The world biggest corporate frauds ever

The world's biggest corporate frauds ever
Satyam
B Ramalinga Raju’s startling admission of padding profits and cooking up bank balances at Satyam Computer has erupted into what can be described as India’s biggest corporate fraud to date. However, this is only a part of the big horror show.Fraud, in fact, is not a new phenomenon in the world of business – whether Indian or global. From Enron to WorldCom to Tyco, corporate fraud continues to plague businesses and hurt consumer trust. This is one show which just goes on and on, and refuses to end.We look at some of the biggest corporate frauds ever:

Enron
As a result of the massive fraud at Enron, an energy company based in Houston, Texas, shareholders lost tens of billions of dollars. Many Enron executives, Enron’s accounting firm and certain bank officials were indicted. >Andrew Fastow, Enron's former finance chief, testified that many of the banks' transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow. Kenneth Lay, the founder of Enron whose spectacular implosion in 2001 lead to one of the biggest fraud cases in history, was convicted of fraud for duping investors over the health of Enron’s finances before it plummeted into bankruptcy. Prosecutors accused Lay of pocketing over 40 million pound of investors' money, and Lay was charged with 11 counts of securities fraud.

WorldCom
Financial executives at WorldCom exercised various methods of hiding expenses for a period of more than two years between 2000 and 2002. They delayed reporting some expenses and misrepresented others to give investors the appearance of growth during secretly hard times. In June 2002, Securities and Exchange Commission (SEC) lawyers filed civil fraud charges against WorldCom for what would later be estimated at over $9 billion worth of accounting errors. WorldCom’s Chapter 11 filing later on was the largest bankruptcy filing in American history, and the SEC accused the company of misrepresenting earnings to the tune of $11 billion. Investors lost $200 billion as a direct result of the bankruptcy. WorldCom’s rise and fall epitomizes the corruption of the telecom sector during the boom.

Cendant
Walter Forbes, the former chairman of Cendant, masterminded an accounting fraud that was considered at the time it was discovered - 1998 - to be the largest on record. Investors lost $19 billion when Cendant’s stock fell after the disclosure. This fraud was later eclipsed by the scandals at Enron and WorldCom.The Cendant case also resulted in a record payment for settling a lawsuit brought by shareholders who had lost money in a fraud. Cendant paid $2.85 billion to settle, and its auditor, Ernst & Young, paid $335 million.

Daewoo Group
Kim Woo-chong, the founder and former chairman of defunct conglomerate Daewoo Group, was in May 2006 sentenced to 10 years in prison on charges of embezzlement and accounting fraud. The Seoul Central District Court also ordered Kim, 69, to pay back more 21 trillion Korean won ($22 billion), according to press reports. Kim was charged about a year ago with accounting fraud, illegal financing and diverting funds out of the country. The court found Kim guilty of 20 trillion won of accounting fraud, 9.8 trillion won of illegal financing and sending 19 trillion won out of the country illegally. He was also convicted of embezzling $100 million. At the time of its downfall, Daewoo Motor was the biggest corporate failure in South Korean history.

Tyco
In 2002, three former top Tyco International executives were indicted on fraud charges. Former CEO L. Dennis Kozlowski, former CFO Mark Schwartz, and former legal counsel Mark Belnick allegedly issued themselves low or no interest loans, which they then forgave through an unauthorized bonus program. They were accused of concealing their illegal actions by keeping them out of the accounting books and away from the eyes of shareholders and Board members. Tyco later on replaced its CEO and most of its Board in an attempt to purge the company of fraud and restore its reputation. It agreed to pay almost $3 billion to settle class-action suits brought by investors. It had also earlier paid $50 million to settle a suit brought by the SEC.

Parmalat
massive financial scandal involving Italy’s largest food company Parmalat underscored the fact that corporate fraud was not just an American problem. With the disappearance of about $10 billion in declared assets, the scandal was one of the largest in corporate history. Parmalat collapsed in December 2003 under 14 billion euros ($27 billion) of debt, after uncovering a 4 billion euro hole in its accounts. Some dubbed the episode ‘Europe's Enron’. It is currently estimated that at least $17 billion of Parmalat funds have simply disappeared and cannot be accounted for.

more@http://economictimes.indiatimes.com/quickiearticleshow/msid-3974228.cms
Satyam scam India's top 5 accounting scandals

Source:ET