| Corporation/CEO |
Scandal |
Investigations |
Auditor |
Election Cycle 2002 Contributions
(from corporation; from CEO) |
CEO Compensations |
Other |
|
| Adelphia Communications/ John Rigas
(quit) |
Under investigations by the SEC and two federal grand
juries for multibillion dollar, off-balance-sheet loans to its founders,
the Rigas family. Former CEO Rigas, his son and former CFO Timothy
Rigas were arrested for securities fraud. |
SEC, 2 federal grand juries and an internal investigation.
(legal
action) |
Deloitte & Touche LLP |
to Democrats: $1,500; $0 CEO; to Republicans: $25,050;
$52,250 CEO |
$1.4 M salary |
stock drop since 1/14/00:
-99.75% |
|
| AES/ Dennis W. Bakke
|
Use of secured equity-linked loans (SELL) that grossly inflated revenues and bolstered stock prices. These loans are not carried on the company expense sheets, since they are paid back by issuing stocks--further diluting value and ownership of company. |
|
Deloitte & Touche LLP |
data not available |
potential value of FYE options: $9,520,000 |
posted $445M loss so far this year |
|
| AOL Time Warner/ Robert Pittman
|
Accused of erroneously inflating advertisement revenue to keep stock prices inflated assuring greater stock price through mega-merger with Time Warner. (article) |
Class
action lawsuit, SEC, DOJ
|
Ernst & Young LLP |
to Democrats: $649,847; to Republicans: $114,678; CEO info not available |
$1,904,347; potential value of FYE options: $66,578,750 |
stock down 59% in 2002, stock at 52-week low |
|
| Arthur Andersen LLP/ Joseph Berardino
(quit); Company found guilty of obstruction of justice; David B Duncan,
former partner, accused of ordering the destruction of Enron-related
papers, plead guilty to obstruction of justice |
Obstructed justice in the Enron investigation. Other
scandals include: 1. WorldCom (3.9 billion in hidden expenses),
2. Boston Market Trustee Corp (Agreed to pay $10.3M to in suit
claiming a façade of corporate solvency), 3. Baptist Foundation
of Arizona ($217M settlement), 4. Department 66 ($11M settlement),
5. Sunbeam ($110M settlement), 6. Colonial Reality ($90M
settlement), 7. Waste Management ($75M settlement) |
SEC
investigation, DOJ investigation. |
NA |
to Democrats: $177,221; CEO information not available;
to Republicans: $413,517; CEO information not available |
More than $1 M in salary alone |
|
|
| Bristol Myers/ Fred Schiff (resigned); Peter Dolan |
Accused of purposefully inflating sales by offering
incentives to wholesalers--including warnings that it planned to raise
prices--in order to meet last year's revenue expectations. |
SEC investigation. |
Pricewaterhouse Coopers LLP |
to Democrats: $216,341; $1,000 CEO;
to Republicans: $1,136,262; $11,500 CEO |
|
lowest stock price since 1996 |
|
| Cendant/ Henry Silverman |
Paid $2.83B to shareholders after internal audits revealed
CUC Intl. (which merged with HFS to form Cendant) inflated income
by $500M through fraud and accounting errors. |
|
Deloitte & Touche LLP |
to Democrats: $10,000; CEO information not available;
to Republicans: $0; CEO information not available |
$40,056,773 in salary options and bonus |
|
|
| Citigroup/ Sanford I. Weill |
Congressional investigators testified that CITIgroup
helped Enron Corp and others set up "sham" transactions to alter their
finances. These transactions included loans that allowed Enron to
hide nearly $4B of debt. |
Senate
Committee on Government Affairs. |
KPMG LLP |
to Democrats: $618,545; $3,027 CEO;
to Republicans: $756,000; $2,379 CEO |
$26,694,959 in total compensation |
stock down 48% this year |
|
| CMS Energy/ William T. McCormick Jr.,CEO
(resigned); Rodger Kershner, general counsel and senior vice-president
(resigned) |
Disclosed it overstated revenue by nearly $4.4B in 2000
and 2001 by using artificial "round trip" energy trades |
Class
action lawsuit.SEC, CTFC, US Attorney's Office in Houston and
NY |
Arthur Andersen LLP |
to Democrats: $122,775; $1,000 CEO; to Republicans:$169,890;
$0 CEO |
$1,100,000 total compensation |
number of lost jobs: 50; stock drop since 1/14/00:
-56.78%
|
|
| Computer Associates/ Charles Wang |
Agreed to a $638,000 penalty in April to settle charges
