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People’s Bank

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Scenario: People’s Bank

• Early September, 2003 – The gradual positive turnaround in the country’s economy is starting to take hold. Of particular significance has been the strengthening of the banking system. Both investors and depositors in within the country and the major outside players (including the World Bank, IMF, European banking circles and foreign investors) have expressed satisfaction with the progress.

• A 4-day conference on banking and investment in Croatia is now scheduled for the last four days of September in Zagreb. Key attendees from abroad have already accepted invitations.

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People’s Bank (cont.)

• On 20 September, the wife of the CFO for “People’s Bank,” the second-largest in the country, calls the police at 2:30 a.m. reporting that her husband is missing, saying that “he never came home from the office.” The next morning, a check of his office reveals that the banker had his secretary book a ticket for a 6:00 p.m. flight to Rome. A quick check by his executive assistant reveals that three key files held in the CFO safe on an upcoming audit are “missing”

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People’s Bank (cont.)

• 22 September – Police efforts to locate the CFO with the help of Italian authorities have made no progress. Within the bank, however, a preliminary review of the CFO’s activities highlight an alarming discovery. Although many key documents are missing, bank officials have pieced together an audit trail showing that the CFO, through unauthorized speculation on oil futures, managed over a period of 18 months to lose $750,000,000, or the bulk of the bank’s assets.

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People’s Bank (cont.)

• 23 September – The matter of the pending bank insolvency has to date been kept from the public with only a handful of bank officials and senior government officials aware of the true situation. The CFO’s disappearance has also, for obvious reasons, been kept from the press.

• The CFO’s wife, frustrated by the lack of progress in finding her husband, and apparently unaware of his troublesome activities at the bank, is now threatening to go to the press with the story of his disappearance. She fears foul play.