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25 Biggest Corporate Scandals Ever:

Corporate scandals, whether centered around corruption, bribery, fraud, or other kinds of greed,
have a significant impact on the economy. After all, trust and credit play a substantial role in
any economy. Once you remove honesty, the whole stack of cards can come tumbling down.
Of course, while some companies can make a comeback after a scandal, many others go down
with the ship and file for bankruptcy. As we peel back the covers of financial greed, here is a
list of the 25 Biggest Corporate Scandals Ever.
1 Facebook Data Privacy Scandal:
In early 2018, news sources revealed that over 87 million Facebook users’ data leaked to the
political consultancy Cambridge Analytica. Worse yet, Facebook admitted they knew
Cambridge Analytica had been siphoning off data through a program called This Is Your
Digital Life and did nothing about it. Due to the huge breach in privacy, Mark Zuckerberg
faced several hearings with U.S. Congress and the European Union. Their stock and public
faith in the platform has plummeted since the scandal.
2 Volkswagen:
Not all corporate scandals have involved insider trading or spying. Some have
involved…prostitutes and luxury vacations. In 2005, the VW bribery affair made huge
headlines as it was discovered that top executives were using said incentives to secure certain
contracts and business relationships…all under the guise that it was in the interest of the
company. Even though the story broke in 2005, investigations, resignations, and convictions
happened over the course of about five years.
3 WorldCom:
You might have wondered why the US’s second largest long-distance phone company,
WorldCom, filed for Chapter 11 in 2002. However, an internal audit report showed that the
company had been using fraudulent accounting methods to hide its declining financial
condition. The company’s assets were inflated by around $11 billion with $3.8 billion in
fraudulent accounts. The company was purchased by Verizon Communications and was
renamed Verizon Business Division. It’s worth noting that this scandal prompted the approval
of the Sarbanes-Oxley Act by the senate, which introduced the most sweeping new business
regulations since the 1930’s.
4 Siemens:
Siemens AG and the Greek government went under fire for corruption and bribery involving
the deal for the security systems for the 2004 Summer Olympic Games in Athens. While no
serious charges were made, it’s believed that the bribes may have been up to 100 million Euros.
5 Hewlett-Packard Spying Scandal:
This spying scandal was purportedly at the behest of HP Chairwoman, Patricia Dunn. In
connection with an information leak, she contracted a team of independent security experts to
investigate some board members and several journalists by obtaining their phone records.
However, this backfired and resulted in Dunn’s resignation.
6 Barings Bank:
Barings Bank is the oldest merchant bank in the city of London, which was founded by the
German-born Baring family. This bank handled the Queen’s personal bank and was once the
financier of the Napoleonic Wars. However, the bank collapsed in 1995 when one of its bank
employees, Nick Leeson, squandered and lost £827 million ($1.3 billion) through speculative
investing over a three-year period, which he masked by manipulating records.
7 Bre-X:
Bre-X is a Canadian mining company that bought a purported gold mine in Busang, Indonesia,
in March 1993. In 1995, the company announced the discovery of a veritable treasure chest
that soared the company’s stock prices to CAD $286.50 on the Toronto Stock Exchange (TSX).
However, this turned out to be the worst mining scandal of all time when it was discovered that
workers and miners falsified crushed core samples by salting them with placer or supergene
gold constitutes. Because of this, Bre-X fell down the mine shaft after its stocks become
worthless.
8 Barclays:
Barclays, one of the world’s largest banks, was hammered by a scandal involving Libor
manipulation, where banks lend each other money at high rates. The company owned up to the
allegation that it manipulated the London Interbank Offered Rate which was tied to trillions of
dollars’ worth of financial contracts and derivatives. The issue led to the resignation of the
company’s CEO, Bob Diamond, and the company was asked to pay $450 million. Other banks<
like UBS, were also under investigation for the Libor-rate rigging.
9 Jerome Kerviel and the Société Générale Banking Scandal:
Jerome Kerviel is a rogue trader who tripped up the world’s financial market when his
unauthorized trading in the securities markets using the bank’s computers resulted in €4.9
billion losses to the Société Générale funds. The worst part of the issue came when the bank’s
executive tried to mask the fraud by “unwinding” his trades. This resulted in trading panic all
over the Atlantic, causing a decline in European markets.
10 Urban Bank:
This was one of the largest banks in the Philippines until it was closed based on liquidity by
the Philippine Deposit Insurance Corp (PDIC). However, the liquidation grounds were not the
big issue here. The big scandal was that some of Urban Bank’s officers were later criminally
charged with economic sabotage due to their falsified Supervision and Examination Sector
(SES) reports to the Monetary Board.
11 Deutsche Bank Spying Scandal:
Deutsche Bank AG is a German global banking and financial services company that was caught
spying not only on its board members, but also on the personal life of some of its investors. As
Germany’s largest bank and the largest foreign dealer in the world with a presence in Europe,
USA, Asia-Pacific, and the emerging markets, the scandal took quite a toll. In 2006, the bank
succumbed to paranoia when it hired an external detective agency to snoop on contacts between
board members and the Munich-based media magnate, Leo Kirch and his associates, whom
they had litigation with. Due to the scandal, the German government vowed to have a new
privacy protection law for workers.
12 Martha Stewart’s Mess:
Martha Stewart is a household name due to her endeavors as a business magnate, author, and
magazine publisher. She is very successful in all her business ventures and has numerous
bestselling books. However, she became entangled in the ImClone insider trading affair in 2002
and was even indicted on nine counts of securities fraud and obstruction of justice. She was
able to bounce back, however, and even regained her company in 2012.
