Top 10 Corporate Scandals

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 isocyanine 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 was 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 were 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.

6. Xerox

American-based company Xerox is known for its document management solutions which were

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.

3. WorldCom

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.

2. Parmalat

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.

1. Enron

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.