In a very short amount of time, the company which still stated to have US$ 101 billion earnings in 2001, suddenly shocked the world financial economy by declared its bankruptcy. This tragedy was known to be the biggest corporate collapse in the U.S. history. There was an extremely complex accounting scandal in the company that involved the top executives and several big entities. Before the bankruptcy, Enron businesses were seemed so
On July 22, 2002, MCI WorldCom (hereafter known as WorldCom) filed for Chapter 11 bankruptcy, the largest filing in U.S. History at the time (Beltran, 2002). It is clear that senior-level executives were holding the reigns throughout the elaborate and, what one analyst called, “incredibly elegant (Simons, 2002),” scam, intended to defraud investors and Wall Street. To someone not familiar with accounting processes, the case becomes difficult to understand. The executives were falsifying accounting entries, both creating accounting line items that did not exist and counterfeiting actual entries to inflate earnings (Boatright, p.44). The 1990s proved to be an excellent decade for WorldCom, particularly after the 1997 purchase of MCI, which was the largest national long-distance phone carrier at the time, and resulted in the largest corporate merger in the history of the United States.
However, on December 10, 2008, Bernie Madoff told his two sons that the impressive growth was fraudulent, which named “Ponzi scheme”. This fraud was known as one of the largest in the history, and also influenced the stability of global stock markets, and as a result, the subprime mortgage crisis happened in the United States. However, as the auditor of Madoff Securities, Friehling & Horowitz Accounting firm should also be responsible for this fraud because it holds nearly $15 million investment funds in the account of Madoff. What’s more, David Friehling was the only professional auditor in the firm instead of auditing team to serve Madoff, which impaired the independence of the auditors. Harry Markopolos conducted one page length report based on the specific problems of fraud.
GORDON RAMSAY, the foul-mouthed television chef, has publicly admitted for the first time that his restaurant empire came close to collapse earlier this year. His accountants drew up plans to put the business into administration and at one point Ramsay owed the tax-man more than £7m. “It was the worst bollocking ever . . .
Case 37: American International Group (AIG) and the Bonus Fiasco Synopsis: In September 2008 American International Group started to fall under the financial crisis in America. The United states enter in a recession in the beginning of 2008 but it didn’t hit until the end of that year. Then all big companies started falling and going bankrupt. They decide to help stop the collapse of the America economy by presenting a bailout package of companies in need. The government created a 750 billion bailout package for American companies that are going under.
Case Study Compensation Controversies at AIG American International Group (AIG), a behemoth insurance and financial services company, became notoriously famous in early 2009 for the payment of $165 million in retention bonuses to employees in its Financial Products unitthe business unit that was instrumental in bringing AIG to its knees and necessitating the infusion of many billions of dollars in United States government bailout money, beginning in September 2008. Although the near collapse of AIG was significantly influenced by “soured trades entered into by the company’s Financial Products division,” the operations of other AIG units, such as the financial gambles of its 2,000-employee Investments unit, helped cripple the company as well. Rapidly mounting financial losses had been occurring in the Financial Products unit for some time. Consequently, AIG decided to unwind the business and shut it down. In early 2008, employees in the Financial Products unit were asked to remain with the company through the unit’s shutdown and, essentially, to work themselves out of a job.
Summary of Bigger than Enron In 2001, the nation was rocked by the collapse of Enron, a multibillion-dollar corporation that employed thousands of people and had affiliations right up to and including The White House itself. With all of the fraud and mismanagement that took place under the gilded roof of Enron, the question arises as to the involvement of others in the scandal, not the least of who is the firm of Arthur Andersen. In the 1990s, more than 700 U.S. companies were forced to correct misleading financial statements as a result of accounting failures, lapses, or outright fraud. Together with Enron -- the largest corporate bankruptcy in U.S. history -- these failures have cost investors an estimated $200 billion. What went wrong?!
On September 11, 2001 (9/11), four days later, terrorists attacked the World Trade Center. This attack had thrown the world into chaos, and made the global economy unstable. The stock market dropped 20 percent, and GE lost US$80 billion in market capitalization just within a week of Immelt taking charge. At any rate, Immelt knew the mission would not be easy, and there were difficulties that he had to overcome. To examine the difficulties that faced Immelt, there are two important
Within his first five years as CEO he closed 73 plants, sold 232 businesses and eliminated 132,000 workers from GE. There were opposing views to his tactics, many supported him and many did not agree with him. Many people called him "Neutron Jack" because as he rolled out his vision, GE had mass layoffs of many employers that had been loyal to the company for a long time. Somehow, Welch did fulfill the company's primary economic responsibilities to society by turning it into an exceptionally profitable conglomerate. Shareholders and managers became rich off of Welch's vision.
The enron collapse So how does a company go from reporting $100 billion dollars in sales when they a really on the verge of bankruptcy? The enron collapse So how does a company go from reporting $100 billion dollars in sales when they a really on the verge of bankruptcy? Kenichia White April 12, 2013 Kenichia White April 12, 2013 The broad purpose of this paper is to investigate the Enron Scandal from a variety of perspectives. Enron was the seventh largest company by revenue in the United States. In contrast, they are the largest corporate bankruptcy in American history.