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by ajithreddy1997@outlook.com
WHAT IS CORPORATE SCANDLE?
 Corporate scandals refer to illegal and
unethical actions done by the people
employed in the corporate sector.

 Generally top level employees in the

organization are involved in corporate
scandals.

 Like Promoters, Directors, Managers …..etc.

What are the Causes of Corporate Scandals?

 Greed

 Lack of morality

 Lack of Transparency

 Loopholes in law
WHAT ARE THE TYPES OF CORPORATE
SCANDLES?
 Falsification of Accounts
 TAX evasion
 Others
Over invoicing
Under invoicing
Showing false representation
ex: volks wagen
CORPORATE SCANDALS RELATING TO ACCOUNTING
Top worst accounting scandals:

COMPANY YEAR AMOUNT

WASTE MANAGEMENT 1998 $1.7billion
COMPANY
ENRON ENERGY SAVING 2001 Share holders
COMPANY lost $74billion
WORLDCOM COMPANY 2002 $3.8billion
TYCO SCANDLE 2002 $150million
SATHYAM COMPANY 2009 $1.5Billion
AMERICAN INC 2005 $3.9billion
COMPANY
FREDDIE MAC 2003 $5Billion
LEHMAN BROTHERS 2008 $50Billion
OLYMPUS SCANDAL 2011 $1.7billion
WASTE MANAGEMENT SCANDLE(1998)

COMPANY Hosten based.

• Publicly traded waste management company

WHAT HAPPENED

• Reported 1.7 billion fake earnings

KEY PERSONS

• Founder/CEO/chairman: Dean L Buntrok &

other top level mgt
• auditors : authors Anderson
 •
• The company falsely increased the
How they
depreciation time length of the
did
property & plant and equipments.

•
How they • A new CEO & management team
caught got a doubt on uneven rise of
profits and they checked

• Settled a suit for $457 million

Penalties
• Auditor penalty $7million

IMPACT: The share price of company reached peak stage because of

showing huge profits

After the scam revealed share price drastically went down

 ENRON SCANDAL (2001)

• Housten based commodities, energy

COMPANY and sevice corporation

WHAT • 1.Share holders loss $74 billion

2.Thousands of employees lost their
HAPPENED jobs and retirement accounts

KEY • CEO : Jeff skilling

PLAYERS FORMER CEO: Ken ley
How they
• Kept huge debts of balance sheet.
did

How they
• Turned in by internal whistle blowers
caught

• CEO Ley died before serving time

Penalties • Former Skilling got 24 years in prison
WORLDCOM SCANDAL

• Tele communication company; now MCI

COMPANY

• Inflated assets by $11Billion

WHAT HAPPENED. • resulted 30000 lost jobs
• $180billion losses for investors

HOW THEY • By internal audit.

CAUGHT
How they did?