In this day and age, big corporations are practically running our world. Despite all of the rules and regulations surrounding corporate actions and their impact on civilians, corporations have a lot of control, influence, and power over even the minutiae of our daily lives. You think that it’s just a coincidence that we crave certain foods for breakfast? Or that we believe certain price points for things are acceptable, even when they’re marked up an astronomical amount? We’ve kind’ve been brainwashed by all of the corporate agencies that bump elbows and run the worlds we live in- and most of us have no idea that it’s even happened.
For all the corporations manage to get away with, there is still plenty that they get caught on and called out for. The only stories we really manage to hear about, though, are the most tragic- the rest are usually covered up fairly well by highly paid public relations departments. But those that we do hear about and the media swarms over? They are doozies. They frequently wind up resulting in prison sentences, millions of dollars lost, and even the occasional tragic death.
It’s pretty damn crazy what people will do for money, pride, and status these days. Maybe it’s always been this ugly and dramatic, but for the first time we seem to truly be seeing the dark underbelly of the business world. Money truly can’t buy happiness, and these corporate bozos have proved it. Here are fifteen of the top corporate scandals that have ever ravaged the world:
15. Bernie Madoff and the Ponzi Scheme
Bernie ran his own ponzi scheme, just like the one we described to you before, but he ran his much more elaborately and the New Yorker seemed much more trustworthy and intelligent. Bernie had everyday clients, sure- but he also had clientele including some of the world’s richest people, including Steven Spielberg, Kevin Bacon, Zsa Zsa Gabor, and Larry King. While Marc only landed a 20 year sentence for his crimes, Bernie got a whopping sentence of 150 years of imprisonment (even though the codger is already in his seventies) and had to forfeit the $17 billion he schemed his clients out of. His scandal was so popular that, shortly after his imprisonment, the Will Ferrell and Mark Wahlberg comedy The Other Guys was made with a plot that involved a vastly incorporated and successful ponzi scheme like Bernie’s.
14. Banco Ambrosiano: Money Laundering and Murder
Banco Ambrosiano was one of the most famous and well regarded banks of Italy- for a time. It collapsed in the early 1980s after a series of scandals that not only irreparably tarnished the bank’s reputation, but led to criminal charges and dangerous implications surrounding the executives. Chairman Roberto Calvi was a member of an illegal society called the Masonic Lodge, linked to the age old Freemasons. His greatest client and shareholder at the bank was the Vatican- not a group you disappoint. When Pope John Paul I died under seemingly suspicious circumstances, all eyes looked to the Banco Ambrosiano. Nothing was ever found solidly linking the bank to John Paul’s death, but it was later discovered that the Vatican was funneling covert United States funds through the bank for the purposes of unionization and contra-militant activity. The bank dissolved… but a new bank, the Nuovo Banco Ambrosiano replaced it. Doesn’t sound too different to us…
13. BCCI: Money Laundering for Terrorists
Okay, you’re right: that is Diane Kruger and Bryan Cranston. And no, they haven’t done anything wrong, don’t worry. They starred together in the recent movie The Infiltrator, which was all about Robert Mazur and his work busting Pablo Escobar’s money laundering organization by going undercover as a corrupt businessman. What does this have to do with anything? Because in reality, BCCI (Bank of Credit and Commerce International) was the bank responsible for such money laundering. They marketed to the underworld, the black market, the organizations no one ought to lend any aid to, all for the sake of getting business. When BCCI was busted for aiding black market traders and terrorist organizations, they wondered why they were being picked on. “We’re not doing anything that isn’t going on in the rest of the banking community.” Now that’s a line you probably hoped never to hear from financial corporations.
12. Volkswagen and Their Bribes
This case is often commonly known as the “Perks and Prostitution Scandal.” Sounds scandalous indeed, right? Back in 2005, state prosecutors started to dig into the behind-the-scenes workings at Volkswagen and found some pretty nasty stuff. Turns out that the personnel director Peter Hartz had been bribing members of the company’s work council (aka, the union leaders for the automobile company) to keep things running as they were- no raises, no high standards of safety, no changes. The bribes came in the form of expensive and luxurious vacations, usually with all expenses paid and even including prostitute sex parties- all in the name of denying blue collar workers higher work standards. And this came in the same year that they were found guilty of another corruption scandal in India! It’s a miracle the company is still operating today, considering all of the trouble they’ve been in- especially since the year after, they were found guilty of further corruption scandals and taking bribes.
