang on the bedside table at his home in Greystones, Co Wicklow. At first the pharmaceutical chief executive thought it was the alarm. Once he realised it was the phone, he answered it, fearing it might be bad news about his elderly father who hadn't been well.

A radio reporter on the other end apologised for the early call but said she was hoping to have a few words with him about a story running in one of the newspapers. Did he know anything about the alleged bribes his company received from suppliers?

At first he thought it was a wind-up. What on earth was all this about?

As he spoke, his phone started to vibrate with incoming messages and missed calls.

"No comment" was all Curtin could muster in reply to the radio reporter's detailed questions before brusquely terminating the conversation. It was clear he needed to call senior staff in to an early morning meeting.

By 8am, three directors and most of the managers at Delalley Pharma Plc were sitting in the company's boardroom at the top of its new offices in the Grand Canal Dock area. They had some idea of the crisis from the news reports and were wondering how the journalists seemed to have more information than the board members.

Curtin was anxious to start the briefing, so he closed the boardroom door even though more people were expected. The latecomers crept in as he went over the stories running in the news. There was one notable absentee from the meeting: purchasing director Peter O'Neill.

Earlier in the week O'Neill had been questioned by a newspaper reporter about several trips he had taken to Argentina, apparently organised and paid for by one of the firm's major suppliers, Risay.

He had told the reporter it was common practice for suppliers to reward their clients with these trips; they had included a visit to the supplier's plants and that it was all above board.

O'Neill had not thought it necessary to alert anyone else in the business about the phone call. However, this morning's paper claimed O'Neill not only benefited from the trips, but had holidayed on at least five occasions with his family at a Spanish villa owned by the managing director of Risay.

These allegations suggested an uncomfortable level of contact with Risay, but it was claims of regular pay-outs that were really going to hurt the business.

Apparently a source in Risay had provided the financial journalist with documented evidence of pay-outs to O'Neill ahead of contract tenders. These ran to five-figure sums and stretched back over eight years.

Once Curtin had finished his briefing, he asked senior managers for their views. Some wanted O'Neill suspended immediately, others wanted him fired. The deputy purchasing director, Joe Swan, told them O'Neill was on a flight to New York and could not be contacted. However, Swan insisted that he had not witnessed any bribes, nor had he been offered any.

"Sure there were freebies such as concert tickets, dinners and even a weekend trip to Madrid to see the Argentinian football team play Spain," he said. "But I'd get the same sort of thing from most of the firm's suppliers - or those looking for business with us."

Curtin couldn't believe his ears. It seemed the purchasing department was one large holiday camp, with the winning bidder being decided on who offered the best junket. Even worse, if cash payments were involved it was clearly a case of bribery. How could he not have known this was going on?

Perhaps the most aggravating issue, however, was the fact that only last year Delalley Pharma had to recall a range of its medical devices, due to a failure in Risay-supplied parts. At the time he had quizzed O'Neill about it, but was told that it was a one-off problem at one of Risay's plants.

Two years ago O'Neill had also argued strongly for Risay to be included as supplier to what had become the firm's best-selling product, despite the finance department saying it was not the lowest priced tender and the manufacturing department claiming they were not the best parts.

Curtin was getting paranoid now. Why had that contract been given to Risay? Had the South American company effectively bribed managers in finance and manufacturing in order to get the contract?

He had sat in on one purchasing committee meeting at the time and he remembered how both of these departments opposed Risay. Yet, when the contract came to be awarded, the committee strongly recommended Risay. The board members had approved the contract without question. Who were they to doubt the expertise of the committee? But now he had his doubts about the process.

The immediate and biggest issue was how to handle the media. For a start, if the allegations were true, not only would the management be discredited, but questions would be asked about the company's best-selling product.

Curtin wanted to confront O'Neill face-to-face, but he was halfway over the Atlantic. If the reports were true, Curtin feared that O'Neill might be tempted to disappear for a while, leaving the management at Delalley to clean up the mess.

And that was just the start of it. No doubt the stock exchange regulators and even the Garda would get involved and question just how far the alleged corruption went.

For his part he had not taken anything from Risay, but he had gone on the odd junket in his earlier days. Would that damage his reputation? And even if he could prove his innocence, would he then be accused of poor management?

At 52 years of age, he could not afford to resign, with three children in university and a hefty mortgage after trading up to a period house with a bigger garden two years ago. It was still only 9 am on Monday morning and he felt like he was staring into the abyss. Yet the managers sitting around the table were depending on him to lead them out of the mess.

Inwardly, he felt like joining O'Neill on the next plane out. But he knew that he had to at least give the impression that he was in control of the situation.

He certainly needed to talk to the chief executive of Risay, Charles Fernandez, to find out what was going on. But with Buenos Aires three hours behind GMT, he would have to wait a while yet.

What should Curtin do?