A list of global examples of Corporate Fraud/Midemeanors
1). Olympus Corporation
In late 2011, Olympus fired its newly appointed British president, precipitating a scandal that wiped 75% off the company’s stock market valuation. The scandal culminated in admission by the company that some of its board members had engaged inone of the biggest and most durable loss-concealing scamsin the history of corporate Japan.
When Michael Woodford took over as CEO of Japanas Olympus Corp. last year, he could hardly foresee that within a year he would uncover a massive fraud at the company, investigate it, be fired for investigating it, try to make acomebackto take control of Olympus and see its Chairman arrested for being a part of the fraud. Such is the life of Mr. Woodford.
According to Bloomberg, Tsuyoshi Kikukawa, and four others were arrested for suspected violation of Japanas Financial Instruments and Exchange Act. Woodford was fired on October 14 and the Tokyo headquarters were raided by Japanese officials in search of information related to hiding investment losses of the company since the 1990as. Those arrested are accused of inflating takeover costs of Gyrus Group Plc (traded on London Stock Exchange) and three other Japanese companies. The overall effect of the scheme was to boost the value of goodwill and then write it down over years to cancel out losses that were kept off Olympusas balance sheet. The fraud timeline virtually covers the 10 years in which Kikukawa was Chairman (he resigned last year).
2). Xerox Accounting Scandal
The SECchargedthat the change in how Xerox applied accounting principles not only violated GAAP, but was intentionally designed to fool Wall Street into believing the new management team was working wonders, exceeding Wall Street’s expectations nearly every quarter from 1997 through 1999.
The SEC further charged that theaccounting irregularitiesincreased fiscal year 1997 pretax earnings by $405 million, 1998 pretax earnings by $655 million, and 1999 pretax earnings by $511 million (in each quarter of each year, earnings wereinflatedjust enough to exceed the Wall Street’s First Call Consensus EPS).
The SEC also alleged that Xerox’s senior managementwas awareof, either by directing or approving, the accounting actions that were taken for the purpose of what management called “closing the gap” to meet revenue and profit goals.