Organizations are products of man’s desire to make money. The world has been witness to the grandeur and failure of these big corporations.
Individuals are not spared from scandals, more so, a corporation can get involved with allegations of unethical behavior by the people acting within or on behalf of the business entity. Oftentimes, a corporate scandal involves accounting fraud or something almost like it. Some of these corporations plunged to greater heights in just a short period of time and this caused suspicions to arise. These well-regarded companies have fallen further into the ravine even when all the astute people tried to find loopholes and make use of unconventional sources in order to resuscitate the nearly-dying corporations.
Here is a list of those 10 infamous corporate scandals that rocked the world.
10. Union Carbide
Union Carbide is a chemical manufacturing company that was founded in 1917 and was known as a pioneer of petrochemical industries. It once owned big brands including Energizer before shifting to the production of chemical products as raw materials for various industries. Union Carbide hit the news when an industrial disaster exposed more than 5 million people in Bhopal, India to methyl isocyanate gas after a leak from the pesticide plant. The terrible gas-leak incident in Bhopal is considered one of the worst industrial disasters of all time. The Indian Government sued the company and Union Carbide was charged with a fine of $480 million.
9. Compass Group
Compass Group was founded in 1941 by Jack Bateman. The company started as a small canteen to support British war support staff. From then on, the company has grown to become an authority in the contract catering industry. The scandal surfaced in 2005 when a UN procurement office together with Vladimir Kuznetsov were arrested for corruption. The group later admitted to receiving $1 million as bribe from the Compass Group. The company stated that only a few of its officials were involved in the matter devoid of the management’s knowledge. In the end, all those who were involved were terminated from service.
8. ImClone Systems Inc.
ImClone Systems Inc. is an American pharmaceutical company founded in 1984, which was engaged in the production of cancer medicines. In the later of part of 2001, the corporate world was shocked when the Food and Drug Administration of America rejected one of the most anticipated medicines that was developed by the company. Founder and CEO, Samuel D. Waskal, sold his shares and influenced his family, relatives and close associates to follow suit before he even released the news of FDA’s rejection of the medicine, for fear that the share price of ImClone Systems Inc. would plummet. He was sentenced to seven years of imprisonment for insider trading and fraud.
7. BP Oil
BP Oil or British Petroleum Oil is the 3rd largest energy company in the world operating in more than 75 countries and was founded in 1906. The largest marine oil spill in history happened in 2010 when a massive amount of oil leaked from one of the wells into the Gulf of Mexico near the Mississippi River Delta. It was caused by a wellhead blowout during the digging process, which killed 11 people and eventually caused great harm to marine life and affecting about 800 km of American coastline. The company was plagued by many serious setbacks because of the spill. BP processed almost $1 million in damage claims and by far has paid the claimants close to $5 million.
American-based company Xerox is known for its document management solutions which was founded in 1906. It was discovered in 2002 that there were incorrect entries in the balance sheets of the company from 1997 to 2000. The U.S. Security and Exchange Commission brought Xerox’s malpractice into the limelight. The corporation rectified its accounts and was forced to pay $10 million as penalty for securities fraud.
5. Tyco International
Tyco International was founded in 1960 by Arthur Gandua. The company is involved in fire safety systems, security equipments, and pipeline construction. In 2002 the company got involved in a scandal when its CEO Dennis Kozlowski was accused for theft, embezzling more than $120 million worth of company funds. He received millions of dollars that were never authorized by the company’s directors. Kozlowski was sentenced 8-25 years of imprisonment in 2005.
4. HealthSouth Corporation
HealthSouth Corporation was founded in 1984 by Richard M. Scrushy and provides health care for patients who are recovering from cardiac or neurological disorders. The company’s CEO Richard Scrushy got into a scandal in 2002 when he sold $75 million of his company stocks before the company reported huge losses. When the scandal was investigated, it was found that the CEO got into a fraudulent deal which amounted to $10 billion.
WorldCom was founded in 1983 and at that time, it was named as Long Distance Discount Services. The company’s CEO Bernard Ebbers aggressively acquired new companies as a way to build the company. For this reason, the company was able to accrue more than $40 billion worth of debt. Other officials of the company decided to use illegal methods to conceal the real financial condition of the business. Upon, proving that Ebbers got involved in the fraud, he was sentenced to 25 years of imprisonment.
Parmalat is an Italian company founded by Calisto Tanzi in 1961. The once famous and rich company collapsed in 2003 when Tanzi embezzled eight hundred million Euros from his own company and left a hole in its accounts equivalent to the amount of $20 billion, making the Parmalat affair the biggest bankruptcy ever to happen in Europe.
Enron is an American company doing business in the energy industry which was founded in 1985. It was conferred as “America’s Most Innovative Company” for six consecutive years by the Fortune magazine because of its significant growth in the market. That fame, however, changed when the Enron Scandal was brought into the limelight in 2001, making it the largest bankruptcy of all time, amounting to a whopping $63.4 billion. It led to a massive job loss in 2002. More importantly, it pioneered several policy changes to ensure that every American corporation’s books are properly audited.