Corporate scandal
Encyclopedia
A corporate scandal is a scandal
involving allegations of unethical behavior by people acting within or on behalf of a corporation. A corporate scandal sometimes involves accounting fraud
of some sort. A wave of such scandals swept many United States
companies in 2002 (see list at accounting scandals
).
Scandal
A scandal is a widely publicized allegation or set of allegations that damages the reputation of an institution, individual or creed...
involving allegations of unethical behavior by people acting within or on behalf of a corporation. A corporate scandal sometimes involves accounting fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
of some sort. A wave of such scandals swept many United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
companies in 2002 (see list at accounting scandals
Accounting scandals
Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations...
).
List of corporate scandals
- 2006 HP Spying Scandal
- 2008 Siemens Scandal2008 Siemens alleged scandal in GreeceThe 2008 Siemens scandal in Greece was a corruption and bribery scandal that hit Greece over deals between Siemens AG and Greek government officials during the 2004 Summer Olympic Games in Athens regarding security systems and purchases by OTE in the 1990s....
, involving cases of bribery on behalf of SiemensSiemensSiemens may refer toSiemens, a German family name carried by generations of telecommunications industrialists, including:* Werner von Siemens , inventor, founder of Siemens AG...
towards the Greek Government - American Airlines, deferred maintenance of aircraft
- Adelphia officers trial and prison sentence
- AOL Time Warner
- Arthur AndersenArthur AndersenArthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations...
- BAE SystemsBAE SystemsBAE Systems plc is a British multinational defence, security and aerospace company headquartered in London, United Kingdom, that has global interests, particularly in North America through its subsidiary BAE Systems Inc. BAE is among the world's largest military contractors; in 2009 it was the...
bribery scandal related to the Al YamamahAl YamamahAl Yamamah is the name of a series of a record arms sales by the United Kingdom to Saudi Arabia, which have been paid for by the delivery of up to of crude oil per day to the UK government. The prime contractor has been BAE Systems and its predecessor British Aerospace...
contracts with Saudi Arabia. - Bank of Credit and Commerce InternationalBank of Credit and Commerce InternationalThe Bank of Credit and Commerce International was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The Bank was registered in Luxembourg with head offices in Karachi and London. Within a decade BCCI touched its peak...
scandal - Barings BankBarings BankBarings Bank was the oldest merchant bank in London until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million due to speculative investing, primarily in futures contracts, at the bank's Singapore office.-History:-1762–1890:Barings Bank was founded in 1762 as the...
, derivatives trading scandal - BayerBayerBayer AG is a chemical and pharmaceutical company founded in Barmen , Germany in 1863. It is headquartered in Leverkusen, North Rhine-Westphalia, Germany and well known for its original brand of aspirin.-History:...
, links to Josef MengeleJosef MengeleJosef Rudolf Mengele , also known as the Angel of Death was a German SS officer and a physician in the Nazi concentration camp Auschwitz-Birkenau. He earned doctorates in anthropology from Munich University and in medicine from Frankfurt University...
's Auschwitz human experiments, HIV-tainted blood products, anti-Semitism, racism - Bre-XBre-XBre-X was a group of companies in Canada. A major part of the group, Bre-X Minerals Ltd. based in Calgary, was involved in a major gold mining scandal when it was reported to be sitting on an enormous gold deposit at Busang, Indonesia...
gold mining and stock scandal - Bristol-Myers Squibb accounting scandal
- Carrian GroupCarrian GroupThe Carrian Group was a Hong Kong conglomerate founded by George Tan, a Singaporean Civil Engineer working in Hong Kong as a project manager for a land development company. The Group's principal holding company Carrian Holdings, Ltd...
- ClearstreamClearstreamClearstream Banking S.A. is the clearing and settlement division of Deutsche Börse, based in Luxembourg and Frankfurt. Clearstream was created in January 2000 through the merger of Cedel International and Deutsche Börse Clearing...
