List of corporate collapses and scandals
A corporate collapse typically involves the insolvency or bankruptcy of a major business enterprise. A corporate scandal involves alleged or actual unethical behavior by people acting within or on behalf of a corporation. Many recent corporate collapses and scandals have involved false or inappropriate accounting of some sort (see list at accounting scandals).
List of a few major corporate collapses
The following list of corporations involved major collapses, through the risk of job losses or size of the business, and meant entering into insolvency or bankruptcy, or being nationalised or requiring a non-market loan by a government.
|Medici Bank||Florence||1494||Banking||Owned by the Medici family, it ran up large debts due to the family's profligate spending, extravagant lifestyle, and failure to control the managers, their bank went insolvent.|
|Mississippi Company||France||Sep 1720||Colonialism||Scottish economist John Law convinced the French government to support a monopoly trade venture in Louisiana. He marketed shares based on great wealth, which was highly exaggerated. A speculative bubble grew and then collapsed, and Law was expelled.|
|South Sea Company||Sep 1720||Slavery and colonialism||After the War of Spanish Succession, the UK signed the Treaty of Utrecht 1713 with Spain, ostensibly allowing it to trade in the seas near South America. In fact, barely any trade took place as Spain renounced the Treaty, however this was concealed on the UK stock market. A speculative bubble saw the share price reach over £1000 in August 1720, but then crash in September. A Parliamentary inquiry revealed fraud among members of the government, including the Tory Chancellor of the Exchequer John Aislabie, who was sent to prison.|
|Dutch East India Company||31 December 1799||Colonialism||This huge early publicly listed multinational company founded in 1602 fell victim of declining markets in the late 18th century, internal corruption and excessive distribution of dividends (in excess of its profits), and finally Anglo-Dutch wars. It was nationalised by the Batavian Republic in 1796 but nevertheless closed down at the end of 1799.|
|Overend, Gurney & Co||June 1866||Banking||After Samuel Gurney's retirement, the bank invested heavily in railway stocks. It went public in 1865, but was badly affected by a general fall in stock prices. The Bank of England refused to advance money, and it collapsed. The directors were sued, but exonerated from fraud.|
|Friedrich Krupp AG||1873||Steel, metals||Krupp's business over-expanded, and had to take a 30m Mark loan from the Preußische Bank, the Bank of Prussia.|
|Danatbank||13 July 1931||Banking||At the start of the Great Depression, after rumours about the solvency of the Norddeutsche Wollkämmerei & Kammgarnspinnerei, there was a bank run, and Danatbank was forced into insolvency.|
|Allied Crude Vegetable Oil Refining Corp||16 Nov 1963||Commodities||Commodities trader Tino De Angelis defrauded clients, including the Bank of America into thinking he was trading vegetable oil. He got loans and made money using the oil as collateral. He showed inspectors tankers of water, with a bit of oil on the surface. When the fraud was exposed, the business collapsed.|
|Herstatt Bank||26 June 1974||Banking||Settlement risk. Counterparty banks did not receive their USD payments, where Herstatt had received DEM earlier, prior to government forced liquidation.|
|Carrian Group||1983||Real estate||Accounting fraud. An auditor was murdered, an adviser committed suicide. The largest collapse in Hong Kong history.|
|Texaco||13 April 1987||Oil||After a legal battle with Pennzoil, whereby it was found to owe a debt of $10.5 bn, Texaco went into bankruptcy. It was later resurrected and taken over by Chevron.|
|Qintex||1989||Real Estate||Qintex CEO Christopher Skase was found to have improperly used his position to obtain management fees prior to the $1.5 billion collapse of Qintex including $700m unpaid debts. Skase absconded to the Spanish resort island of Majorca. Spain refused extradition for 10 years during which time Skase became a citizen of Dominica.|
|Lincoln Savings and Loan Association||1989||Banking||Financial institution that went bust following the Keating Five scandal.|
|Polly Peck||30 Oct 1990||Electronics, food, textiles||After a raid by the UK Serious Fraud Office in September 1990, the share price collapsed. The CEO Asil Nadir was convicted of stealing the company's money.|
|Bank of Credit and Commerce International||5 July 1991||Banking||Breach of US law, by owning another bank. Fraud, money laundering and larceny.|
|Nordbanken||1991||Banking||Following market deregulation, there was a housing price bubble, and it burst. As part of a general rescue as the Swedish banking crisis unfolded, Nordbanken was nationalised for 64 billion kronor. It was later merged with Götabanken, which itself had to write off 37.3% of its creditors, and is now known as Nordea.|
|Barings Bank||26 Feb 1995||Banking||An employee in Singapore, Nick Leeson, traded futures, signed off on his own accounts and became increasingly indebted. The London directors were subsequently disqualified, as being unfit to run a company in Re Barings plc (No 5).|
