Corporate scandals, whether centered around corruption, bribery, fraud, or other kinds of greed, have a significant impact on the economy as a whole. 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.
Last Updated on
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.
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.
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.
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.
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.