Scandals aren’t just about corporate scandals anymore. They also involve political scandals. Watergate, Tyco, and Enron are just a few examples. These scandals have changed the way the world does business. While you may not be familiar with all of them, there’s a good chance you’ve heard of them.
The Watergate affair is one of the most infamous political scandals in American history. It challenged the very notion of democracy and destroyed the public’s trust in political leaders. A break-in by Republican presidential aides prompted an unprecedented constitutional crisis second only to the Civil War, and led to the overthrow of President Nixon’s administration. The scandal involved illegal wiretapping, illicit fundraising, cover-ups, and destruction of evidence.
Watergate was first exposed by journalists Carl Bernstein and Bob Woodward. The scandal was part of a larger political context, a turbulent political era, and Nixon’s desire to discredit his political opponents. This misdeed, however, led to a slew of unintended consequences.
In May 1973, the Senate Watergate Committee began hearings on the scandal. The hearings were televised nationally. The testimony of several people, including Dean, helped prove that there was a connection between the burglary and the CREEP program. Also, the tapes revealed that the president had secretly taped all of his Oval Office conversations.
One of the greatest scandals in recent history involves Enron, a Houston-based energy company. In the wake of this scandal, Kenneth Lay, Enron’s CEO, resigned. The company’s board of directors is now on “the hot seat,” and a criminal investigation was opened by the Justice Department. It later formed a national task force, composed of federal prosecutors in several cities, to look into Enron’s business dealings. The investigation led to the disqualification of the company’s entire Houston office by U.S. Attorney General John Ashcroft.
The United States economy was experiencing its longest bull market in history at the time of Enron’s collapse. Many of Enron’s corporate executives were relatively young, and had never experienced the rigors of a prolonged bear market before. As a result, Wall Street demanded double-digit growth for virtually every business.
Enron was a Houston-based energy and commodities company that used accounting loopholes to hide billions of dollars of bad debt. This led to false earnings reports and the collapse of the company’s stock price. In addition, Enron executives misled the audit committee and the board of directors.
The Tyco scandal shook investor confidence. Until the scandal broke, Tyco was a blue chip company and considered a safe investment. Its products ranged from safety equipment to electronic components. The company was also one of the largest in the world prior to its collapse. The scandal exposed its executives, who allegedly used company funds to fund their own extravagant lifestyles.
In 2003, Tyco International was the subject of a massive accounting scandal. The company inflated its earnings by over $500 million. The CEO, Dennis Kozlowski, and CFO Mark H. Swartz lied to investors about the true value of the company’s stock and paid them with illegal loans. This led the SEC to investigate the questionable practices of Kozlowski and Swartz. In addition to being jailed, the scandal led to a class action lawsuit against the company and its former executives.
Kozlowski’s criminal charges include theft of over $600 million from Tyco International and the misuse of company funds. Kozlowski also abused Tyco loan programs for his own personal benefit, obtaining more than $270 million in loans. He used $12 million of the money for a personal art collection and borrowed $9 million for real estate in Boca Raton. The money was intended to help Tyco employees pay taxes on their company stock.
Enron’s accounting scandal
One of the greatest accounting scandals in the history of business took place in 2001, when the US energy, commodities and services company Enron filed for bankruptcy. The company had been falsely reporting its earnings for many years, and the scandal resulted in losses of $74 billion for shareholders. The company’s share price fell from $90 to under $1 in a single year. The scandal triggered a class-action lawsuit that ultimately led to the Enron bankruptcy.
When competition in the energy trading industry became fierce, Enron executives were forced to use questionable accounting practices to stay afloat. For example, they wrote unrealized future gains into their current income statements, which is known as mark-to-market accounting. This gave the company the appearance of higher current profits. Enron also moved some of its operations into special purpose entities, or SPEs, with third parties. These SPEs were later turned into dump sites for troubled assets.
Enron’s accounting scandal is particularly significant to new and experienced financial professionals alike. It illustrates why strong corporate governance is crucial, and how accounting policies must be followed properly to avoid devastating consequences for a business. It also cost the company’s workers pensions and other benefits, and forced the company to file for bankruptcy.
