Fortune’s top 10 annual business scandals: tesla, twitter, wells fargo?
In ordinary years, people are unforgettable but the worst corporate scandals and the worst executive malfeasance.
In 2020, however, many people find their economy so tight that it is hard to recall what has happened in the past 12 months.
To that end, the Fortune editor compiled the 10 strangest, most interesting, and most eye-catching business scandals of 2020.
Nikola gliding door incident
Perhaps inspired by the Theranos of the infamous blood-testing company, hydrogen-fueled electric-truck start-ups have Nikola been a bit too trusting of the mantra “until they succeed “.
Shortsell Hindenburg Research said in September that Nikola and its chief executive, Trevor Milton, had made a series of false propaganda about their technology, including a 2016 promotional video showing the state of travel Nikola freight trucks, a processed video that actually let the truck slide down a long slope, not on its own.
Nikola company subsequently acknowledged the above.
Surprisingly, however, the company brazenly claimed that it was not cheating, because it described the video as a vehicle showing “driving” literally no problem, even if the driving force was gravity rather than hydrogen fuel. Still, milton quickly took his toll and resigned as ceo.
What’s really striking for corporate scandal fans is that, Hindenburg the time of the report, gm announced a major partnership with Nikola two days ago (a point that does help Hindenburg make a big profit by shorting).
Under the plan, GM will become a major shareholder in the Nikola and Nikola planned Badger electric pickup truck. GM was unusually calm in dealing with the less glamorous affair, and it did not announce a direct exit until late November.
Nikola shares peaked at $79.73 in June and today are trading at less than $17.
Wirecard story is a two-in-one scandal.
Marcus Braun, a former chief executive, seems to think the financial services company has $2.1 billion in unwarranted capital and has used it to paint its image at events. The company went bankrupt in June and investors lost billions of dollars.
Another scandal is that regulators and auditors have failed to detect the impending disaster, despite years of warning.
Bruce Doris, a former prosecutor and president of the Association of Fraud Examiners, said :” When you see the scale of events that have taken place, Wirecard is simply Germany’s Enron .”
Europe’s best-known financial technology company, Wirecard now bankrupt, is committed to providing mobile payments and banking services globally. Founded in 1999 and nearly bankrupt in 2002, KPMG’s former consultant Braun recapitalized the company and became its chief executive. The company expanded, went to market, attracted new capital and maintained growth.
Its success surpassed the growth of financial business. Wirecard is also the pride of germany and europe, where the seemingly thriving international company been dominated by chinese and american start-ups. Wirecard rocket-like growth peaked in 2018, when investors gave a valuation of 24 billion euros ($27 billion) and the company broke into the upper German business circle and became one of 30 members of the DAX stock index.
However, something is not right.
External sources, especially Financial Times reporter Dan McCrum, have found discrepancies in Wirecard accounts since 2015. Wirecard always strongly deny that the company has any problems, but the outside world has not stopped questioning.
Germany’s federal financial regulator launched an investigation in 2019, not against Wirecard, but against the financial times. When singapore police raided Wirecard offices a month later, the bundesbank ordered a ban on shorting Wirecard shares for two months.
At a critical juncture last june, the Wirecard announced that 1.9 billion euros ($2.1 billion) in the company’s books had “disappeared “. Braun resigned quickly. The company quickly announced “a universal possibility” that disappeared funds “did not exist “.
Braun was arrested the following day and remains in detention. At one point, the company’s shares reached 191 euros ($233), and recently only 0.43 euros (52 cents).
A report issued by the european parliament called the collapse of the Wirecard “an event in which european capital markets could have a significant impact” and should trigger retail reforms to regulate financial markets.
The collapse of Enron gave birth to the Sarbanes-Oxley Act. If WireCard scandal can trigger a similar reaction, it can at least play a role.
The Financial Bubble of Ruisuke Coffee
Unfortunately for rui xing, good luck soon ran out.
The start-up coffee chain, founded in October 2017, apparently replaced Starbucks with a thunderous development and became China’s largest coffee giant in early 2020. However, the company’s subsequent frantic confession to the accounts showed that the company’s dream ambition —— caffeine fever, that is, to make tea-drinking people like coffee, basically mirror water.