with the Justice Department that it violated pre-merger rules after
announcing it would acquire Platinum Technology Inc. |
SEC investigation. |
KPMG LLP |
to Democrats: $19,250; $1,000 CEO; to Republicans: $108,450;
$0 CEO |
$1.03M salary, options, grants |
stock drop since 1/14/00:
-73.58% |
|
| Cornell Companies Inc./ Steven W. Logan (removed) |
Pending Class action suit claims Cornell and its officials
of making misleading statements on behalf of shareholders. Arthur
Andersen questions "unusual $3.7M retainer" to Lehman Bros Holdings
Inc. |
Class action lawsuit. |
Arthur Andersen LLP |
information not available |
$505,000 total compensation |
stock down over 50% |
|
| Dollar General/ Cal Turner |
Shares dropped 13% following reduced earnings report
for last 2 years of nearly $200M; Took a fourth quarter charge of
$162M to settle shareholder suits over accounting missteps. |
Settled
litigation. |
Ernst & Young LLP |
to Democrats: Corporate information not available; $0
CEO; to Republicans: Corporate information not available; $7,500 CEO |
|
|
|
| Duke Energy/ R. Priory |
Investigations into "round trip" energy trades with
other energy producers to inflate volumes and revenues. These falsified
trades added $1B to revenues over three years. |
SEC, the Commodity Futures Trading Commission and CA
state regulators and attorney general class
action lawsuit. |
Deloitte & Touche LLP |
to Democrats: $91,575; $0 CEO; to Republicans: $289,989;
$1,000 CEO |
$8,831,475 in total compensation including stock option
grants. |
|
|
| Dynegy/ Chuck Watson (ousted) |
Tried to merge with Enron; target of several federal
probes into alleged sham trades aimed at artificially pumping up revenue
and volume. Dynegy’s longtime chief executive, Chuck Watson, resigned
in May, and it has announced a major restructuring. |
SEC, the Commodity Futures Trading Commission and CA
state regulators and attorney general. |
Arthur Andersen LLP |
to Democrats: $55,101; CEO information not available;
to Republicans: $102,330; CEO information not available |
$1.5M salary, $5M bonus, 1.5M options |
stock drop since 1/14/00:
-64.97% |
|
| El Paso/ William Wise |
Identified 125 "round trip" trades used to bolster revenues
and market share. |
SEC, CFTC, Houston US Attorney's office
|
Deloitte & Touche LLP |
to Democrats: $0; $0 CEO; to Republicans: $277,569;
$8,558 CEO |
$39,286,780 salary stock option grants |
|
|
| Enron/ Ken Lay (left company) |
Once the nation’s largest energy trader, collapsed into
the largest-ever U.S. bankruptcy on Dec. 2 amid an investigation surrounding
off-the-book partnerships that were allegedly used to hide debt and
inflate profits. |
SEC and DOJ investigations; team of attorneys representing
investors and employees in civil lawsuits; Senate
Committee on Government Affairs. |
Arthur Andersen LLP |
to Democrats: $158,390; $0 CEO; to Republicans: $411,860;
$13,710 CEO |
$67.4M salary and bonus, $70M in loans |
stock drop since 1/14/00:
-99.80% layoffs: 6,100 |
|
| General Electric Corporation/Jack Welch (retired); Jeffrey Immelt |
1. GE Capital is a primary financial backer to WorlCom,
providing a financial crutch to the corporation that would go on to
file the largest bankruptcy claim in the history of the US; 2. Largest
corporation to lack an independent board; 3. 77% of GE's 401k's was
invested in company stock as of 2001; 4. GE paid its independent auditor
3 times as much for non-audit fees in 2000 |
Congressional inquiry into the lending practices of
JP Morgan and Citigroup, both of which were partners with GE in lending
to WorldCom |
KPMG LLP |
to Democrats: $170,859; $1,000 from former CEO Welch; to Republicans: $341,718; $10,500 CEO; $1,000 from former CEO Welch |
former CEO Welch: total compensation $18,893,720; CEO Immelt: compensation $6,592,771; potential value of FYE options $30,936,585 |
stock down 38% on the year |
|
| Global Crossing/Leo Hindery, Gary Winnick
|
Faces probes by the SEC and the FBI regarding its accounting
practice and for allegedly engaging in network capacity swaps with
other telecommunications firms to inflate revenue; CEO acknowledges
that Global Crossing's actions "may in some fashion misled the market."
