What are Corporate Scandals 5 Biggest Corporate Scandals in History

Introduction

As long as they are humans, there are scandals. Sometimes scandals occur unintentionally, but most of the time scandals are on purpose. Scandals are going on in each and every corner of the world. It’s the greed and arrogance of the human that lead to the scandals. A man is mortal and wants all the luxuries and facilities in his life. But unfortunately, this is a universal truth that no one can achieve all his desires in this life. In this article, we will discuss about what are corporate scandals and the biggest corporate scandals of the history and their factors.

What is a corporate scandal?

A scandal is a disgrace moment. It is a symptom of public crises. There are many frauds and wrongdoings going on in every business, but these frauds become scandals when exposed to public. Most of the times, scandals involve more than one person. A scandal is said to be a corporate scandal when more than one member of the same company involved in the fraud. The first output of the scandal is disgrace and moral outrage of the company. Sometimes, unusual incidents like executive compensations are also considered as the scandals. Scandals are very significant in the reformation of the running systems. PhD dissertation writing services has the information about biggest corporate scandals of the history were the reasons to control the upcoming situations. Scandals are the best source to bring the problems to light. A company readily changes its behavior if its scandal goes viral.

Effects of biggest corporate scandals

Mostly, scandals produce a positive change in the behavior of the company. Scandal is the other name of the light on an issue. There are no more hidings in the shadows when a scandal is exposed. Sometimes, a scandal causes the whole constitution to get changed. Scandals are the best source of income for media. People always want to hear about scandals. But sometimes, continuous news of wrongdoing cause frustration among people. They already have so many problems related to personal and professional life and do not want to hear damaging news. There are some scandals that are hard to believe. They are said to be the biggest scandals of the history. As there is no worse creature on the earth, if a human goes violent.

5 biggest corporate scandals of the history

Scandals occur everyday everywhere in the corporations. But there are some scandals that can never be forgotten. These are termed as biggest corporate scandals because they affected the largest number of people and huge amount of money. Following list will elaborate their main features.

Hidings of Enron

Enron is an energy-based company. It is situated in United States of America. Enron scandal is considered as one of the biggest corporate scandals of all time. It started to appear in 2001. In the annual report of the company account, some analysts raised questions on the irregular entries of the company incomes and expenditures. SEC investigated about the ambiguities and founded that Enron was hiding billions of dollars in liabilities through special purpose entities. As the scandal revealed, the shares of the company fell from 90 US dollars to less than 1 dollar. Company had gone through bankruptcy, which is considered as the biggest bankruptcy of the history.

Uber scandal

Uber needs no introduction. Everyone knows about the travelling services of Uber. Uber has changed the structure of the taxi business. In recent years, the number of sexual harassment cases rises and got the attention of media as well. Uber was considered as the legal technology to evade the law enforcements. One of the biggest corporate scandals of Uber was Uber’s bro culture. Scandal got heat when the news regarding senior staff went viral. According to the news, they visited brothel in Seoul and made sexiest jokes. CEO Travis Kalanick had to resign after that scandal in June 2017. Image of the company damaged so much that even after spending half billion dollars, they didn’t get the lost status.

• Tyco Scandal 

Tyco International was an American company of security system. The CEO of the company Dennis Kozlowski, and CFO Mark Swartz were involved in a huge fraud. From their company, they stole the money around over $150 million. In the reports, they inflated the earning of the company by over $500 million and that was not a joke. With the help of stock sales as well as the unapproved loan, they successfully drew off the money. After some time, investigation was held when office of District Attorney of Manhattan raised certain questions for practices of accounting. Upon investigation, both of the persons sentenced to the prison of 8 to 25 years as a result of their fraud. The story didn’t end here. There was a class action suit against them. They were forced to pay $2.92 billion to investors and that’s how they got the real essence of ‘you reap what you sow.

• American International Group (AIG) Scandal 

There was an insurance firm, named as American International Group (AIG). This was a US multinational firm. It had 88 million customers in 130 countries and that made a huge number of people as their customers. Hank Greenberg was the CEO of the firm. He found guilty in 2005 for the manipulation of stock price when investigation wash held by SEC. According to that investigation, Hank Greenberg was involved in the fraud of $4 billion approximately. After the investigation, it was revealed that there was a huge game behind the scene. As revenues, loans were booked by the company. The company had the agreements with insurers and forced its clients to use them. It was also found that the company was involved in inflation of the share price of the company. The company asked the stock traders to do so.

As a result, the company was forced to pay the fine. It was asked to pay $1.64 billion to SEC as the outcome of their fraud. It was not the end. To a pension fund in Louisiana, the company also had to pay $115 million. Furthermore, $275 million was supposed to pay to three pension funds in Ohio and that’s how, the justice was found.

• Freddie Mac Scandal

Freddie Mac is a US federally-backed mortgage financing giant that misstated the earning of approximately $5 billion. There were different people involved in overstating the earnings in the books of the company. SEC investigation was held and the guilty people were fired. The company had to pay $125 million as a fine.

Conclusion

Scandals throw the lights on issues and frauds that are done by people at different levels. Above mentioned cases are among a few biggest corporate scandals in the history. Other than these, there’re many cases that make us surprised that how people and organizations get indulged in such frauds.