As China’s youngest and hottest so-called unicorn start-up, Beijing-based Ruixue has promoted itself as a technology company rather than a coffee business.
Lucky attracts people to book out-of-band drinks and delivery drinks through its mobile app. The company has introduced a lot of discounts and “free” coupons, cutting the price of its drinks to about a third of the market price. Like any good start-up, executives value growth more than profits.
The strategy worked well for some time. By the end of 2018, a little more than a year after its establishment, Ruixing had more than 2000 stores and private investors had given a $2 billion valuation.
As of May 2019, the company raised $561 million and listed on Nasdaq at a valuation of $4.2 billion. At the beginning of 2020, after Ruixing was thought to have taken the crown of the Chinese coffee market from Starbucks (4500 Ruixing and 4300 Starbucks by number of stores), it was valued at a record $12 billion.
Then charges of fraud came up.
Ruisuke initially denied a january 31 report by muddy waters, a leading us short-selling company, alleging that it had falsified sales.
But a few weeks later, on april 2nd, mr. rishin confessed that $310 million in revenue was fake, accounting for a large portion of its 2019 disclosure. Ruisuke admits to exaggerating the figure, delisting its shares and restructuring its leadership team.
In December, Mr. Rui made a settlement with the Securities and Exchange Commission for $180 million.
In a statement, mr guo, chairman and ceo recently appointed by mr ruixing, said the deal “reflects our cooperation and remedies that will allow the company to continue its business strategy .” He added that the company “is committed to building a strong internal financial control system and will adopt best practices in compliance and corporate governance .”
Twitter security errors
A series of well-known accounts, including those Twitter Alan Musk, Kim Kardashian and Barack Obama, seemed a bit strange on the afternoon of July 15,2020, sending out a simple bitcoin scam.
Twitter had to close all the push content of the verified account, and he was stepping up his search for security vulnerabilities.
Is the elite hacking team in Russia hijacking these accounts? Or a North Korean agent with a national background? None.
Behind the scenes was a boring Florida teenager named Graham Ivan, who and several of his friends teased an employee of Twitter over the phone and asked the employee to reveal the authentication information needed to reset his account password and email address.
Clark was arrested weeks later and is awaiting trial.
SocialProof Security chief executive of San Francisco security company Rachel Toebuck said :” This is the oldest trick in the textbook .”
Twitter began to limit the number of employees with such competencies and other measures were taken to strengthen security initiatives. The company also released a comprehensive report on how the incident occurred. Mr. Toebuck said the move helped raise awareness among many companies and improve their training to prevent further “social modification” hacking. “People are the first line of defence .”
Tesla boycott blockade
Tesla, the electric car maker, was well above expectations by 2020. It started with revenue in the first quarter well ahead of expectations for the new crown, followed by a squeeze into the S & P 500.
However, CEO Alan Musk’s response to California’s efforts to contain the new crown virus has dimmed the company’s aura.
The first round of resistance appeared in April, when Tesla tried to resist the blockade by calling on employees to return to its Fremont plant, but was stopped by Alameda County officials.
A few days later, at the april revenue conference that announced the quarter’s stunning results, mr musk shocked investors and analysts by describing the california blockade as “fascist.
Then the fact that 300,000 Americans died in the new crown made that sound worse.
On may 9th tesla filed a lawsuit to get rid of the blockade order, arguing that it conflicted with a statement by alameida that tesla was classified as a “necessary enterprise” in the county. However, a few days later, Tesla directly restarted production without permission.
Alameda county officials seemed to have given way to the liberal resistance of Musk and announced on May 13 that they would approve Tesla’s plan to restart the plant, but Tesla had restarted before.
Subsequently, some people said that the factory environment security risks, including mask wear requirements lax, and Tesla employees subsequently detected a new crown virus positive.
Musk seems to want to prove that he can both fight climate change and quietly play the villain in James Bond’s film. He told employees that if they are worried about health and safety, they can stay at home, but then sent a termination letter to some employees who stay at home.
At the end of 2019, McDonald’s chief executive Steve Eastbrook Inin was fired from pornographic text messages with his subordinates, which the company called voluntary.
In an email sent to employees at the time, eastbrook said :” in view of the company’s values, I agree with the decision of the board of directors, it is time to leave the company .”
