Everybody loves a scandal, be it about politicians, actors or corporations. Business scandals whether centered around corruption, bribery, fraud, or other greed tend to have a significant impact on the economy. Many companies fail at some point for one reason or another, but other companies are so spectacularly corrupt that they make headlines.
The business world has been rocked by one scandal after another in the past 15 years. Enron brought the first shock. The energy trading firm was a virtual cash machine, until its accounting fraud was revealed.The company filed for bankruptcy protection in December 2001, laying off thousands. And employees who had invested their retirement funds in Enron stock had the money disappear. The scandal also led to the demise of the accounting firm Arthur Andersen.
Then, another scandal hits the headlines. Executives at Tyco were accused of using the company's treasury as a personal piggy bank. There were lavish homes and bonuses which included a $2 million birthday party for the wife of CEO Dennis Kozlowski. The party featured an ice sculpture in the form of Michelangelo's David, a laser show and a performance by Jimmy Buffett.
In 2003 Martha Stewart was indicted by a grand jury on charges related to insider trading. The following year, a jury found her guilty of conspiracy, obstruction of justice and making false statements.
One of the biggest scandals in recent years is the epic fraud committed by Bernard Madoff, who's Ponzi scheme took tens of billions of dollars and left investors with a fraction of their savings. In 2009 Madoff pleaded guilty to 11 federal felonies and is currently serving 150 years, the maximum allowable sentence.
And then, with flaws exposed at Bear Sterns, Lehman Brothers, Washington Mutual, Fannie Mae, Freddie Mac and AIG in 2008, we had a 777-point one-day plunge in the Dow (plus plenty of dismal trading days that followed) and more than 7 million job losses. This scandal not only made headlines, it also affected the world economy in such a deep and profound way that we are still recovering from it to this day.
To read about these and other business scandals, check out these books: