Businesses and corporates are the lifelines of the present day economy. They continue to play an important role in driving up economic growth and deliver value for money to their customers. However, it would be equally right to say that corporate scams and frauds too have become an everyday issue these days. Losses running into billions as well as misuse of the savings of the investors throw light on the darker side of the corporates. Moreover, it points out the non-compliance with the business ethics and following the path of treachery. Thus, it becomes essential that we as consumers behave in prudent manner. Moreover, government should enforce stringent laws on the corporates in the larger interest of the investors. Here’s a list of the top 10 corporate scams that have hit the headlines and indeed serve as an eye-opener for the general public and investors:

10. Phar-Mor

Phar-Mor operated around 300 stores in the United States in 1992. It primarily ran a successful chain of drugstores which sold drugs and medicines under heavy discounts to its customers. Though it used to sell huge amounts of merchandise, it basically carried out its operations on a policy of little profits. However, in 1992 its owners were accused of cash embezzlement as the top executives attempted to conceal company’s losses and transferred around $10 million to the World Basketball League. Consequently, the company filed for bankruptcy in the later years as borrowings mounted up.

9. AIG

AIG or the American International Group faced a crisis situation in 2008. Its credit rating was degraded below “AAA” levels as it was unable to accumulate funds to discharge its debts and other borrowings. Initially the major insurance company in America got involved in a series of scams related to financial accounting and disclosure of facts. Consequently it faced liquidity crisis in late 2008 and it eventually led to its downfall.

8. Fannie Mae and Freddie Mac

The company witnessed its downfall in 2008. It was one of the many events during the sub-prime crisis in the United States. Both the companies owned almost $12 trillion worth mortgages in 2008 in the United States. However, they were placed under conservatorship by the Federal Housing Finance Agency as the housing loans crisis could then have hurt the global economy adversely.

7. Daewoo

Daewoo was the second largest company in Korea prior to its collapse in 1999. The losses amounted to millions of dollars and also became a major political crisis in Korea. There were several reasons for the downfall of this large firm. While some believed that the funds were poorly managed within the company, others had a belief that burgeoning labour unrest and global financial crisis were responsible for its collapse. Low quality products and services were another cause of deep concern for the company. Despite this, expenditures were increasing at an alarming rate.

6. Barlow Clowes International Ltd.

Barlow Clowes International Ltd was a British company which witnessed its collapse in 1988 due to an accounting scandal. It was basically a bond management company in which people invested to buy government bonds and thus avail tax benefits. However, in 1980’s it was disclosed that one of the owners Peter Clowes had spent millions of money of the company’s clients on private luxuries such as expensive yachts, cars etc. As per reports, the scam ran into 100 million dollars of the client’s money.

5. Worldcom

Worldcom filed for bankruptcy in the United States on July 21, 2002. The accounting fraud revealed that the company tried to conceal vital facts related to the financial health of the firm such as profits, overall debt etc. Moreover, it painted a false picture of company’s health and manipulated the records. As per official reports, over $11 million were involved in this corporate scam.

4. Satyam Computers

Satyam computers remained the biggest corporate scam in the history of Indian telecom sector. The fraud amounted to over Rs. 7000 crores as the CEO of the company, Ramalinga Raju, manipulated company’s records. After the accounting audit, it was found that the bank figures were inflated, outstanding debts and other borrowings were not disclosed and the company even overstated the number of existing employees in the company to over 10,000.

3. Sub-prime mortgage crisis

This crisis roped in several large firms and financial institutions of the United States as the scam hogged the entire limelight in 2008. Primarily it was a nationwide banking emergency during the U.S. recession. Reduced household spending and increasing housing loan defaulters were the chief characteristics of the sub-prime crisis. As a result, it had a detrimental effect on the health of banks and other financial institutions.

2. Bernie Madoff

Bernie Madoff was an American stock broker who ran a “Ponzi” scheme to extract money from his clients and then manipulated profits and returns on the money invested. He was sentenced to 150 years of imprisonment owing to the corporate fraud he committed. As per officials, the total fraud amounted to over $17 billion.

1. Enron

Enron scandal was revealed in 2001 as the Enron Corporation became bankrupt. It also led to the collapse of Arthur Anderson which was one amongst the top 5 accounting firms in the world until the scam hit the headlines in 2001. The financial statements did not disclose the facts in entirety to the investors and other stake holders. It was alleged that the executives had indeed manipulated the company’s records. As such, the series of events led to its bankruptcy and the stock options of the employees fell from $83.01 to $0.01.