|Bre-X||1997||Mining||After widespread reports that Bre-X had found a gold mine in Indonesia, the stories were found to be fraudulent.|
|Livent||November 1998||Entertainment||In November 1998, Livent sought bankruptcy protection in the US and Canada, claiming a debt of $334 million. Garth Howard Drabinsky, co-founder of Livent, was convicted and sentenced to prison for fraud and forgery. A judgment has been obtained against Deloitte & Touche LLP in respect of Deloitte's negligence in conducting the audit for Livent's 1997 fiscal year.|
|Long-Term Capital Management||23 Sep 1998||Hedge fund||After purporting to have discovered a scientific method of calculating derivative prices, LTCM lost $4.6bn in the first few months of 1998, and required state assistance to remain afloat.||$3.6 billion|
|Equitable Life Assurance Society||8 Dec 2000||Insurance||The insurance company's directors unlawfully used money from people holding guaranteed annuity rate policies to subsidise people with current annuity rate policies. After a House of Lords judgment in Equitable Life Assurance Society v Hyman, the Society closed. Though never technically insolvent, the UK government set up a compensation scheme for policyholders under the Equitable Life (Payments) Act 2010.|
|HIH Insurance||15 March 2001||Insurance||In early 2000, after increase in size of the business, it was determined that the insurance company's solvency was marginal, and a small asset price change could see the insurance company become insolvent. It did. Director Rodney Adler, CEO Ray Williams and others were sentenced to prison for fraudulent activity.|
|Pacific Gas and Electric Company||6 April 2001||Energy||After a change in regulation in California, the company determined it was unable to continue delivering power, and despite the California Public Utility Commission's efforts, it went into bankruptcy, leaving homes without energy. It emerged again in 2004.|
|One.Tel||29 May 2001||Telecomms||After becoming one of the largest Australian public companies, losses of $290m were reported, the share price crashed, and it entered administration. In ASIC v Rich the directors were found not to have been guilty of negligence.|
|WorldCom||21 July 2001||Telecomms||After falling share prices, and a failed share buy back scheme, it was found that the directors had used fraudulent accounting methods to push up the stock price. Rebranded MCI Inc, it emerged from bankruptcy in 2004 and the assets were bought by Verizon.|
|Enron||28 Nov 2001||Energy||Directors and executives fraudulently concealed large losses in Enron's projects. A number were sentenced to prison.||$63.4 billion|
|Chiquita Brands Int||28 Nov 2001||Food||Accumulated debts, after a series of accusations relating to breaches of labour and environmental standards. It entered a pre-packaged insolvency, and emerged with similar management in 2002.|
|Kmart||22 Jan 2002||Retail||After difficult competition, the store was put into Chapter 11 bankruptcy proceedings, but soon re-emerged.|
|Adelphia Communications||13 Feb 2002||Cable television||Internal corruption. The Directors were sentenced to prison.|
|Arthur Andersen||15 June 2002||Accounting||A US court convicted Andersen of obstruction of justice by shredding documents relating to Enron scandal.|
|Parmalat||24 Dec 2003||Food||The company's finance directors concealed large debts.|
|MG Rover Group||15 April 2005||Automobiles||After diminishing demand, and getting a £6.5m loan from the UK government in April 2005, the company went into administration. After the loss of 30,000 jobs, Nanjing Automobile Group bought the company's assets.|
|Bayou Hedge Fund Group||29 Sep 2005||Hedge fund||Samuel Israel III defrauded his investors into thinking there were higher returns, and orchestrated fake audits. The Commodity Futures Trading Commission filed a court complaint and the business was shut down after the directors were caught attempting to send $100m into overseas bank accounts.|
|Refco||17 Oct 2005||Brokering||After becoming a public company in August 2005, it was revealed that Phillip R. Bennett, the company CEO and chair, had concealed $430m of bad debts. Its underwriters were Credit Suisse First Boston, Goldman Sachs, and Bank of America Corp. The company entered Chapter 11 and Bennett was sentenced to 16 years prison.|
|Bear Stearns||14 Mar 2008||Banking||Bear Stearns invested in the sub-prime mortgage market from 2003 after the US government had begun to deregulate consumer protection and derivative trading. The business collapsed as more people began to be unable to meet mortgage obligations. After a stock price high of $172 a share, it was bought by JP Morgan for $2 a share on 16 March 2008, with a $29bn loan facility guaranteed by the US Federal Reserve.|
|Northern Rock||22 Feb 2008||Banking||Northern Rock had invested in the international markets for sub-prime mortgage debt, and as more and more people defaulted on their home loans in the US, the Rock's business collapsed. It triggered the first bank run in the UK since Overend, Gurney & Co in 1866, when it asked the UK government for assistance. It was nationalised, and then sold to Virgin Money in 2012.|