13 HIH Insurance:
This corporation’s downfall is considered the largest in Australia’s history. HIH Insurance was
Australia’s second-largest insurance company until it entered into provisional liquidation in
2001. It incurred losses totaling $5.3 billion where its director, Rodney Adler, was sentenced
to four and half years of jail time due to obtaining money by false or misleading statements,
and failure to discharge his duties as a director in good faith and in the best interests of the
company.
14 Global Crossing Ltd:
This company proved an incredible scandal is not necessarily the end of the business road. In
terms of assets, the company’s bankruptcy can be considered the 7th largest filing in American
history; the total assets given at the filing were $22.4 billion with debts amounting to $12.4
billion. The debt was amassed by four CEO’s of the computer-networking services company.
Each was given $23 million in personal loans which were ultimately forgiven. However, in
2004, the company began to show improved margins and even announced acquisitions of Fiber
Net and Imp sat in 2006.
15 Adelphia Communications Corp:
This Pennsylvania-based company was ranked as the fifth largest cable company in the US
before it yielded to bankruptcy in 2002 due to internal corruption. The company incurred a $2.3
billion debt, and its founders were charged with securities violations. John and Timothy Riga’s
were sentenced to 15 to 20 years in prison while five other officers were indicted. They’d made
a complicated cash-management system where they diverted funds to other family-owned
entities.
16 BANINTER:
Banco Intercontinental, or BANINTER, was the second-largest privately held commercial
bank in the Dominican Republic. Its demise resulted from political corruption in 2003 as
fraudulent bookkeeping and political influence by all the major Dominican political parties
resulted in a $2.2 billion deficit, which was equal to 12 to 15% of the country’s GDP.
17 Parmalat:
Parmalat, an Italian company, is the leading global producer of Ultra Hot Temperature (UHT)
milk and other foods. However, its founder, Calisto Tanzi, was accused of questionable
accounting practices in 2003 when a €14 billion hole was discovered in the company’s
accounting records. This resulted in one of the biggest corporate scandals in history. It turns
out he was selling credit-linked notes to the company and diverting the company’s funds
elsewhere.
18 Swissair:
Swissair, a former national airline of Switzerland and a major international airline, was
grounded in October 2001 due to a bad expansion move. With 30% of its shares in stocks
owned by the Swiss government, the company implemented the Hunter Strategy, a major
expansion program. However, this resulted in a financial crisis that also effected its parent
company, SAirGroup, which was already hurt by the September 11 attacks. As the entire
Swissair fleet was grounded and officially dismantled in March 2002, it was later acquired by
Cross air and the liquidation firm Jurg Hoss.
19 Bear Stearns Companies Inc:
This is one of the US’s biggest government bailouts that helped avoid a domino effect of
financial market failures. Ranking as one of the largest global investment banks, securities-
trading and brokerage firms in the world, Bear Sterns was nearly bankrupted before it sold
itself to JP Morgan Chase for $2 a share or $240 million. This was furthered bolstered by a
guarantee of $30 billion worth of loans given by the Federal Reserve to the company.
20 Arthur Andersen:
Speaking of Arthur Andersen, this Chicago-based company voluntarily relinquished its
licenses to practice as Certified Public Accountants (CPAs) in the USA due to the Enron
accounting scandal. This was a blow, considering that it was one of the world’s top five
accounting firms prior to the scandal. It resulted in the loss of 85,000 jobs and corporate re-
branding.
21 Enron Corp:
Enron was the “it” company at the turn of the century as it oozed with wealth, smarts, and
power. However, this Houston-based energy company toppled into a spectacular bankruptcy
due to a painstakingly-planned accounting fraud made by its accounting firm, Arthur Andersen.
Once considered a blue-chip stock, Enron shares dropped from $90 to $0.50, which spelled
disaster in the financial world when thousands of employees and investors saw their savings
vanish with the company as it filed for an earnings restatement in October 2001.
22 Lance Armstrong and the Livestrong Foundation:
Lance Armstrong not only held the title of a Tour de France champion and is the man behind
the Livestrong Foundation, but he also owns several businesses and investments. He owns the
coffee shop “Juan Pelota Café,” a bike shop named “Mellow Johnny,” and had several million
dollars invested in the American bicycle component manufacturer SRAM Corporation.
However, due to his doping confessions, he lost his title and several sponsorships, and SRAM
cut ties with him.
23 Tyco Ltd:
Tyco International is a diversified manufacturing conglomerate that deals with electronic
components, health care, fire safety, security, and fluid control with headquarters in New
Jersey. In 2005, its CEO, Dennis Kozlowski, and CFO, Mark H. Swartz, were found guilty of
stealing $600 million from the company. These two symbolized the excesses of executive
compensation at shareholder’s expense, where Kozlowski will be remembered for the $2
million birthday bash he gave his wife on a Mediterranean Island at the company’s expense.
24 HealthSouth:
Organized and directed by the company’s CEO, Richard Scrushy, this financial hoax involved
coming up with fictitious transactions and accounts to boost the company’s earnings. The fraud
embezzled $1.4 billion which was reported as the company’s earnings from 1996 to 2003. He
almost got away with it when he was acquitted by a “friendly” Alabama jury, but the
prosecutors kept at it, and he was convicted in June 2006 of bribery charges made on Alabama’s
governor to receive a seat on the medical regulatory board.
25 The Bernie Madoff Ponzi Scheme:
This made the list not only for the sheer amount of money involved (at least $65 billion in
client accounts) but because the people he conned are some of the smartest people in the world.
People entrusted him with their charitable funds, but they were used for his luxurious lifestyle
and personal gain.