, which has been qualified as "the greatest financial scandal in Luxembourg" (Clearstream is a clearing house, i.e. sort of a "bank of banks", used to centralize credit & debit between banks and other financial organizations). As of 2006, it hasn't been resolved yet. - Chiquita Brands InternationalChiquita Brands InternationalChiquita Brands International Inc. is an American producer and distributor of bananas and other produce, under a variety of subsidiary brand names, collectively known as Chiquita. Other brands include Fresh Express salads, which it purchased from Performance Food Group in 2005...
Financing terrorist organizations - CMS EnergyCMS EnergyCMS Energy is a public utility supplying electric power and natural gas to Metro Detroit and most of Michigan. Its headquarters are located in Jackson, Michigan. The company has operated since 1890....
- Compass GroupCompass GroupCompass Group plc is a global contract foodservice and support services company headquartered near London, United Kingdom. It is the largest contract foodservice company in the world and has operations in over 50 countries...
, bribed the United NationsUnited NationsThe United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
in order to win business. - Corrib gas controversyCorrib gas controversyThe Corrib gas controversy concerns plans by Shell E&P Ireland, Statoil Exploration Limited, Vermilion Energy Trust and the Irish government for processing the Corrib gas field through Broadhaven Bay and Sruth Fada Conn Bay in Kilcommon parish, Erris, County Mayo, and objections raised against...
Kilcommon, Erris, Co. Mayo, Ireland. - Deutsche BankDeutsche BankDeutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...
, spying scandal - Duke EnergyDuke EnergyDuke Energy , headquartered in Charlotte, North Carolina, is an energy company with assets in the United States, Canada and Latin America.-Overview:...
- DynegyDynegyDynegy Inc. , based in Houston, Texas, United States, is a large owner and operator of power plants and a player in the natural gas liquids and coal business...
- El Paso Corp.El Paso Corp.El Paso Corporation , provides natural gas and related energy products and is one of North America's largest natural gas producers. It is headquartered in Houston, Texas. United States....
- Enron accounting fraudEnron scandalThe Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world...
, involving Arthur AndersenArthur AndersenArthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations... - ExxonExxonExxon is a chain of gas stations as well as a brand of motor fuel and related products by ExxonMobil. From 1972 to 1999, Exxon was the corporate name of the company previously known as Standard Oil Company of New Jersey or Jersey Standard....
overreporting of oilPetroleumPetroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
reserves - Fannie Mae underreporting of profitProfit (accounting)In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
- Firestone Tire and Rubber CompanyFirestone Tire and Rubber CompanyThe Firestone Tire and Rubber Company is an American tire company founded by Harvey Firestone in 1900 to supply pneumatic tires for wagons, buggies, and other forms of wheeled transportation common in the era. Firestone soon saw the huge potential for marketing tires for automobiles. The company...
for use of child laborChild laborChild labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries... - FlowTex, the largest corporate scandal in German history
- Ford PintoFord PintoThe Ford Pinto is a subcompact car produced by the Ford Motor Company for the model years 1971–1980. The car's name derives from the Pinto horse. Initially offered as a two-door sedan, Ford offered "Runabout" hatchback and wagon models the following year, competing in the U.S. market with the AMC...
scandal - Global CrossingGlobal CrossingGlobal Crossing Limited was a telecommunications company that provides computer networking services worldwide. It maintained a large backbone and offered transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and...
- Guinness affair
- HafskipHafskipHafskip was Iceland's second-largest shipping line before its collapse which became a national scandal.The firm had fallen deep into debt and might have sunk quietly had it not been for its ties to Iceland's finance minister, who was its former chairman and still a shareholder...
's collapse - HalliburtonHalliburtonHalliburton is the world's second largest oilfield services corporation with operations in more than 70 countries. It has hundreds of subsidiaries, affiliates, branches, brands and divisions worldwide and employs over 50,000 people....
overcharging government contracts - Harken Energy ScandalHarken Energy ScandalThe Harken Energy scandal refers to a series of transactions entered into during 1990 involving Harken Energy. These transactions are alleged to involve either issues relating to insider trading, or influence peddling. No wrongdoings were found by any investigating authorities although the matter...