|Lehman Brothers||15 Sep 2008||Banking||Lehman Brothers' financial strategy in from 2003 was to invest heavily in mortgage debt, in markets which were being deregulated from consumer protection by the US government. Losses mounted, and Lehman Brothers was forced to file for Chapter 11 bankruptcy after the US government refused to extend a loan. The collapse triggered a global financial market meltdown. Barclays, Nomura and Bain Capital purchased the assets which were not indebted.|
|AIG||16 Sep 2008||Insurance||Out of $441 billion worth of securities originally rated AAA, as the US sub-prime mortgage crisis unfolded, AIG found it held $57.8 billion of these products. It was forced to take a 24-month credit facility from the US Federal Reserve Board.|
|Washington Mutual||26 Sep 2008||Banking||Following the sub-prime mortgage crisis, there was a bank run on WaMu, and pressure from the FDIC forced closure.|
|Royal Bank of Scotland Group||13 Oct 2008||Banking||Following the takeover of ABN-Amro, and the collapse of Lehman Bros, RBS found itself insolvent as the international credit market seized up. 58% of the shares were bought by the UK government.|
|ABN-Amro||Oct 2008||Banking||After a takeover battle between Banco Santander, Fortis and RBS, ABN-Amro was split up and divided between the banking consortium. Fortis and RBS were found to be heavily indebted due to the sub-prime mortgage crisis. Fortis was split and the Dutch part of Fortis was taken under government ownership by The Netherlands, thus reinstating the company in ABN-AMRO. The Belgian part was taken over by BNP-Paribas. RBS was taken under government ownership by the UK.|
|Bernard L. Madoff Investment Securities LLC||Dec 2008||Securities||Tricked investors out of $64.8 billion through the largest Ponzi scheme in history.
Investors were paid returns out of their own money or that of other investors rather than from profits.
Madoff told his sons about his scheme and they reported him to the SEC. He was arrested the next day.
|Bankwest||2008||Banking||Following the purchase of Bankwest by the Commonwealth Bank Of Australia (CBA), there have been calls for a royal commission specifically into the conduct of bank following allegations made that the CBA engineered defaults of Bankwest customers in order to profit from clawback clauses under the purchase agreement.|
|Nortel||14 Jan 2009||Telecomms||Following the 2007-2008 financial crisis, and allegations over excessive executive pay, demand for products dropped.|
|Anglo Irish Bank||15 Jan 2009||Banking||After the financial crisis of 2007-2008, the bank was forced to be nationalised by the Irish government.|
|Arcandor||9 June 2009||Retail||After struggling to maintain business levels at its brand names Karstadt and KaDeWe, Arcandor sought help from the German government, and then filed for insolvency.|
|Schlecker||23 Jan 2012||Retail||After continual losses mounting from 2011 Schlecker, with 52,000 employees, was forced into insolvency, though continued to run.|
|Dynegy||6 July 2012||Energy||After a series of attempted takeover bids, and a finding of fraud in a subsidiary's purchase of another subsidiary, it filed for Chapter 11 bankruptcy. It emerged from bankruptcy on 2 October 2012.|
|China Medical Technologies (CMED)||27 July 2012||Medical technology||In 2009, an anonymous letter alleging possible illegal and fraudulent activities by management since 2007 was sent to KPMG Hong Kong, then CMED's auditor, and investigated by law firm Paul Weiss Rifkind Wharton & Garrison. Since 27 July 2012, pursuant to an Order by the Grand Court of the Cayman Islands, CMED has been under the control of Joint Official Liquidators. Post-bankruptcy filing, CMED's liquidator found itself probing an alleged $355 million insider fraud. In March 2017, the U.S. Department of Justice criminally indicted the CMED founder and CEO, as well as former Chief Financial Officer, charging them with securities fraud and wire fraud conspiracy for stealing more than $400 million from investors as part of a seven-year scheme.|
|Banco Espírito Santo (BES)||3 August 2014||Banking||An audit performed in 2013, for a capital raise performed in May 2014, uncovered severe financial irregularities and a precarious financial situation of the bank. In July 2014, Salgado was replaced by economist Vítor Bento, who saw BES in an irrecoverable situation. Its good assets were bought by Novo Banco, a vehicle founded by Portugal's financial regulators for that purpose, on August 3, which hired Bento as CEO, while its toxic assets stayed in the "old" BES, which got its banking license revoked by Portugal's regulators.|
|Dick Smith (retailer)||5 January 2016||Retail||On 5 January 2016, the retailer collapsed and was placed into receivership. McGrathNicol were appointed as administrators by the company's board and Ferrier Hodgson appointed by the company's major creditors National Australia Bank (NAB) and HSBC Bank Australia.|
List of scandals without insolvency
- Australia and New Zealand Banking Group scandal involving misleading file notes in the Financial Ombudsman Service (Australia) presented to the Victorian Supreme Court.
