Automakers on alert for suppliers faking diversity

DETROIT — Building a network of minority-owned and female- owned suppliers can be complicated, in part because some companies try to unfairly take advantage of the programs designed to support such endeavors.

When automakers look to diversify their supply chains, they rely on third-party organizations that certify whether companies are majority-owned by minorities and women. This shields automakers from companies that may feign diversity by giving lofty titles to minorities who don't actually own the companies and don't have sway in the big decisions. The certification bodies include the Great Lakes Women's Business Council and the Michigan Minority Supplier Development Council.

The minority supplier council, which handles certifications for minority business enterprises in the state, schedules site visits to verify application information. To get certified, the council says, companies are required to have minority management talent in key leadership roles who are making important business decisions.

The council's certification efforts include analysis from accountants, attorneys and certified fraud examiners. It reviews operating agreements, tax returns, family birth and death records and other documents to ensure it's certifying only those companies that meet its requirements.

"There's always going to be people who play the games," said Reginald Humphrey, GM's supplier diversity senior manager. "Anytime I'm at a facility and there was a change in ownership, I'm doing a census check. I'm asking the same questions those certification auditors are asking.

"You said you're the CEO or president, why are you parked out there? I see three parking spots reserved, and you don't have one of them," Humphrey added. "Why is your office in the corner of the warehouse, when I just walked past three offices that said CEO and president?

"These are real issues that happen."