Business Accounting Scandals: What Happened? When a company deliberately withholds or distorts information to make it appear healthy and successful to its shareholders, it has committed corporate or shareholder fraud. Corporate fraud can affect a few or more individuals, depending on the extent to which employees are aware of their company's financial practices. Company directors can rig financial records or hide inappropriate expenses. Corporate fraud can be devastating, not only for outside investors who have made stock purchases based on false information, but for employees who, through the 401k, have invested their retirement savings. in company shares.
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Some recent corporate accounting scandals
have consumed the news media and ruined hundreds of thousands of lives of employees who have invested their retirement in companies that defrauded them and other investors. The nuts and bolts of some of these accounting scandals are as follows:
WorldCom has admitted to adjusting accounting records to cover operating costs and present a positive front to shareholders. Nine billion dollars of discrepancies were discovered before the telecommunications company went bankrupt in July 2002, says Postal Code Rennes. One of the hidden expenses was $ 408 million given to Bernard Ebbers (CEO of WorldCom) in undisclosed personal loans.
At Tyco, shareholders were not informed
of the $ 170 million in loans taken out by Tyco's CEO, CFO and general counsel. The loans, many of which were contracted without interest and subsequently written off as benefits, were not approved by Tyco's compensation committee. Kozlowski (former CEO), Swartz (former CFO) and Belnick (former legal director) face ongoing investigations from the SEC and the Tyco Corporation, which now operates under the direction of Edward Breen and a new board administration.
At Enron, investigations against multiple acts of fraudulent behavior have been uncovered. Enron has used illegal loans and partnerships with other companies to cover its multibillion-dollar debt. He presented erroneous accounting records to investors and Arthur Anderson, his accounting firm, began shredding the incriminating documentation weeks before the SEC could begin its investigations. Money laundering, wire fraud, mail fraud and securities fraud are just a few of the indictments that Enron executives have faced and will continue to face as the investigation continues. continues.
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