11. Stratton Oakmont and Their Not So Glamorous Story
Stratton Oakmont is one of the few stories you may know on this list, not because you’re tuned in to the corporate world or news. The story of Stratton Oakmont was recently adapted into a movie, and it turned out to be one of the most popular dramatic films of the last few years: The Wolf of Wall Street, starring Leonardo DiCaprio, Jonah Hill, and Margot Robbie. The story is one of Jordan Belfort, an “over-the-counter” brokerage house that stupidly and blindly committed various frauds in efforts to build their personal bank accounts. Their schemes are what is known as “pump-and-dump:” this means that they inflated the price of an owned stock through misleading positive statements in order to sell cheap stocks at higher price points. Then they “dump” the overvalued shares and investors lost loads of money. The executives Jordan Belfort and Danny Porush were arrested for money laundering and securities fraud three years after the men shut down the business for fear of being caught- too little, too late boys.
10. MegaUpl0ad and Piracy
Remember this startup? Probably not, since many that were similar to it released around the same time. MegaUpl0ad was a Hong-Kong based online company that lasted from 2005 to 2012, and it was all about creating an online file storage and viewing site: you know, kind of like what Apple Cloud, Google Drive, and DropBox all do today, but back when that was still futuristic tech. However, it all ended when Kim Dotcom (yep, that was the New Zealand native’s owner’s name) was arrested and indicted for operating the company as a business for copyright infringement. What was really happening that was so bad? Well, they weren’t really operating as a site for people to upload their own work but as a piracy site, doling out illegally stolen and copyrighted items. All their assets were seized and they had feds going after them from all over the world regarding worldwide copyright infringement policy.
9. Martha Stewart and Insider Trading
Everyone knows Martha Stewart! The woman has been a television icon for what feels like ages, known best for her takes on easy and simple living, homemaking in style, and fashion that is comfortable but gorgeous. She’s got brands you can buy in almost every facet of living, from dog beds for your pets to pots and pans in your kitchen. We like Martha a lot- but we’ve never forgotten her crimes. Back in 2003, Martha got in trouble for insider trading, which is when someone trades corporate secrets to benefit their stock portfolios. Doesn’t sound like a big deal, but it could potentially cause a rift in a company’s finances that is irreparable- which is what Martha did. She got prison time for her crime followed by time on house arrest, and her scandal was so well known that it was used as inspiration on the Netflix hit Orange is the New Black to give an inside look at what life might have been like for a wealthy celeb behind bars.
8. Nortel and Their Huge Exec Bonuses
Formerly known as Northern Telecom Limited, Nortel was a multinational telecommunications and data networking equipment manufacturer- not stuff that us lay-people typically dealt with. Nonetheless, they were a very successful manufacturer with a lot of people making a living on their work. Over the years, the company faced multiple sets of charges and allegations that they were fudging the books and potentially misrepresenting their compensation of executives. As it turns out, billions of dollars were being sent straight into the accounts of executives and corporate lawyers under the guise of “bonuses,” which lowered the potential money that could funnel into the accounts for pensions and bonuses for lower level employees. The company went out of business and declared bankruptcy. It’s been selling assets ever since, and guess where all that money is going to? Yup- straight to the same selfish executives, who continue to face scrutiny by both civilians and government today.
7. Siemens and Their Government Bribes
Siemens A.G. was once Europe’s biggest engineering company. Now, they’re recognized as untrustworthy and are attempting to rebuild their reputation. This is all because, in 2008, the company pleaded guilty to breaking U.S. anti-corruption laws surrounding bribery. The company had been involved in bribery since at least 2006, and they’d been bribing both governmental and private entities to win projects- thus making them the top engineering company and building their reputation on lies. The prosecuting U.S. attorney claimed that bribery must have been a standard practice within the organization, possibly since the mid-90s. Siemens used illegal and secret accounts to conceal the transactions, but it clearly didn’t pan out well. The company ended up paying $814 million to the German government and $800 million to the United States government for their crimes. Needless to say, they were seriously hurting for quite a while. Nowadays, they’re just attempting to rebuild what was once a golden reputation.
6. AIG Bailouts and Bonuses
Remember the recession in the late 2000s that seemed to slam every single American corporation in the wallet? This was early in Barack Obama‘s presidency, and he decided that, if American business and capitalism were to survive the economic crisis, the economy would need supplementary stimulation. So the big buyout happened, which not everyone was too fond of. People were even less fond of the decision when AIG, the American International Group, received their bailout and immediately planned to funnel the money (how much money? $165 million) into executive’s paychecks as bonuses. What’s worse is that the bonuses would be paying the execs who had just brought the company to the brink of its demise! The Obama Administration was, of course, infuriated, as were the constituents who paid for the bailout, as were the employees of AIG who weren’t getting bonuses and would soon be out of a job if the company kept running such corrupt operations.
