Famous Corporate Scandals

Corporate law certainly doesn’t get as much face time in the papers and on TV as trial law does. Most of the job isn’t as glamorous—corporate lawyers are crossing the T’s and dotting the I’s on contracts and mergers, not defending someone’s innocence and right to freedom. But, there is a certain time when the obscurity of corporate law is dredged up to the surface for an eager public: during the fire and brimstone of a corporate scandal. Here are some of the more famous ones, and the corporate law and malfeasance involved.  

Halliburton

This giant company provides oil and gas equipment and services, and employs over 50,000 people. In 2003, it was alleged to have overcharged the Pentagon for services related to oil fields in Iraq. A legal watchdog group called Judicial Watch filed a suit against the company, including its former CEO and vice president of the United States, Dick Cheney. Halliburton argued that it had followed the generally accepted accounting principles for corporations.

Enron

Before its bankruptcy in 2001, this energy company employed tens of thousands and had its hands in the electricity, gas, and paper industries. This was before they fixed their books, boosted profits, manipulated the power market in two states, and bribed foreign countries into awarding them contracts. The Department of Justice, the SEC, and various congressional committees investigated the wrongdoings. Although Mike Koppler, the company’s ex-executive, pled guilty to two felony charges, the shareholders were the real losers; after the scandal came to light, the company’s stock dropped from nearly $100 a share to just pennies.

WorldCom

You’d think, with so many fancy lawyers and accountants, these firms could keep their books straight, but sadly it’s just not the case. This telecommunications company overstated its cash flow by nearly $4 billion, and they gave their founder a nice loan of $400 million that didn’t make it into their records. After an internal team of auditors uncovered the fraud, the SEC investigated, and the company filed bankruptcy. It turns out it was worth about $11 billion less than it had been valued.

Sources: