7 Biggest Corporate Scandals in the World

A corporate scandal can have very negative impacts on a company, as well as on the economy of a country. While the economy will recover eventually, some businesses can never get back on their feet after having been involved in a scandal.

Corporate scandals revolve around fraud, corruption, bribery, data breaches, or bad business practices that show disregard for employees, customers, or the environment. Of course, greed is often the motivation of those who are responsible for the incidents that turn into scandals when they are uncovered.

With the help of corporate investigation services, these white-collar crimes get uncovered and publicizied, shocking the world at large. Here are 7 of the biggest corporate scandals that happened in recent times:

Scandal #1: Bernie Madoff’s Ponzi scheme

A Ponzi scheme is a fraudulent investment scheme in which investors are convinced to invest, with the promise that they will get high returns on their investments. However, their money is used to pay older investors who are still waiting on their promised returns, and, of course, to line the pockets of the person who designed the scheme.

Bernie Madoff was arrested for such a scheme in 2008. For many years, he had been defrauding the clients of Bernard L Madoff Investment Securities LLC, for a total of at least $65 billion. He has been sentenced to 150 years in prison.

Scandal #2: Enron Corporation accounting fraud

Enron Corporation accounting fraud is also one of the biggest corporate scandals in recent times. Enron Corporation, an energy company formed in 1985, became the largest seller of natural gas in North America in 1992. It used to be seen as a very good company to invest in, one that seemed innovative and wealthy.

However, Enron’s CEO and former CEO used a method called mark-to-market to hide their financial losses, and to fool their investors into thinking Enron was a stable company.

When the accounting fraud was uncovered, the share price of Enron fell from more than $90 to $0.50, and the company was forced to file for bankruptcy in December 2001.

Scandal #3: Facebook and Cambridge Analytica data privacy scandal

Even though many people around the world are still using Facebook today, a large data privacy scandal hit the social networking giant in 2018, when it was uncovered that Global Science Research had been gathering the data of about 87 million Facebook users, and selling it to Cambridge Analytica without the users’ consent.

The consulting firm then used this stolen data for political advertising, as disclosed by a former employee. Following the scandal, Mark Zuckerberg had to face hearings with the US Congress and the European Union.

Scandal #4: Deutsche Bank spying scandal

Deutsche Bank AG is a German investment bank and financial services company. The bank was at the center of a spying scandal when it was revealed that somewhere around 2001 to 2007, it had been spying on some of its critics, including investors as well as a former media executive.

The bank hired an independent law firm to investigate these spying incidents, but their report was never made public. The bank has since then been involved in a few other controversies, including an alleged involvement with a Danish bank in a money laundering scandal.

Scandal #5: HealthSouth accounting scandal

HealthSouth Corporation, which is now called Encompass Health Corporation, is a provider of post-acute healthcare services. In March 2003, it was revealed that the company’s chairman and CEO, Richard Scrushy, had instructed his senior employees to falsify the company’s earning reports, inflating them to satisfy investors and to control the price of stocks.

This accounting fraud had been going on since 1996, and HealthSouth had embezzled $1.4 billion. The CEO responsible for this accounting scandal was fired, and the company managed to avoid filing for bankruptcy and to recover from this crisis.

Scandal #6: Equifax security breach

Equifax, an American multinational consumer credit reporting agency, announced it had been a victim of a massive security breach in September 2017. Hackers stole data that included names, social security numbers, addresses, and birth dates of 147.9 million of Americans, plus many more consumers around the world.

Equifax’s response to the security breach, which was one of the largest crimes related to identify theft, was highly criticized. Many questioned why the announcement was made in September, since the breach was discovered in July.

Scandal #7: BP oil spill

BP is a British multinational oil and gas company that was operating the Deepwater Horizon, a floating drilling rig. On April 20, 2010, an explosion destroyed the platform and caused a large oil spill in the Gulf of Mexico, which is still seen as one of the largest environmental disasters in America.

BP initially downplayed the incident, claiming the spill was not as bad as some were saying, and it took months for them to find a solution to contain it. Many people were criticizing the company’s response to the spill, and they had to pay to repair the damage they had caused.