NYT 3/22/02 |
SEC, DOJ; pending class
action lawsuit; over 60 investor fraud lawsuits in total. |
Arthur Andersen LLP |
to Democrats: $754,716; $312,000 CEO; to Republicans:
$429,204; $0 CEO |
|
stock drop since 1/14/00:
-99.87% |
|
| Halliburton/ Dave Lesar |
Whether it improperly recorded revenue from cost overruns
on big construction jobs |
SEC |
Arthur Andersen LLP |
to Democrats: $9,000; CEO information not available;
to Republicans: $70,950; CEO information not available |
|
stock drop since 1/14/00:
-56.51% |
|
| HPL Technologies, Inc./David Lepejian (former CEO, founder) |
Facing charges that corrupt accouting practices inflated
stock prices following IPO, allowing executives to sell 85,500 shares
at inflated prices. Also facing charges of violating Security Exchange
Act of 1934. Company expects to restate profits for 2001 and 2002. |
Class action lawsuit pending. |
Pricewaterhouse Coopers LLP |
data not available |
$184,046 total compensation |
Company stock halted on NASDAQ since 7/26/02 following 72% drop |
|
| IM Clone Systems Inc./ Samuel Waskal (arrested)
Charged with insider trading |
Under investigation by a congressional committee to
determine if it correctly informed investors that the U.S. Food and
Drug Administration had declined to accept for review its experimental
cancer drug; Samuel Waksal, former chief executive of ImClone, was
arrested June 12 on insider trading charges. |
SEC,
DOJ, Congressional litigation. Pending class action lawsuit. |
KPMG LLP |
to Democrats: $17,000; CEO information not available;
to Republicans: $0; CEO information not available |
$550,000 salary, $450,000 bonus, 1.2M options |
stock drop since 1/14/00:
-52.34% |
|
| JP Morgan Chase & Co./ William B. Harrison |
Congressional investigators testified that JP Morgan
Chase helped Enron Corp and others set up "sham" transactions to alter
their finances. These transactions included loans that allowed Enron
to hide nearly $4B of debt. |
Senate
Committee on Government Affairs. |
Pricewaterhouse Coopers LLP |
to Democrats: $260,830; $2,000 CEO;
to Republicans: $204,938; $0 CEO |
$17,149,013 in total compensation |
|
|
| Kmart/ Charles Conaway |
SEC investigating accounting and other practices. The
company investigated whether it improperly accounted for vendor allowances
and since changed its practices. |
SEC, and internal investigations headed by Skadden,
Arps, Slate Meagher & Flom Law firm. (legal
action) |
Pricewaterhouse Coopers LLP |
to Democrats: $136,000; CEO information not available;
to Republicans: $244,942; CEO information not available |
$1,375,000; potential value of FYE options: $4,031,498 |
stock drop since 1/14/00:
-91.02% |
|
| KPMG/ Michael J. Donahue |
SEC alleges accounting missteps by KPMG that allowed
Xerox to post knowingly erroneous profits/earnings |
SEC investigations (1,
2). |
NA |
to Democrats: $0; to Republicans: $136,675 |
|
|
|
| Lucent Technologies/ Henry Schact |
Adjusted 2000 revenues by $679 million, spurring SEC
investigation. Also investigating whether vendor- financing played
an improper role in sales. |
|
Pricewaterhouse Coopers LLP |
to Democrats: $39,550; to Republicans: $43,090 |
$21.56M salary, grant options |
stock drop since 1/14/00:
-93.39% |
|
| Martha Stewart Living Omnimedia/ Martha Stewart
Accused of insider trading obstruction of justice and providing
false statements to the SEC |
Stewart is under investigation for possible insider
trading, obstruction of justice and making false statements in IM
Clone investigation. |
|
Arthur Andersen LLP |
to Democrats: information not available;$36,000 CEO;
