Sources inform ''Globes'' that McAfee Inc (NYSE: MFE) has launched an extensive investigation at McAfee Israel into alleged irregularities, including grey market activity of the company's products.
The immediate consequence of the investigation is the suspension of McAfee territory manager Yaniv Alfi for several weeks, until the investigation is completed. He has been temporarily replaced by McAfee Israel director of distribution channels Keren Atias. A McAfee Israel spokeswoman said in response to the suspension, "The company does not disclose details related to its employees."
The investigation at McAfee Israel grew out of another investigation that McAfee is undertaking. McAfee Middle East regional director Patrick Hayati, who was based in Dubai, resigned a few weeks ago under uncertain circumstances. The investigation at McAfee Israel is the result of conclusions reached in the McAfee investigation at the regional management.
Last week, a number of McAfee investigators arrived in Israel from Texas. They recommended Alfi's suspension until the issue was cleared up. The investigators simultaneously launched a broad investigation into the conduct of McAfee Israel employees. These include 40-50 employees at the company's R&D center and a small group of sales and technical support staff.
The sources added that McAfee Israel has hired a local company to examine correspondence of employees with distributors. McAfee Europe, headed by president EMEA Mike Dalton, is also involved in the investigation.
Alfi has been in his post for 18 months. He is the third McAfee Israel territory manager within three years, following the resignation of Shmuel Antebi (who now is VMware Israel manager) and his predecessor, Doron Dreyer.
McAfee Israel has had a fairly good year, after jointly winning a prestigious government anti-virus project with Japan's Trend Micro Ltd. (TSE: 4704). With this contract, as well as several others, McAfee was able to break into the ranks of customers previously dominated by its rival, Symantec Corporation (Nasdaq: SYMC).
McAfee Israel also expanded its R&D activity, following the acquisition of Onigma, which develops data loss prevention (DLP) solutions, in October 2006. There is no investigation at the R&D activity, although the unpleasantness unquestionably undermines foreign managers' attitudes towards the activity.
Like many publicly traded multinational corporations, McAfee is very sensitive about internal conduct, especially in the era of stock option backdating scandals and the Sarbanes Oxley Act. The US Securities and Exchange Commission (SEC) investigated the company for allegedly inflating its revenue and profits by hundreds of millions of dollars. In early 2006, the company agreed to pay a $50 million fine to compensate investors. Given this history, McAfee's sensitivity to suspicions at remote branches is understandable.
Published by Globes [online], Israel business news - www.globes-online.com - on June 12, 2008
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