By Anupam Dabral:
“It was not curiosity that killed the goose who laid the golden egg, but an insatiable greed that devoured common sense.” -Â E.A. Bucchianeri
Greed is something which has belittled mankind time and again and in USA the history of fraud and greedÂ has been centuries old.Â Greed is one phenomenon which has been defined in numerous ways by scholars , businessmen and psychologists but no one has until now come up with a concrete reason what ignites ‘greed’. Is greed only limited to money? How different is it from the unbridled power game that the world is witnessing in terms of international politics , how does greed effect intra-personnel relationships of two individuals , there are magnanimous questions that remain unanswered.
However as far as USA is concerned the term Greed had been popularized by the huge financial scandals that have shaken the world time and again. One of the best known frauds was the 1626 purchase of Manhattan Island for trinkets valued at 60 guilders (approximately $24).Â In this case the Carnarsie Indians from Brooklyn perpetrated the fraud since their land was not even connected to Manhattan Island.Â But in most cases it was the white men who cheated the Indians and each other.Â Land swindling grew rampant as America expanded to the west and continues to be one of the major opportunities for fraud and deception.
As early as 1700’s more than 40 corporations were operating in US dealing with bridges, canals, dams, and other “public” projects all soaked in bribes, kickbacks, and inflated prices.Â The late 1800’s saw the rise of a number of corporations and an unprecedented reporting of financial frauds. Newspaper reporting of scandals gave rise to the Populist movement that led to the passing of laws to regulate corporations and the robber barons who owned them. But the courts, using due to the inviolability of contracts, struck down repeated attempts to protect society from labor and monopoly abuses.
One of the nation’s terrible frauds was perpetrated by General Motors Corporation.Â Street cars were once and still would be one of the most efficient ways of moving people around urban centers.Â In major U.S. cities the tracks were already in place and street cars were running efficiently up and down the tracks.Â Then General Motors took it upon itself to capture the city bus sale and replacement market.Â In an effort to persuade cities to abandon street cars in favor of buses, General Motors commenced a strategy to bribe or otherwise cajole cities to sell their streetcar systems to GM from the 1920s to the early 1940s. The strategy was an enormous success for GM and a fraudulent disaster for large cities.Â Eliminating the trolleys not only helped GM make millions in sales of city buses, the public became more dependent upon buying GM cars for commuting into the cities.
THE DIRTY GAME AT WALL STREET
Unlike the rest of the financial scandals the Wall Street scandals are devised and carried on some of the Titans of the field who have reputable degrees from Ivy Leagues . Wall Street provides ambitious men and women enough of tempting fodder to commit financial crimes. As Scot Paltow wrote Â in “The Dark Side of Wall Street: Why Scandals Continue to Erupt” , The Wall Street Journal, December 23, 2004
“Wall Street firms in modern times can’t resist treating men and women of Main Street as chickens to be plucked. With the end of fixed commissions on stock trades in 1975, individual investorsÂ while remaining an important source of revenue became progressively less important for most firms than the huge fees to be earned from underwriting and investment banking for big corporations. Over time, taking advantage of the naivetÃ© of individual investors became a convenient way to gain and keep big corporate clients. In the analysts’ case, firms disseminated falsely rosey reports to induce unwitting investors into boosting the stock price of the firms’ investment-banking clients. Indeed, the language Wall Street traders and brokers use sometimes betrays disdain toward individual investors. Nasdaq market makers commonly refer to buy and sell orders from individuals as “dumb order flow,” meaning their orders are almost certain to be profitable for the market makers because small investors typically trade without any hard information that could give them an advantage over these dealers”
If one intricately studies one of the major causes for such repetitive financial frauds in the United States is especially high because the laws and courts are so lenient on non-violent white collar criminals.Â White collar crime pays big even in the rare chance that the criminal is caught.Â By the time the culprit is detected and indicted, he or she has already pirated away most of the loot in an offshore bank account or some other hiding place.Â After spending a very small amount of time in relatively comfortable incarceration facilities, the culprit returns to a life of luxury. The auditing profession also is highly responsible for such kind of frauds and this is due to their tardy way of working. Most of the auditing companies today rely upon the views of the employees within the system. Â Privacy is an another issue , if every, deal is electronically recorded and every high end money monger becomes responsible for every dollar , he or she owns then the scene would be a little bit different.