- Australia and New Zealand Banking Group allegations of racial bigotry toward billionaire businessman Pankaj Oswal and his wife. Court was presented with emails where an ANZ staff member comments to ANZ CEO Mike Smith: "We are dealing with Indians with no moral compass and an Indian woman as every bit as devious as PO (Mr Oswal)."
- Australia and New Zealand Banking Group toxic culture. Court case where allegations were made by ex-employees that the bank's senior management tolerated drugs and strip clubs.
- Australia and New Zealand Banking Group alleged manipulation of the Australian benchmark interest rates. ANZ is currently being pursued by the Australian Securities and Investments Commission, which filed an originating process in the Federal Court of Australia against ANZ in March 2016.
- BAE Systems bribery scandal related to the Al-Yamamah arms deal with Saudi Arabia
- Bristol-Myers Squibb accounting scandal
- Brown & Williamson, for chemically enhancing the addictiveness of cigarettes, becoming the leading edge of the tobacco industry scandals of the 1990s, eventually resulting in the Tobacco Master Settlement Agreement
- Chevron-Texaco Lago Agrio oil field pollution scandal
- Commonwealth Bank of Australia facts uncovered that showed the insurance arm of the bank denied life insurance policy holders despite having legitimate claims, resulting in calls for a Royal Commission into the Australian insurance industry.
- Commonwealth Bank Of Australia provision of unsuitable financial advice to a large number of customers between 2003 and 2012 and continuious delay in providing compensation to victims.
- Compass Group, bribed the United Nations in order to win business
- Corrib gas controversy Kilcommon, Erris, Co. Mayo, Ireland
- Deutsche Bank, spying scandal
- Deutsche Bank Libor scandal, agreed to a combined US$2.5 billion in fines
- Duke Energy
- El Paso Corp.
- Fannie Mae, underreporting of profit
- Firestone Tire and Rubber Company, part of the General Motors streetcar conspiracy, labor controversies, Firestone and Ford tire controversy
- FlowTex, the largest corporate scandal in German history
- Forced labour under German rule during World War II, financial enrichment by several major companies
- Ford Pinto, fuel tank scandal
- Financial Ombudsman Service (Australia) scandal involving misleading file notes in the Financial Ombudsman Service (Australia) presented to the Victorian Supreme Court.
- Global Crossing
- Guinness share-trading fraud
- Hafskip's collapse
- Halliburton overcharging government contracts
- Harken Energy Scandal
- HealthSouth reporting exaggerated earnings
- Hewlett-Packard spying scandal
- Hospital Corporation of America
- Kerr-McGee, the Karen Silkwood case
- Kinney National Company financial scandal
- Lernout & Hauspie accounting fraud
- Lockheed bribery scandal in Germany, Japan, and Netherlands
- Livedoor scandal
- Luxembourg Leaks. Luxembourg under Jean-Claude Juncker's premiership had turned into a major European centre of corporate tax avoidance.
- Marsh & Mclennan
- Merck Medicaid fraud investigation
- Morrison-Knudsen scandal. Led to William Agee's ouster
- Mutual-fund scandal (2003)
- Nugan Hand Bank
- Olympus Scandal
- Options backdating involving over 100 companies
- Panama Papers International. Leak of hundreds of thousands of confidential documents pertaining to the bank accounts and companies held by politicians, High-net-worth individuals and other people, some in off-shore tax havens. The focus was Panama law firm Mossack Fonseca.
