Introduction
The United States is a haven for business. The country has a powerful economy that fosters trade and investment. Unfortunately, some unscrupulous individuals have taken advantage of the naivety of some investors to engage in dubious financial activities. This has resulted in some of the worst financial scandals ever witnessed in the country.
The Scandals
The Panic of 1792 hit the United States in its infancy. The main players in the scandal included William Duer, George Washington, and Alexander Hamilton (Lund). Duer used the opportunity to corner the market. He bought all the existing shares with borrowed money and used them as collateral. He tried to establish a rival bank which led to the liquidation of his holdings. His friend, Alexander Hamilton attempted to intervene to contain the financial damage (Lund). The Ponzi scheme is another major financial scandal that hit the United States. The player was Charles Ponzi who created an âinvestment companyâ aimed at expanding his scheme. The American people invested millions of dollars into the company hoping to earn higher interest rates (Lund). The initial investors were paid their dues, but the new ones lost all their investments. The scheme was uncovered by the authorities who shut it down. Ponzi was imprisoned.
In 1921, the Teapot Dome scandal hit the United States of America. The players were President Warren Harding and Albert Fall (Lund). The Interior Secretary, Albert Fall, awarded the drilling rights to some private firms while ignoring competitive bidding (Lund). He accepted bribes worth $7 million in the process. The Senate Committee uncovered his scandalous dealings when he failed to explain his new net wealth (James). Hitler Defaults came in 1933 as a result of the Versailles Treaty that ended World War I in 1919. The parties responsible were Adolf Hitler, the Wall Street bankers, and Franklin Delano Roosevelt (Lund). The German president, Adolf Hitler declined to pay the war reparations that Germany had paid using bonds. The Bonds found themselves on Wall Street and became worthless.
Eron Bankruptcy also tainted the United States’ corporate environment. The responsible persons were Jeffrey Skillings, Andre Fastow, and Ken Lay (Lund). Enron was named the country’s most innovative company for six years in a row by generating over $101 billion by 2001. In reality, the revenue had been generated by planned accounting fraud. It resulted in limited liability with special purpose entities where Enron hid its liabilities. The scandal was uncovered by Sherron Watkins, the whistleblower, who revealed it to the authorities (Lund). In the Madoff Investment Scandal, Bernie Madoff ran a Ponzi scheme based on falsifying digits and defrauding new investors. Due to the unexpected 2008 financial crisis, investors requested to withdraw their money (Lund). Madoff’s sons realized the fraud and turned their father into the authorities.
The Lehman Brothers Collapse was perpetuated by Dick Fuld, Hank Paulson, and Timothy Geithner. It is responsible for the US financial crisis and was recognized as the largest in history due to the loss of $691 billion after the purchase of the sub-prime loans (James). The losses incurred rendered the company unsound. The scandal was uncovered after the buyer could not be found when the company became bankrupt. The ImClone Systems Insider Trading was played by Martha Stewart. The company’s stock dropped after one of its products, Erbitux, failed to meet the Food and Drug Administration’s approval (Lund). Most of the executives were found guilty of having participated in insider trading.
The Barring Bank Collapse was orchestrated by Nick Leeson. He kept his losing trades using a secret account. His losses piled to about $1.3 billion (James). The scandal was uncovered due to the collapse of the bank in 1995. The Waste Management Scandal occurred in 1998. The company reported $1.7 billion of fake revenue. They falsely prolonged their depreciation time on the balance sheets (Lund). The new chief executive officer scrutinized the books only to note the fraud.
Conclusion
Given the above discussion, the corporate image of the United States has been tarnished by these scandals. The government has made a stance in mitigating such fraud by issuing the harshest penalties for the criminals. Such scandals create a loss of trust by investors and adversely affect ant nation’s GDP and therefore need to be eliminated.
Works Cited
James, Geoffrey. âTop 14 Financial Frauds of All Time.â CBS News. 2011. Web.
Lund, Brian. âTop 10 Financial Scandals of All Time.â AOL Finance. 2014. Web.