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20 Huge Companies that Have Been Accused of Massive Fraud

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What could the German automotive manufacturer Volkswagen possibly have in common with the international governing body of association football, FIFA? Similarly, what connects the dots between British retail giant Tesco and Japanese camera maker Olympus? If you guessed “fraud”, give yourself a pat on the bank. As it turns out, some of the biggest companies in the world have been routinely indulging in shady practices, creative accountancy, and downright dishonesty for years. Keep reading to find out more about 20 huge companies that have been accused of massive fraud.

1. BAE Systems

British defense, security, and aerospace company BAE has been plagued by allegations of fraud since 1989. One of the most serious cases levied against them involves the use of corrupt practices to sell arms to various countries, including Chile, Czech Republic, Romania, Saudi Arabia, South Africa, Tanzania, and Qatar. According to the Serious Fraud Office, BAE made a series of payments via an intermediary to line the pockets of amenable foreign officials. In February 2010, BAE agreed to pay criminal fines of US$400 million to the US and £30M to the UK after being convicted of felony conspiracy.

2. Bank of Credit and Commerce International

In 1990, the Bank of Credit and Commerce International (BCCI) came under fire from Price Waterhouse for reporting "false or deceitful" transactions on its accounts, and "(colluding) with major customers to misstate or disguise the real purpose of significant transactions". As the Guardian reports, things just went from bad to worse for the disgraced corporation, and by July 1991, the Bank of England had found enough evidence of fraud on a monumental scale to close down the beleaguered bank for good. The story didn’t end there: in 1997, shipping tycoon Abbas Gokal was given a 14-year jail sentence and a $3million fine for orchestrating a mammoth $1.2 billion fraud alongside various BCCI officials.

3. Enron

In 2001, the world was hit with one of the biggest accounting scandals of all time. The energy trader Enron had for years been hiding its huge debts by simply removing them from its balance sheet. When the debts were finally revealed, the company collapsed, bringing $75bn of shareholder funds (and unsurprisingly, its auditor Arthur Anderson) down with it. Over the course of the next decade, Enron would be forced to repay its creditors $21.7 billion.

4. Tesco

It may be Britain’s biggest retailer, but as it turns out, it’s also a seriously big fraudster. As the Guardian reports, 2013 was a shockingly bad year for the retailing giant… although not if its profit sheet was to be believed. In a huge miscalculation, Tesco overstated its profits by £263million, leading to a formal criminal investigation by the Serious Fraud Office. The upshot of the investigation was a huge shakeup at the top, with 8 executives suspended (and three charged with criminal fraud), a $162 million fine, and $2bn being wiped from Tesco’s market value.

5. Olympus

Burying losses for 13 years takes a lot of hard work and some seriously creative accountancy, but that’s exactly what Japanese camera maker Olympus managed to do. In 2011, Olympus held its hand up to hiding its losses by selling on bad assets to other companies and then buying those same assets back under the guise of huge “advisory” or transaction fees. The process allowed the losses to eventually be posted with their true nature cunningly disguised. Despite the company losing 7 of its executives and downsizing operations by 40%, it clearly didn’t learn its lesson; in 2016, it was involved in yet another scandal, this time revolving around the $600 million in kickbacks it had paid over the previous decade.

6. Tyco

Dennis Kozlowski was known in his circle for his notoriously lavish lifestyle, which extended to acquiring multiple million-dollar properties, throwing a $2 million birthday party for his wife (complete with an ice sculpture of Michelangelo’s David urinating Stolichnaya vodka), and buying a $6,000 shower curtain. While his salary as CEO of Tyco International may have afforded him a certain amount of luxury, people began to suspect something was up- and they were right. For several years, Kozlowski and Tyco’s CFO Mark H Swartz had been siphoning off millions of dollars from the security systems company, leading to an incredibly high-end lifestyle and, ultimately, 25 years in prison.

7. Theranos

For a while, Elizabeth Holmes was the college dropout done good, hailed by USA Today as the “next Steve Jobs” for her innovative work in creating Edison, a commercially ready portable blood analyzer that could perform lab tests for peanuts. As it turns out, she was less Steve Jobs, more world-class fraudster. After the Wall Street Journal ran an expose on Holmes’ company, Theranos (which included reports from many employees voicing their doubts about Edison’s functionality), Holmes’ blood testing license was revoked, and she was issued with a $50000 penalty. She was also barred from holding an executive position at a public company for 10 years and forced to return 19 million of the company’s shares.

8. Siemens AG

In 2005, German manufacturer Siemens AG came under scrutiny from Italy, Liechtenstein Switzerland, and the US when allegations emerged that the company was bribing officials in order to win bids. Siemens was found guilty of, amongst other things, paying $40 million in fines to win a $1 billion contract to make national insurances cards in Argentina and a further $20 million to build power plants in Israel. The outcome of the investigation involved a fine of around $1.6 billion (the largest in history at the time), the dismal of it its chairman and CEO Heinrich von Pierer, and the implementation of a series of new anti-corruption policies.