- Paradise Papers leak
- Peregrine Systems corporate executives convicted of accounting fraud
- Phar-Mor company lied to shareholders. CEO eventually sentenced to prison for fraud and company eventually became bankrupt
- Qwest Communications
- RadioShack CEO David Edmondson lied about attaining a B.A. degree from Pacific Coast Baptist College in California
- Reliant Energy
- Rite Aid accounting fraud
- Royal Dutch Shell overstated its oil reserves twice, it downgraded 3,900,000,000 barrels (620,000,000 m3), or about 20 percent of its total holdings.
- S-Chips Scandals, Singapore
- Satyam Computers, India
- 7-Eleven Australia. Allegations of bullying tactics, underpayment of wages and entitlements.
- Siemens Greek bribery scandal, involving cases of bribery on behalf of Siemens towards the Greek Government
- Société Générale, derivatives trading scandal causing multibillion-euro losses
- Southwest Airlines, violations of safety regulations
- SunTrust Banks, "claims of shoddy mortgage lending, servicing and foreclosure practices."
- Tyco International, executive theft and prison sentence
- Union Carbide, the Bhopal disaster
- ValuJet Airlines, loading live oxygen generators into cargo hold of passenger jet causing fatal crash
- Volkswagen emissions violations, fraud in diesel motors pollution measurements
- David Wittig "looting" scandals
- Xerox alleged accounting irregularities involving auditor KPMG, causing restatement of financial results for the years 1997 through 2000 and fines for both companies
- List of bank failures in the United States (2008–present)
- List of largest U.S. bank failures
- List of sovereign defaults
- List of stock market crashes and bear markets
- List of UK businesses entering administration during 2008–2009 financial crisis
- List of accounting scandals
- List of defunct airlines
- Agency cost
- Center for Audit Quality (CAQ)
- Corporate crime
- Global settlement
- Subprime mortgage crisis
- White collar crime
-  NSWSC 1229
- Jerry W. Markham, A financial history of modern U.S. corporate scandals: from Enron to reform
- Cohen, Jeffrey R., Ding, Yuan, Lesage, Cédric and Stolowy, Hervé (August 1, 2008), Managers' Behavior in Corporate Fraud, SSRN 1160076CS1 maint: Multiple names: authors list (link)
- 'Chiquita files bankruptcy under pre-arranged plan' (11 November 2001) USA Today
- Penelope Patsuris (26 August 2002), The Corporate Scandal Sheet, Forbes
- "The questions the Financial Ombudsman needs to answer". ABC News. Retrieved 2016-04-02.
- "ANZ Displayed Racial Bigotry to Oswals Court Hears".
- "Emails Expose Bankers Racist Insults About Oswals".
- "ANZ Accused Racial Bigotry Against Indian Billionaire Couple".
- "ANZ facing $30m lawsuit over 'toxic' culture of sleaze". NewsComAu. Retrieved 2016-01-17.
- "Corporate watchdog investigation on bank rate rigging nears end". ABC News. Retrieved 2016-02-26.
- Walley, Jeff. "Herald Sun". Retrieved 26 February 2016.
- ASIC, Originating Process available at, http://download.asic.gov.au/media/3563864/originating-process-asicvanz.pdf
- "Calls for Royal commission into 'disgraceful' CommInsure". ABC News. Retrieved 2016-03-07.
- "CBA compensation to victims of financial scandal 'a joke'". ABC News. Retrieved 2016-01-17.
- Appleby, Julie (December 18, 2002). "HCA to settle more allegations for $631M". USA Today.
- "Luxembourg tax files: how tiny state rubber-stamped tax avoidance on an industrial scale". The Guardian. Retrieved 12 November 2014.
- "The Panama Papers".
- Ferguson, Adele. "Horror at 7-Eleven: no compensation and no good will for franchisees".
- Cumming, Chris (October 11, 2013). "SunTrust to Pay $1.5B to Settle Mortgage Claims". American Banker. 178 (F340). p. 13. Retrieved August 7, 2017 – via EBSCO. (Registration required (help)).
- The Corporation, a documentary and book examining and criticising the corporation and its history.
- Conspiracy of Fools, Enron documentary.
- Enron: The Smartest Guys in the Room, Oscar-nominated Enron documentary.