A corporate scandal can occur any time there is evidence of unethical behaviour, negligence or third-party interference that impacts a company’s reputation.
As we will see, this can include evidence of ‘creative’ accounting, dodgy business practices, data breaches or anything that damages the environment. Here are ten of the biggest corporate scandals of recent times — ranked according to notoriety.
Top 10 biggest corporate scandals
1. Enron scandal
The Enron scandal is undoubtedly one of the most famous corporate scandals of all time.
The situation started in early 2001, when analysts questioned the accounts presented in the company’s previous annual report. These accounts used a variety of irregular procedures, which made it difficult to work out how the company was making money — despite it apparently having a foothold in energy, commodities and telecoms among other industries. The SEC began to investigate and discovered that Enron was hiding billions of dollars in liabilities through special-purpose entities (companies it controlled), which enabled it to appear profitable even though it was actually haemorrhaging cash.
The company’s share price fell from $90.56 to under a dollar as the crisis unfolded, with Enron forced to file for what was then the biggest Chapter 11 bankruptcy in history.
2. Volkswagen emissions scandal
The Volkswagen (VW) emissions scandal — also known as ‘emissionsgate’ and ‘dieselgate’ — started in September 2015, when the US Environmental Protection Agency (EPA) announced that it believed VW had cheated emissions tests.
It turned out that the company had been fitting what some industry commentators described as ‘defeat devices’ to its diesel cars, which included software that would detect when the cars were undergoing laboratory testing and turn on controls to reduce nitrogen emissions. The cars would then appear to comply with the agency’s standards but, in some cases, were actually emitting up to 40 times the nitrogen dioxide limit when driving on the road.
This discovery led to investigations worldwide, with some estimates suggesting the scandal affected up to 11 million cars.