These famous business scandals are all examples of what not to do when running a business or not-for-profit organization. By being familiar with these bad examples, we can learn from the mistakes of others and not make these same infamous errors in judgment.
1. Brown & Williamson (1993). The U.S. tobacco company is an arm of British American Tobacco and produces cigarette brands such as Kool, Capri, and Pall Mall. In 1989, B&W hired Jeffrey Wigand, a biochemist, as its Vice President of Research and Development. Wigand demanded that the company stop using the “flavor enhancer” coumarin in its pipe tobacco, concerned that the chemical was a lung-specific carcinogen. When B&W fired Wigand, Wigand went on the tv news magazine “60 Minutes” and blew the whistle on the tobacco industry’s practice of intentionally adding ingredients (including ammonia) to its products to make them more addictive.
2. FlowTex (2000). In Germany’s biggest corporate scandal to date, the heavy equipment manufacturing company sold its 181 machines more than 3,000 times, manufacturing false identification plates so that it appeared the company had more inventory than it actually did.
3. Enron (2001). When Texas’s Houston Natural Gas and InterNorth merged in 1985, the company became Enron. It dealt in communications, paper, wood pulp, natural gas, and electricity and had approximately 20,000 employees. At the end of 2001, it became known that Enron’s reported billion-dollar annual profits were the result of extensive internal accounting fraud. The corporation was forced to declare bankruptcy and sell off companies. Several executives were convicted of crimes and sent to prison. Its accounting firm was also forced to disband for its part in the fraud.
4. Adelphia Communications (2002). The Pennsylvania cable television company was the fifth largest in the U.S. Internal corruption forced the company to file for bankruptcy in 2002. Five of the company’s officers were indicted on charges of securities violations, and two served time in prison.