Enron Scandal was a cornerstone in the history of financial scandals on the wall street. The dramatic collapse of the company shook the lives of thousands of employees and many pension funds. Many still wonder , how can such a gigantic firm crumble down to nothing. C.E.O Jeffery Skilling adoptedÂ a perfect way of concealing the financial losses that were incurred by the firm by a process called Mark to Market funding. It’s a method used when one is dealing in the business of securities and one determine the value of the security at the moment. It is normally disastrous for other business.Â It was a clear game of hiding the ruptured condition of the firm, Skilling very artistically portrayed that the company was doing well. In order to create a delusion the star recruit of the Enron , Andrew Fastow was promoted to the C.F.OÂ in the year 1998 , who came with an another plan of SPE , which was used to hide any asset that were losing money. In 2001 , the Enron debacle was exposed , it was a very knit web of company executives who were hiding the debts and were not recording them in the books. Enron had lossesÂ upto 591 million dollars and had 628 million dollars by the end of 2000. Share holders lost nearly 11 billion dollars until the end of 2001. The Enron scandal also resulted in the passing of the Surbanes-Oxley Act.
Worldcom joined the league of the greatest accounting scandals of the history. The second largest long distance phone company sercices provider in America wrongly booked $3.8billion over the past 5 yrs. S.E.C said that Worldcom had committed “accounting improprieties of unprecedented magnitude”. It a resulted in 17000 job cuts. Worldcom like any other scandal brought the company down to debris , however it brought the story of Bernie Ebbers to the surface. A Canadian immigrant started Worldcom in 1997.Â Ebbers started out as a milkman , later he joinedÂ Mississippi College, where the Canadian won, of all things, a basketball scholarship and mostly rode the bench before graduating in 1967 with a bachelor’s degree in physical education. Â Bernie Ebbers was like that of a rolling stone which took a unexpected halt until the Worldcom scandal got exposed.
A company that began it’s journey under the aegis of Arthur .J. Gandua in 1960 , resulted in rocking the Wall Street as one of the most infamous financial frauds of all times. In the year 2002 former chairman and chief executive Dennis Kozlowski and former chief financial officer Mark H. Swartz were accused of the theft of more than $150 million from the company. During their trial in March 2004, they contended the board of directors authorized it as compensation. Ex-CEO L. Dennis Kozlowski indicted for tax evasion. SEC investigating whether the company was aware of his actions, possible improper use of company funds and related-party transactions, as well as improper merger accounting practices.
One of the most undocumented bank scandals in the history of U.S.A which had its roots in the transborder drug trade. In March 2010 Wachovia was sanctioned for filing to apply the proper anti-laundering strictures to the transfer of $ 378.4 Billion a sum equivalent to 1/3rd of Mexico’s gross national product. In the year 2006Â a plane was seized Â carrying 128 cases packed with 5.7 tons of cocaine , value at $100million . Later the authoritiesÂ discovered billions of dollars in wire transfer traveler cheque and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia settled the biggest action under the U.S bank Secrecy Act. It paid federal authorities $110million in forfeiture and incurred at $50million fine for failing to monitor cash used to ship 22 tons of cocaine.
WASHINGTON MUTUAL :
It was considered to be the largest bank failure in the nation’s history. One of the biggest reasons for the failure was that a surge of high risk lending put borrowers, shareholders and depositories in the harm way. The other was the negligence by the OTS ( Office of Thrift Supervision) . Washington Mutual(WAMV) unsafe lending grant under the nose of a toothless watch day. In 2008 Washington Mutual Inc. and it’s remaining subsidiaries WMI investment Corp. filed for Chapter 11 Bankruptcy W.M.Inc was delisted from NYSE . The investigation continued in 2010/2011.
With the recent Rajat Gupta case a fresh chapter was added to the history of financial fraud on Wall Street , it leaves us in Â bewilderment if we see the entire scenario in the light of Occupy Wall Street movementÂ . United States of America has been a melting pot for the superlatives of financial success , however unlike never before there is a huge middle class which goes unrepresentedÂ undocumentedÂ and tormented by the taxation and other financial policies of the American government.
Vendors are selling keychains and trinkets in the forms of live animals sealed in plastic bags.Read More >
A long journey of achieving equal rights for the LGBTQIA+ community in the US and shows how political will and the lack thereof can make all the difference.Read More >
Sexual and Gender Based Violence is common in Africa and cuts across nationality, ethnicity, and socio-economic status. An NGO worker gives her an account.Read More >
Given the response to MSG in Maggi, perhaps the regulatory bodies may want to re-consider what they allow and what they don’t in our food.Read More >
Global terrorism has changed its forms, and thus, the battle against it is one that’s more mental than physical.Read More >