- HealthSouthHealthSouthHealthSouth Corporation , based in Birmingham, Alabama, is the nation’s largest owner and operator of inpatient rehabilitative hospitals. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals , outpatient...
reporting exaggerated earnings - Homestore.com
- IG FarbenIG FarbenI.G. Farbenindustrie AG was a German chemical industry conglomerate. Its name is taken from Interessen-Gemeinschaft Farbenindustrie AG . The company was formed in 1925 from a number of major companies that had been working together closely since World War I...
, participation in the Holocaust - Kerr-McGeeKerr-McGeeThe Kerr-McGee Corporation, founded in 1929, was an energy company involved in the exploration and production of oil and gas. On June 23, 2006, Houston-based Anadarko Petroleum Corporation agreed to acquire Kerr-McGee in an all-cash transaction totaling $16.5 billion plus the assumption of $2.6...
, the Karen SilkwoodKaren SilkwoodKaren Gay Silkwood was an American labor union activist and chemical technician at the Kerr-McGee plant near Crescent, Oklahoma, United States. Silkwood's job was making plutonium pellets for nuclear reactor fuel rods...
case - Kinney National CompanyKinney National CompanyKinney National Services, Inc. was formed in 1966 when the Kinney Parking Company and the National Cleaning Company merged. The new company was headed by Steve Ross....
financial scandal - KmartKmartKmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and...
- KruppKruppThe Krupp family , a prominent 400-year-old German dynasty from Essen, have become famous for their steel production and for their manufacture of ammunition and armaments. The family business, known as Friedrich Krupp AG Hoesch-Krupp, was the largest company in Europe at the beginning of the 20th...
, participation in arming Nazi GermanyNazi GermanyNazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
and in the Holocaust - Lernout & HauspieLernout & HauspieLernout & Hauspie Speech Products, or L&H, was a leading Belgium-based speech recognition technology company, founded by Jo Lernout and Pol Hauspie, that went bankrupt in 2001...
accounting fraud - LockheedLockheed CorporationThe Lockheed Corporation was an American aerospace company. Lockheed was founded in 1912 and later merged with Martin Marietta to form Lockheed Martin in 1995.-Origins:...
bribery scandalLockheed bribery scandalsThe Lockheed bribery scandals encompassed a series of bribes and contributions made by officials of U.S. aerospace company Lockheed from the late 1950s to the 1970s in the process of negotiating the sale of aircraft....
in Germany, Japan, and Netherlands - LivedoorLivedooris an Internet service provider based in Tokyo, Japan, that runs a web portal and numerous other businesses. The company was founded and led in its first 10 years by Takafumi Horie, known as "Horiemon" in Japan...
scandal - Long-Term Capital ManagementLong-Term Capital ManagementLong-Term Capital Management L.P. was a speculative hedge fund based in Greenwich, Connecticut that utilized absolute-return trading strategies combined with high leverage...
- LTCM - Merck Medicaid fraud investigation
- MG Rover GroupMG Rover GroupMG Rover was the last domestically owned mass-production car manufacturer in the British motor industry. The company was formed when BMW sold the car-making and engine manufacturing assets of the original Rover Group to the Phoenix Consortium in 2000....
accounts and pensions scandal - MirantMirantMirant Corporation, an Atlanta-based energy company, produces and sells electricity in the United States. The company was spun off from its former parent, Southern Company, on April 2, 2001...
- Morrison-Knudsen scandal. Led to William AgeeWilliam AgeeWilliam Joseph Agee is an American businessman. In 1976 at age 38, he became the youngest non-family member CEO of a Fortune 100 Company when he was appointed President and CEO of the Bendix Corporation. In the 1980s and 1990s he served as Chairman, President and CEO of Morrison Knudsen Corporation...
