Going back to the time when the concept of business was established, there had always been ethics scandals and violations serving as precedent for rules and regulations. But they paled in comparison to some of the largest ethics violations that have happened in the last 10, 20, or 30 years, reaching tens of billions of dollars. You may have heard them all before, especially Enron, but what about some of the more unfamiliar?
Here are nine of the biggest ethics scandals in business history:
1. General Electric Scandal
The case of General Electric is one of the latest ethical breaches in business. Once a stalwart of market stability, GE shares crashed amid reports of the corporation being “a bigger fraud than Enron.” Ostensibly, GE had been engaged in accounting fraud worth $38 billion, resulting in an eventual bankruptcy as this accounts for nearly half of its market share.
The whistleblower, Harry Markopolos, warned that the company was concealing $29 billion in long-term care losses.
2. Bernie Madoff Scandal
Bernie Madoff the largest Ponzi scheme in world history, amounting to $65 billion. But what made the case of Madoff fascinating was the number of clients he defrauded and who these people were. It was remarkable to see who some of the smartest and most well-known individuals and organizations make the list, from the New York Mets to Steven Spielberg to former Governor Eliot Spitzer.
3. Enron Scandal
Enron the it-girl of the dot-com era with shares topping $90 before cratering to under a buck. The energy company was consumed with wealth, power, and intelligence. That did not prevent the company from being slain by the sword of bankruptcy, thanks to an accounting fraud made by its accounting firm Arthur Anderson.
Ultimately, if you parked your cash in Enron or you worked for the company, you experienced a wipeout during one of the biggest ethical scandals in business history.
4. Bre-X Scandal
Not all Canadians are honest and kind. Bre-X proved that back in the 1990s. The mining company announced in 1993 that it had discovered huge volumes of gold, sending its share price through the roof. Four years later, analysts learned that the gold they claimed to have found was fake, resulting in the company’s collapse in 1997.
5. Deutsche Bank Scandal
Deutsche Bank is one of the most troubled financial institutions in the world, yet it is still standing. One of its most famous cases of ethics scandals happened a few years ago when the company was caught in tax fraud and spying scandal involving thousands of clients – German and foreign – and employees (executive and entry-level). It was so bad that the German government enacted new business laws to protect the privacy of workers and clients.
6. Siemens Scandal
If you want further evidence of how corrupt the Olympic Games are, then take a trip back to 2004.
Siemens, a German industrial manufacturing firm, was caught in a bribery and corruption scandal with the Greek government over its security systems provided to the Athens Summer Olympics. It was learned that Siemens officials had bribed Greek politicians with as much as $100 million. Siemens still around today, but it has not removed this blackeye nearly 20 years later.
7. Adelphia Scandal
Adelphia, the Pennsylvania-based cable company and fifth-largest in the United States 20 years ago, filed for bankruptcy in 2002. Why? Internal corruption that accumulated $2.3 billion in debt due to an intricate cash-management system that allocated funds to other family-owned businesses.
The founders, John and Timothy Rigas, and other executives were found guilty of securities violations and were sentenced to 20 years in prison.
8. Martha Stewart Scandal
Martha Stewart is one of the most successful businesswomen in the world, generating millions in revenues from her businesses, books, publications, and endorsements. This is why it was shocking that she was indicted on several counts of securities fraud and obstruction of justice because of an insider trading incident in 2002. Surprising to no one, Stewart returned to prominence in 2012 and regained control of her business.
9. Barings Bank Scandal
This is one of the biggest ethical scandals in business, demonstrating that all it takes is just one person to demolish an empire.
Barings Bank was considered one of the oldest banks in the city of London. Founded by the German Baring family, the bank had quite the history, financing the Napoleonic Wars and handling the Queen’s personal bank account. This rich history ended in 1995 when an employee, Nick Leeson, lost the company $1.3 billion in speculative investing over a three-year period. He was able to get away with it for so long by manipulating records.
A company may be the biggest and richest in the world, but all it takes is one incident to bring it all down. This was evident with Barings Bank and Martha Stewart. When you are worth billions, it is a lot easier to eventually get caught since you always have the authorities breathing down your neck.
When a business rises to the top of a stock exchange and then spirals into an abyss of obscurity, executives need to ask: Was it all worth it? Well, perhaps if they don’t get caught and get to live in their villas in Lake Como, Italy then the answer might be yes!