Clinton’s affair with Monica Lewinsky
Monica Lewinsky’s affair with former President Bill Clinton dominated the US news agenda in 1998. Although Clinton initially denied any relationship with Lewinsky, he later admitted to having sexual contact with her. The affair prompted House Republicans to impeach Clinton, but he was eventually acquitted. He remained in office until 2001. While many criticized her actions, Lewinsky maintained that her relationship with Clinton was consensual.
Monica Lewinsky’s affair with Bill Clinton is one of the most controversial scandals in history. The affair took place between a former president and an unpaid intern at the White House. The scandal has gained more attention recently because of the MeToo movement and the death of Lewinsky’s ex-wife, Linda Tripp. Although Bill Clinton has said that Lewinsky “paid a price,” Lewinsky herself has remained outspoken, speaking publicly about the humiliation she suffered during the affair. She is also set to star in a new Ryan Murphy television series.
Bill Clinton’s relationship with Monica Lewinsky becomes public and is the subject of several investigations. First, Independent Counsel Ken Starr submits a report to the House of Representatives, and the House votes to accept it. The House Judiciary Committee releases the first four-hundred-and-forty-five-page document, which includes Monica Lewinsky’s sexually explicit testimony.
Enron’s downfall has caused much pain and loss for the company’s employees and creditors. In December 2001, Enron filed for bankruptcy. The bankruptcy resulted in the loss of thousands of jobs, $60 billion in market value, and $2 billion in pension plans. Many people have lost everything because of the company’s mistakes.
A special committee of the company’s board of directors filed a 218-page report with the bankruptcy court, detailing how the company hid its losses. The report found that Enron executives had covered up nearly $1 billion in losses in the 12 months ending last September. In addition, the company’s executives had sold millions of dollars in Enron shares.
The downfall of Enron was the result of a combination of individual greed and corporate arrogance. The company was one of the biggest in the United States before its collapse, but its reputation worldwide was ruined by a culture of deceit and greed. In particular, CEO Jeff Skilling created a Performance Review Committee, which was widely known as the harshest employee ranking system in the country. The committee’s members were supposed to have been chosen based on their contribution to the company’s values, but the system encouraged a culture of greed.
The Enron scandal was one of the biggest financial scandals of all time. While many people blame Lay and Skilling for the scandal, there is no denying that Fastow was also involved. The former finance chief pleaded guilty to conspiring with his co-workers to manipulate Enron’s books to inflate profits. In return for his guilty plea, Fastow surrendered nearly $30 million in cash and property to the government. In exchange, he testified against Lay and Skilling and was sentenced to ten years in prison.
The conviction of former Enron executives and chief executive Jeffrey K. Skilling has been overturned by the U.S. Supreme Court. In a landmark ruling, the Supreme Court ruled that jury instructions were vague enough that a jury could convict him without a criminal intention. However, Skilling’s wife has a difficult time coping with the news. She is expected to remain in her home while being monitored by electronic surveillance.
Andersen’s conflict of interest was particularly egregious. Enron hired Andersen to do audits, but that firm’s Houston office overruled their recommendations. The company also forced them to hire other firms to help with their accounting duties. In addition, the company lost billions in pension funds and stock prices.
The Tyco International scandal of 2002 was one of the most infamous corporate scandals in history, and the two former executives, Dennis Kozlowski and Mark Swartz, were convicted and sentenced to prison. Both men were convicted of embezzling millions of dollars from Tyco while lying to the public about Tyco’s finances. Moreover, PricewaterhouseCoopers, Tyco’s auditors at the time, failed to detect the fraud.
The scandal exposed the traits of corporate raiders that characterized Tyco executives. The company was headquartered in West Windsor, New Jersey, and had 250,000 employees. The company had an annual revenue of $40 billion and was once a major conglomerate in the world. Yet, the executives of Tyco used corporate funds to pay their lavish lifestyles, even though the company was struggling to pay off its debts.
The Tyco case is the most notorious corporate scandal in history. This scandal focused on unethical business practices within the security systems industry. Now known as Johnson Controls International plc, Tyco was a massive security systems organization that engaged in questionable financial transactions. The executives, including Dennis Kozlowski, engaged in illegal financial transactions and conspired to conceal the illegal activities, enlisting the help of lower-ranking executives and employees.