's ouster - Nicor Energy
- NortelNortelNortel Networks Corporation, formerly known as Northern Telecom Limited and sometimes known simply as Nortel, was a multinational telecommunications equipment manufacturer headquartered in Mississauga, Ontario, Canada...
executives overstate post-dot-com recovery earnings in order to earn bonuses - One.TelOne.TelOne.Tel was a group of Australian based telecommunications companies, including principally the publicly listed One.Tel Limited established in 1995 soon after deregulation of the Australian telecommunications industry, most of which are currently under external administration by court appointed...
collapse - Options backdatingOptions backdatingOptions backdating is the practice of issuing options contracts on a later date than that which the options have listed. While options backdating is not, in and of itself, an illegal practice, intentional backdating that coincides with low underlying stock prices and accounting reports that claim...
involving over 100 companies - ParmalatParmalatParmalat SpA is a multinational Italian dairy and food corporation. Having become the leading global company in the production of ultra high temperature milk, the company collapsed in 2003 with a €14 billion hole in its accounts in what remains Europe's biggest bankruptcy...
accounting scandal & mutual fund fraud - Peregrine SystemsPeregrine SystemsPeregrine Systems, Inc., an enterprise software company, was founded in 1981 and sold enterprise asset management, change management, and ITIL-based IT service management software. Following an accounting scandal and bankruptcy in 2003, Peregrine was acquired by Hewlett-Packard in 2005...
corporate executives convicted of accounting fraud - Phar-MorPhar-MorPhar-Mor was a United States chain of discount drug stores, based in Youngstown, Ohio, and founded by Michael "Mickey" Monus and David S. Shapira in 1982. Some of its stores used the names Pharmhouse and Rx Place...
company lied to shareholders. CEO eventually sentenced to prison for fraud and company eventually became bankrupt. - Polly PeckPolly PeckPolly Peck International was a small and barely profitable United Kingdom textile company which expanded rapidly in the 1980s and became a constituent of the FTSE 100 Index before it collapsed in 1990 with the then colossal debts of £1.3bn...
scandal - Qwest Communications
- RadioShackRadioShackRadioShack Corporation is an American franchise of electronics retail stores in the United States, as well as parts of Europe, South America and Africa. As of 2008, RadioShack reported net sales and operating revenues of $4.81 billion. The headquarters of RadioShack is located in Downtown...
CEO David EdmondsonDavid EdmondsonDavid J. Edmondson is an American businessman. He is currently Founder and CEO of E-Recycling Corps, an enterprise engaged in the collection, refurbishment and global redistribution of used wireless devices. Edmondson also founded EasySale, Inc in 2007, an internet-based consignment and...
lied about attaining a B.A. degree from Pacific Coast Baptist College in CaliforniaCaliforniaCalifornia is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area... - RefcoRefcoRefco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts. It was founded in 1969 as "Ray E. Friedman and Co." Prior to its collapse in October, 2005, the firm had over $4 billion in approximately 200,000 customer accounts, and it was...
, Inc. commodities & futures scandal involving hidden debts involving underwritting firms Credit Suisse First BostonCredit Suisse First BostonCredit Suisse First Boston was the former name of the banking firm Credit Suisse.-History:In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston...
, Goldman SachsGoldman SachsThe Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Bank of America Corp. - Reliant EnergyReliant EnergyRRI Energy, Inc. , based in Houston, Texas, United States, was an energy company that provided electricity to wholesale customers in the United States. The company was one of the largest independent power producers in the nation with more than 14,000 megawatts of power generation capacity across...
- Rite AidRite AidRite Aid is a drugstore chain in the United States and a Fortune 500 company headquartered in East Pennsboro Township, Pennsylvania, near Camp Hill. Rite Aid is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S....
accounting fraud - Royal Dutch ShellRoyal Dutch ShellRoyal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
overstated its oil reservesOil reservesThe total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...
twice, it downgraded 3900000000 barrels (620,050,450,500 l), or about 20 percent of its total holdings. - Salad oil scandalSalad oil scandalThe Salad Oil Scandal, also referred to as the "Soybean Scandal", was a major corporate scandal in 1963 that ultimately caused over $150 million in losses to corporations including American Express, Bank of America and Bank Leumi, as well as many international trading companies...
, where millions in loans were obtained on largely nonexistent inventories of salad oil - Société GénéraleSociété GénéraleSociété Générale S.A. is a large European Bank and a major Financial Services company that has a substantial global presence. Its registered office is on Boulevard Haussmann in the 9th arrondissement of Paris, while its head office is in the Tours Société Générale in the business district of La...