to Republicans: information not available; $0 CEO |
$900,000 salary, $1.16M bonus $647,737 other |
|
|
| Merck & Co/ Raymond Gilmartin |
Recorded $12.4B in revenue from the company's pharmacy-benefits
unit over the past three years that the subsidiary, Medco, never actually
collected. |
Shareholder
lawsuits alleging that Merck falsely inflated revenue by including
retail co-payments. |
Arthur Andersen LLP |
to Democrats: $81,020; $0 CEO; to Republicans: $271,242;
$25,000 CEO |
$28,024,762 total compensation |
|
|
| Merrill Lynch & Co/ David H. Komansky |
Agreed to $100M settlement with NYS Attorney General
regarding charges it tailored stock research to win investment banking
business. Suspended 2 employees including Martha Stewart's broker
after an internal probe relating to sale of IMClone shares. |
SEC; NY State Attorney General focusing on securing a $100M settlement after accusing Merrill Lynch of "hyping" stocks to win business for its banking unit |
Deloitte & Touche LLP |
to Democrats: $1,000; $2,000 CEO; to Republicans: $50,000;
$0 CEO |
$16,127,527 total compensation |
|
|
| MicroStrategy/ Michael J. Saylor |
Settled without admitting wrongdoing an SEC suit accusing
it of backdating sales contracts to meet quarterly financial estimates
and other improper revenue recognition practices. |
|
Pricewaterhouse Coopers LLP |
to Democrats: $1,000; CEO information not available;
to Republicans: $1,000; CEO information not available |
$150,000 |
stock drop since 1/14/00:
-99.07% |
|
| Network Associates/ George Samenuk |
Investigations regarding whether it hid expenses and
overstated revenue from 1998 to 2000. |
SEC, NY attorney general's office |
Coopers & Lybrand LLP |
to Democrats: $400; $1000 CEO; to Republicans: $500;
$0 CEO |
|
stock drop since 1/14/00:
-28.25% |
|
| Peregrine Systems/ Stephen P. Gardener
(left) |
The SEC is investigating the overstatement of revenues
after the software company restated results on reports that sales
were inflated by $100M in three years. |
SEC |
KPMG LLP (switched from Arthur Andersen LLP) |
Information not available |
$854,237 |
|
|
| Phar-Mor/ Abbey Butler and Melvyn Estrin |
In restated first quarter results, Phar-Mor is taking
a $2.4 million charge to write down the value of its entire investment
in Chemlink. Co-CEO's pursue over $320,000 in bonus pay during bankruptcy
hearings. Auditor Pricewater House Cooper missed signs of fraud. |
|
Pricewaterhouse Coopers LLP |
Information not available |
Butler: $525,439; Estrin: $525,439 |
|
|
| PNC Financial Services/ James E. Rohr |
Restated its 2001 results by $155 million after regulators
raised concerns about how PNC accounted for a transfer of loans. |
Class
action lawsuit, SEC investigation |
Ernst & Young LLP |
to Democrats: $18,200; CEO information not available;
to Republicans: $47,500; CEO information not available |
$1.97M salary; $1.17M bonus |
|
|
| Pricewaterhouse Coopers/ Sam DiPiazza |
Accounting scandals include:
1. Phar-Mor: overestimation
of profits; 2. Gazprom: suits over false and misleading statements;
3. Pinnacle Holdings: accounting violations; 4. Avon
Products: accounting violations; 5. PwC Securities: independence
standards |
SEC investigations: settled 3 investigations involving Pinnacle Holdings, Avon and PwC Securities with SEC with $5 million fine. |
NA |
to Democrats: $129,826;CEO information not available;
to Republicans: $633,860;CEO information not available |
|
|
|
| Qwest Communications/ Joseph P. Nacchio (quit) |
Under investigations to determine if it inflated revenue
for 2000 and 2001 through capacity swaps and equipment sales |
SEC investigations.