9. Volkswagen

The Volkswagen Emissions Scandal can be traced back to 2015 when the EPA issued German car manufacturer Volkswagen with a notice of violation of the Clean Air Act. Within days, regulators in numerous countries opened investigations into the emission discrepancies that suggested Volkswagen may have been tampering with their vehicles in order to pass government emission tests. As it turned out, they were; as the BBC notes, the scandal went all the way to the top, with CEO Martin Winterkorn not only being aware of what his engineers were doing but actively participating in the ongoing cover-up. Volkswagen was ordered to cough up $2.8 billion, while Winterkorn was charged with fraud and conspiracy.

10. Wells Fargo

Well Fargo’s history of fraudulent activities goes back years. In 1981, an assistant operations officer, Lloyd Benjamin "Ben" Lewis, was found to have orchestrated one of the biggest embezzlements in history after he was discovered to have written numerous debit and credit receipts to benefit several boxing promoters. In 2009, the bank was ordered to pay $125 million to subprime borrowers after it was found guilty of institutionalized racist practices. A year later, it admitted to having failed to report suspected money laundering by drug traffickers, while between 2011- 2017, it faced a multitude of lawsuits for its dubious mortgage servicing practices, inadequate risk disclosures, excessive overdraft fees, tax avoidance, violations of New York credit card laws, connections to the NRA, and, perhaps most infamously of all, creating 1.5 million checking and savings accounts and 500,000 credit cards that its customers knew nothing about.

11. Cendant

In 1998, Arthur Anderson (the same auditor that was implicated in the Enron scandal) discovered massive irregularities in the bookkeeping at business and consumer services company, Cendant. The business had recently formed further to the merger of CUC International (CUC) and Hospitality Franchise Services (HFS), and it was the shady practices of CUC which would result in one of the biggest financial scandals of the 1990s. After top execs Walter Forbes and Kirk Shelton were discovered to have massively inflated the company’s revenue by $500 million, the former was sentenced to 12 years in prison, while the latter was sentenced to 10.

12. WorldCom

Arthur Anderson shows up yet again with this next addition to our list. In the early 2000s, the auditing company turned up hints of irregularities in the books of the telecommunications company, World Com. After some further probing, it turned out the company had been hiding its huge losses behind internal transfers and false operating expenses. The end result of their devious behavior? Jail for both the CFO and CEO and enforced bankruptcy for the company.

13. Columbia/ HCA Medicare

In 1994, Hospital Corporation of America and Columbia Healthcare Corp merged to form a joint venture that included the operation of 192 hospitals. 3 years later, the FBI and IRS had a little merger of their own, joining forces to raid the company’s offices after allegations emerged of Medicare fraud. The investigation ended shortly after with the resignation of CEO Rick Scott (who, fun fact, would later reemerge as the governor of Florida), and a $1.74 billion fine for the company.

14. FIFA

In 2015, soccer was rocked by the news that FIFA was being indicted by the FBI on allegations of racketeering, fraud, and various other charges. As well as standing accused of accepting bribes in exchange for broadcasting rights to big games, it was also alleged the body had been offering countries the chance to host international games for the right amount of money. The scandal forced a complete shake-up of the organization after many of the US’s largest organizations demanded reform.

15. Toshiba

Yet another accounting scandal to add to the many already on our list comes by way of electronic conglomerate, Toshiba. In September 2015, the company held its hands up to grossly inflating its earnings by nearly $2 billion over a 7-year period. As Fortune notes, “Toshiba had a corporate culture in which management decisions could not be challenged. Employees were pressured into inappropriate accounting by postponing loss reports or moving certain costs into later years.” While Toshiba managed to survive the scandal, CEO and President Hisao Tanaka didn’t, resigning shortly after the findings were published.

16. Valeant

Who would have thought a major pharmaceutical company would be capable of some underhand dealings? In October 2015, short-seller Andrew Left accused Valeant of artificially inflating its sales through its “secret division”, the specialty pharmacy company, Philidor. An investigation by the SEC followed… as did a 90% plummet in Valeant’s stock price.

17. Bernard L. Madoff Investment Securities LLC

2008 was a bad year for Bernie Madoff. After spending years tricking investors out of $64.8 billion through Bernard L. Madoff Investment Securities LLC (ostensibly a securities firm but as it actually turned out, the largest Ponzi scheme in history), Madoff was finally turned into the police by his own sons, the day after he finally owned up to them about his shady practices. His sentence? 150 years in prison and $170 billion in restitution.

18. Polly Peck

In October 1990, the offices of the electronics, food and textile company Polly Peck were raided by the UK Serious Fraud Office after allegations of fraud and financial irregularities emerged. Stock price fell, its CEO Asil Nadir fled the country (eventually to return to clear his name, only to be slapped with a 10-year jail sentence instead), and the UK began the long process of reforming company law.

19. Bre-EX

After the company claimed to have found an enormous gold deposit at Busang, Borneo, the world and its wife began buying up shares in Canadian based company, Bre-Ex. As it turned out, the gold resource was an elaborate fraud, leading to one of the biggest stock scandals in Canadian history and the biggest mining fraud case of all time.

20. Barings Bank

Barings Bank employee Nick Leeson was one of the early 1990s leading lights… until it was discovered he’d been trading futures and signing off on his own accounts. Further to the court case against Leeson (and several other employees who were found to have been similarly engaged), the bank’s London directors were disqualified, and in 1995, Barings collapsed after suffering losses of £827 million (the equivalent of £1.2 billion in today’s money).

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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