, derivatives trading scandal causing multi-billion euro losses. - Southwest AirlinesSouthwest AirlinesSouthwest Airlines Co. is an American low-cost airline based in Dallas, Texas. Southwest is the largest airline in the United States, based upon domestic passengers carried,...
, violations of safety regulations. - Tyco InternationalTyco InternationalTyco International Ltd. is a highly diversified global manufacturing company incorporated in Switzerland, with United States operational headquarters in Princeton, New Jersey...
, executive theft and prison sentence - Union CarbideUnion CarbideUnion Carbide Corporation is a wholly owned subsidiary of The Dow Chemical Company. It currently employs more than 2,400 people. Union Carbide primarily produces chemicals and polymers that undergo one or more further conversions by customers before reaching consumers. Some are high-volume...
, the Bhopal disasterBhopal disasterThe Bhopal disaster also known as Bhopal Gas Tragedy was a gas leak incident in India, considered one of the world's worst industrial catastrophes. It occurred on the night of December 2–3, 1984 at the Union Carbide India Limited pesticide plant in Bhopal, Madhya Pradesh, India...
. - ValuJet AirlinesValuJet AirlinesValuJet Airlines was an American low-cost carrier, headquartered in unincorporated Clayton County, Georgia, that operated regularly scheduled domestic and international flights in the Eastern United States and Canada during the 1990s...
, loading live oxygen generators into cargo hold of passenger jet causing fatal crash - WorldCom / MCI accounting scandals
- Xerox alleged accounting irregularities involving auditor KPMGKPMGKPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
, causing restatement of financial results for the years 1997 through 2000 and fines for both companies. - David WittigDavid WittigDavid Wittig is the former chief executive officer of Topeka, Kansas-based Westar Energy, a utility company.Born in Kansas City, Missouri, Wittig became a Wall Street investment banker....
"looting" scandals - Northern Rock bank - subprime mortgage crisis and nationalisation, United Kingdom
- Satyam Computers, India
- S-Chips ScandalsS-Chips ScandalsS-Chips Scandals relates to corporate scandals surrounding Chinese companies listed on the Singapore Exchange. Embezzlement, forgery, accounting fraud had been the order of the day. Frauds were perpetrated by Chinese citizens and facilitated by mostly Singaporean and Malaysian securities promoters...
, Singapore - SonySony, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....
including rootkits on audio cds; then providing a security hole as solution.
See also
- Accounting scandalsAccounting scandalsAccounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations...
- Agency costAgency costAn agency cost is an economic concept that relates to the cost incurred by an entity associated with problems such as divergent management-shareholder objectives and information asymmetry...
- Center for Audit QualityCenter for Audit QualityThe Center for Audit Quality is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets...
(CAQ) - Corporate crimeCorporate crimeIn criminology, corporate crime refers to crimes committed either by a corporation , or by individuals acting on behalf of a corporation or other business entity...
- Global settlementGlobal settlementThe Global Settlement was an enforcement agreement reached on April 28, 2003 between the SEC, NASD, NYSE, and ten of the United States's largest investment firms to address issues of conflict of interest within their businesses-Settlement Decision:...
- Subprime mortgage crisisSubprime mortgage crisisThe U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
- White collar crime
Related media
- The Corporation, a documentary and book examining and criticising the corporation and its history.
- Conspiracy of FoolsConspiracy of FoolsConspiracy of Fools is a book by Kurt Eichenwald detailing the Enron scandal. It was published in 2005 when Eichenwald was a business journalist with The New York Times.- Synopsis :...
, EnronEnronEnron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
documentary. - Enron: The Smartest Guys in the RoomEnron: The Smartest Guys in the RoomEnron: The Smartest Guys in the Room is a 2005 documentary film based on the best-selling 2003 book of the same name by Fortune reporters Bethany McLean and Peter Elkind, a study of one of the largest business scandals in American history...
, Oscar-nominated Enron documentary.