DOJ, FBI, Denver US Attorney's office
|
Arthur Andersen LLP |
to Democrats: $247,681; $0 CEO; to Republicans: $394,514;
$2000 CEO |
$1.17M salary, $1.15M bonus 7.25M options |
stock drop since 1/14/00:
-88.35% |
|
| Reliant Energy/ R. Steve Letbetter |
Admitted it inflated revenue by counting artificial
"round trip" energy trades. Under SEC investigation for into accounting
matters and energy trades relating to restatement of profits. |
SEC, CFTC |
Deloitte & Touche LLP |
to Democrats: $78,550; CEO info not available; to Republicans:
$217,672; CEO information not available |
$5,543,555; potential value of FYE options: $2,028,120 |
number of lost jobs: 50 |
|
| Rite Aid/ Robret G. Miller |
Indicted for fraud after it inflated profits by $1.6B
from 1997-1999. Scandal missed by auditor KPMG which resigns as auditor
for company. |
SEC |
Deloitte & Touche LLP |
Information not available |
$8,504,149; potential value of FYE options: $582,879 |
|
|
| Sunbeam/ Al Dunlap (ousted) |
SEC files accounting fraud suit against 4 executives.
Executive Albert J. Dunlap settles for $15M. Auditor Arthur Anderson
settles shareholder suit for $110M. |
|
Arthur Andersen LLP |
Information not available |
$2,701,511; potential value of FYE options: $806,462 |
|
|
| Tyco Intl. Ltd./ L. Dennis Kozlowski (quit
and indicted on 11 felony counts) |
Under investigation into whether executives used corporate
cash to buy art and a home. Tyco’s former chairman, Dennis Kozlowski,
resigned June 3, a day before being indicted for evading about $1
million in sales taxes from art purchases. Accused of improperly creating
"cookie jar" reserves that were supposed to cover merger costs but
instead were drawn on to boost profits; and improperly "spring loaded"
earnings from acquisitions by accelerating their pre-merger outlays.
|
SEC, Manhattan District Attorney's office and company's
internal investigation. (legal
action) |
Pricewaterhouse Coopers: collected $37.9 million in consulting fees in 2001 |
to Democrats: $64,500; CEO information not available;
to Republicans: $233,872; CEO information not available |
$1.65M salary, $4M bonus, $30.4 restricted stock awards
1.4M options |
stock drop since 1/14/00:
-55.15% layoffs: 11,000 |
|
| Vivendi Universal/ John-Marie Messier (forced
to quit) |
May incur $1.1B charge as the result of off-balance
sheet accounting. Attempted to add $1.5B in net profit in deal relating
to sale of British Sky Broadcasting Group PLC (MSNBC 7/02/02). Moody's
relegated Vivendi's credit rating to "junk bond status" (NYTimes 7/02/02)
|
Class action lawsuit. |
Gutierrez & Co. |
to Democrats: $126,574; CEO information not available;
to Republicans: $79,000; CEO information not available |
|
|
|
| Waste Management/ Maurice Myers |
Overstated income from 1992-1996 by more than $1B Anderson
pays $7M fine to SEC for issuing false and misleading reports as well
as part of $229M shareholder settlement. |
|
Arthur Andersen LLP |
to Democrats: $0; CEO information not available; to
Republicans: $117,300; CEO information not available |
$1,451,979; potential value of FYE options: $4,529,928 |
|
|
| WorldCom Inc./ Bernard Ebbers (quit; under
fire for borrowing $408M from WorldCom to cover margin calls), John
Sidgmore |
Hid $3.85 billion in expenses, allowing it to post net
income of $1.38 billion in 2001, instead of a loss. Charged with fraud
by SEC. NY State pension fund files $300M suit |
SEC
investigation; NY State Comptroller filed a motion in Federal District Court saying NY state pension fund lost more than $300M because of fall in stock price; House Financial Services Committee subponea 4 executives to testify, and all take the fifth. |
Arthur Andersen LLP |
to Democrats: $508,625; CEO information not available;
to Republicans: $510,055; CEO information not available |
$1M salary, 1.2M shares |
number of lost jobs: 17000 stock drop since 1/14/00:
-96.90% |
|
| Xerox/ Rick Thoman |
Xerox said June 28 it would restate five years of results
to reclassify more than $6 billion in revenues. In April, the company
settled charges that it used “accounting tricks” to defraud investors.
|
SEC
investigation |
KPMG LLP |
to Democrats: $27,950; CEO information not available;
to Republicans: $29,575; CEO information not available |
$1.25M (2000 Salary and bonus for CEO Paul Allaire)
Allaire also sold $16M in stock before earnings were recalculated
and shares fell nearly 80% (NYTimes 4/7/02). |
number of lost jobs:1500 stock drop since 1/14/00:
-67.53%
|
