Professional Documents
Culture Documents
Enron This is the most popular of them all and is still being referred to even after 8 years. This scandal involved hiding debts, inflating revenues and corruption. It resulted to the displacement of more than 20,000 people, the death of Americas Most Innovative Company for six years in a row and the dissolution of one of the Big 5 global accounting firms (Arthur Andersen). It also gave rise to the passage of Sarbanes-Oxley and more rigorous auditing standards. Parmalat a company based in Italy, Parmalat used to be the biggest dairy company in Europe but it collapsed in 2003 and subsequently declared bankruptcy. The company went under for a variety of reasons: investment disasters; non-existent cash in bank; fake transactions; hidden debts and the use of derivatives and accounting fraud to hide these facts. These illegal acts were carried out worldwide, and they affected not only the company and its people but international financial institutions, as well. Waste Management one of the big companies which offers a comprehensive waste management and environmental services in the US. Unlike the first two, Waste Management still exists. The scandal? Inflating income by a whopping $1.7 billion by understating the depreciation expense of the company. WorldCom WorldCom is now known as MCI, Inc. and is part of the Verizon Communications group. The company emerged from bankruptcy in 2003. The allegations? Inflating total assets through capitalization of operating costs. The amount? Estimated to be around $11 billion. WorldComs Chapter 11 bankruptcy filing is second only to the Lehman Brothers in 2008 in the history of such filings in the US. Qwest Communications a telecommunications company providing services to 14 states in the US. The company still exists. In 2002, it was found out that the company engaged in fraudulent accounting practices resulting to the inflation of its revenues generated from its deals with Enron.
Health South Corporation, founded by Richard M. Scrushy in 1984, was a leading healthcare service provider based in Alabama, USA. The company operates in100 Inpatient Rehabilitation Hospitals and employs 22,000 people. In 2003, thecompanys scandal came into exposure revealing the overstatement of the companys income by and $1.4 billion to meet the investors expectations. It was also found that the company got engaged in fraudulent accounting practices from back in 1996, and in certain years the revenues was overstated by as much as 4700 percent.
Bank of Credit and Commerce International (BCCI) is based in Karachi, Pakistan and was founded in 1972. It was registered in Luxembourg, London by Aga Hasan Abedi. BCCI was a major international bank operating in 78 countries with 30,000 employees. It was the seventh largest private bank until 1991 when it got closed. BCCI was involved in the largest scandals in the financial history with more than $ 20-billion. More than the $13 billion funds in the bank are unaccounted. Other allegations imposed against the bank include bribery, money laundering, smuggling, the sale of nuclear technologies and support of terrorism etc.