OUTSIDE INDIA
Enron:
Year – 2001
Gist – Enron was an energy company based in Houston, Texas and was awarded “America’s most innovative company” for six consecutive years. The concept behind Enron’s fraud can be described with the term “off balance sheet financing”. It means moving one’s asset or liability from the balance sheet. Enron did it with the help of Special Purpose Vehicles (SPV) and the structure was so complex that it managed to keep these SPVs outside the purview of consolidation. These SPVs made huge losses and had huge debts and consolidating them with Enron would have revealed the true position.
People Involved – Jeffrey Skilling (CEO), Andrew Fastow (CFO), Kenneth Lay (Former CEO)
Punishment to the convicted – Jeffery Skilling is serving a 24 year and 4 month term and fined 45 million USD. Andrew Fastow is serving a 6 year term. Kenneth lay died before sentence.
Auditors – Arthur Anderson
Gist – Enron was an energy company based in Houston, Texas and was awarded “America’s most innovative company” for six consecutive years. The concept behind Enron’s fraud can be described with the term “off balance sheet financing”. It means moving one’s asset or liability from the balance sheet. Enron did it with the help of Special Purpose Vehicles (SPV) and the structure was so complex that it managed to keep these SPVs outside the purview of consolidation. These SPVs made huge losses and had huge debts and consolidating them with Enron would have revealed the true position.
People Involved – Jeffrey Skilling (CEO), Andrew Fastow (CFO), Kenneth Lay (Former CEO)
Punishment to the convicted – Jeffery Skilling is serving a 24 year and 4 month term and fined 45 million USD. Andrew Fastow is serving a 6 year term. Kenneth lay died before sentence.
Auditors – Arthur Anderson
World Com:
Year – 2002
Gist – Worldcom awoke the leading giant by leading the telecom industry into profitability in 1990s. It handled 50% of US internet traffic and 50% of e-mails worldwide. The concept of worldcom’s fraud was “Capitalisation of revenue expenses” thus inflating profits.
People involved – Bernie Ebbers (CEO), Scott Sullivan (CFO)
Punishment to the convicted – Scott Sulivan is serving a 25 year term. Bernie Ebbers serving a 25 year term.
Auditors – Arthur Anderson
Year – 2002
Gist – Worldcom awoke the leading giant by leading the telecom industry into profitability in 1990s. It handled 50% of US internet traffic and 50% of e-mails worldwide. The concept of worldcom’s fraud was “Capitalisation of revenue expenses” thus inflating profits.
People involved – Bernie Ebbers (CEO), Scott Sullivan (CFO)
Punishment to the convicted – Scott Sulivan is serving a 25 year term. Bernie Ebbers serving a 25 year term.
Auditors – Arthur Anderson
There have also been other frauds like Tyco, Parmalat, Cedant outside India which involved substantial amounts.
IN INDIA
GTB:
Year – 2002-03
Gist – A bank promoted by an engineer of Osmania university – Ramesh Gelli. GTB accumulated non performing assets in excess of permissible levels which led to negative net worth. These facts were not disclosed in its financial statements.
Punishment to the convicted – None
Auditors – Lovelock and Lewes
Year – 2002-03
Gist – A bank promoted by an engineer of Osmania university – Ramesh Gelli. GTB accumulated non performing assets in excess of permissible levels which led to negative net worth. These facts were not disclosed in its financial statements.
Punishment to the convicted – None
Auditors – Lovelock and Lewes
DSQ Software:
Year -2003
Gist - Dinesh Dalmia's Company DSQ Software was accused of dubious acquisitions and biased allotments made in the year 2000 & 2001.
Punishment to the convicted- Dalmia currently serving a jail sentence
Auditors – PwC
Year -2003
Gist - Dinesh Dalmia's Company DSQ Software was accused of dubious acquisitions and biased allotments made in the year 2000 & 2001.
Punishment to the convicted- Dalmia currently serving a jail sentence
Auditors – PwC
It is to be noted that India has been a place where the number of corporate frauds has been relatively less.
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