5. Bre-X Lied About a Gold Mine
You may not have heard about this scandal when it occurred, but you likely know at least a little bit about the story now. The story of the struggling corporation bears an overwhelmingly striking resemblance to the recent movie starring Matthew McConaughey and Bryce Dallas Howard, Gold, even if producers insist the two share no similarities. However, they’re just about the same story. Matthew essentially plays the real life Bre-X culprit David Walsh, who believed that he and his geologist coworker had struck a gold mine. They told investors as much and the two were suddenly wealthy beyond their dreams. Well, turns out they hadn’t struck gold; they’d found something similar and intentionally manipulated the samples with gold shavings and salt to make it seem like they’d found gold, misleading investors. Their stock plummeted overnight. David Walsh suffered an aneurysm shortly after and his geologist buddy was the only one left to face criminal charges for the fraud.
4. Enron and Stock Inflations
If you know anything about the business world or have ever heard of any corporate scandal, you’ve probably heard about all of the mess surrounding Enron. But perhaps you don’t really know what happened- just that guys in fancy suits lied and conducted business poorly. You’re not wrong, but here’s the whole story: Enron hired Jeffrey Skilling, a man quite skilled indeed at finding loopholes and fudging the records. Skilling and his executive team intentionally made mistakes and falsely reported funds in order to hide billions of dollars in debt from failed contracts and projects- a prospect that is indeed highly illegal. After Enron’s stock shockingly plummeted overnight from $90.75 per share to less than a dollar, stockholders filed a $40 billion lawsuit against the company for lying and intentionally misleading them. Of course they won, and Enron declared bankruptcy shortly thereafter. Their story has since become a cautionary tale to all those investing in the stock market for the first time: always do your research.
3. Refco and Hundreds of Millions of Fake Money
Refco’s story is another kind of cautionary tale, perhaps one more intended for businessmen and corporate executives: do not lend too much trust in what your superior’s say. Just because they seem successful and collected on the surface doesn’t mean they know shit about what they’re doing. Refco’s CEO and chairman Phillip R. Bennett came out in 2005 saying he was taking a leave of absence from the company because he had hidden over $430 million in bad debts from the company’s auditors and investors. Whether he had done it single-handedly (an unlikely situation) or was just taking the fall for malpractice in the company is a bit unclear, but he took the blame on his shoulders nonetheless. The announcement triggered loads of investigations, lawsuits, and uncovered debts. Bennett is now spending extended time in prison and the company declared bankruptcy following the accounting frauds and after attempting to settle their numerous debts.
2. Marc Dreier and His Smooth Talk
Marc Dreier has a more interesting story. His is not one of the failure of an entire corporation or a globally known business, but of his own failures in his own business. Marc was an adept lawyer who developed an idea to hook investors. He’d get a baseline of investors to put their money into him, then pay some of each of their payments to each other under the guise of “returning investments.” The more people he got to invest in him, the more people he funneled the money back into- all the while, keeping a large portion for himself. Cool idea- except it’s known as a Ponzi scheme and it’s totally illegal. Marc professed when he was arrested for his crimes: “I recall only that I was desperate for some measure of the success that I felt had eluded me. I lost my perspective and my moral grounding and, really in a sense, I just lost my mind.” You sure did, Marc, but you have plenty of time to get your bearings together while spending your 20 years in prison.
1. Union Carbide
While many of the items on this list have been here for defrauding shareholders or concealing debts or committing crimes like bribery and corruption, this corporation hits towards the top of our list because what they did didn’t just cost a lot of people a lot of money- it cost lives. Union Carbide was an Indian pesticide company that was very profitable, perhaps partly due to the fact that their safety regulations were lax and their equipment and safety standards outdated. This led to tragedy in Bhopal, India, when leaks of chemicals in the plant not only exposed factory workers but surrounding shanty towns to harmful side effects and death. General estimates believe that around 8,000 people died within two weeks of the leak, and 8,000 or more have died since due to gas-related injuries or consequences. Though the company is still alive today, they still face scrutiny and have changed executive leadership in efforts to prevent any incident like this from ever occurring again.
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