Since then, things have become more and more chaotic.
In august, mcdonald’s filed a lawsuit with eastbrook claiming it had sex with three of mcdonald’s women employees a year before being expelled from the company and approved hundreds of thousands of dollars in shares for one of them.
McDonald’s also said Eastbrook had hidden evidence during the initial investigation and removed mail from his cell phone. In the light of these so-called new discoveries, McDonald’s believes that these led to the company’s decision to dismiss Eastbrook and that Eastbrook should return its severance payment.
Easterbrook counter-attacks that mcdonald’s is aware of stock awards and has information on several other eastbrook relationships while negotiating its severance package.
The lawsuit is still in progress, but it is clear that McDonald’s is willing to make its scandal public in a rare way in American business as it tries to draw a line from its former chief executive.
Compensation protection project fraud
For the most part, the massive $670 billion program, called the pay protection program, is the largest small business assistance program in U.S. history and a milestone in the federal government’s response to the epidemic, which has devastated many small business owners across the country.
However, nine months after its launch as part of the $2.2 trillion coronavirus assistance, relief and economic security act, the project quickly became synonymous with the most egregious shortcomings of government intervention —— waste, corruption and fraud. Critics say this stems from the Trump administration’s mismanagement and lack of transparency.
There are plenty of cases of pay protection fraud, and there are plenty of cases, from fake florida government departments that claim to receive more than $8 million in government money to texas men who claim to squander nearly $1 million in money invested in encrypted currencies.
These cases seem to be just the tip of the iceberg. Some argue that even without billions of dollars, hundreds of millions of taxpayer dollars could be fraudulently diverted through pay protection programs, and government watchdogs have acknowledged the existence of “widespread potential fraud and abuse” possibilities.
For its part, the Trump administration said the project succeeded in distributing more than $52 billion to about 5.2 million U.S. businesses, allowing companies to save jobs and pay workers during a severe economic downturn. But even if it is legally issued, there are obvious loopholes in the project.
More than half of the money for pay protection projects goes to less than 5 percent of recipients and more than a quarter to less than 1 percent of recipients, according to data recently released by the Small Business Association. Large, well-funded listed companies have become beneficiaries.
In addition, there is ample evidence that many small businesses, which are owned by ethnic minorities (particularly those affected by the epidemic), have failed to obtain the funds they need through the project. At the same time, wealthy celebrities and connected politicians find that getting the money they need is like digging in.
As one government regulator put it :” Fundamentally, the Trump administration’s project is not only poorly designed but also poorly managed .”
Wells Fargo is the biggest business scandal in 2020? Isn’t that 2016?
In fact, to be exact, the scandal began in 2016. Four years later, the scandal has grown so much that it deserves a special award for its achievements in business scandals that it has a place on our list.
The scandal began on September 8,2016, when news came that Wells Fargo had created more than 2 million fake accounts and would pay a $185 million fine. The startling discovery immediately made headlines, and weeks later, congressional committees held hearings and CEO John Stuff suddenly retired. With the payment of fines and the change of leadership, the trouble seems to be resolved soon, but it is not.
Let’s fast forward to 2020: in january, stonff agreed to pay a $17.5 million fine to the u.s. monetary supervision agency for its role in the scandal, while it also issued $37.5 million to five other former executives.
Wells Fargo agreed in February to pay $3 billion to resolve federal criminal and civil investigations into scandals. U. S. Attorney Andrew Murray said :” Given the scale, scope and time frame of Wells Fargo’s illegal actions, this amount is reasonable .”
In November, Stuff agreed to pay a $2.5 million fine to the Securities and Exchange Commission. The Securities and Exchange Commission also sued Gary Tolstoy, head of Wells Fargo’s retail banking business during the creation of a fake account.
These are only major developments in the event in 2020. During this time, the scandal intensified, not reduced.
The bank found it created 3.5 million fake accounts instead of 2 million. It also found that it had charged more than 800,000 car-loan clients with insurance fees that they did not need or even knew (a fine of $1 billion and a class-action settlement fee of about $400 million).
The biggest loss is that the Fed banned Wells Fargo’s assets in 2018 above its $1.95 trillion level at the end of 2017, a sanctions unprecedented. That’s why Wells Fargo’s performance was well below that of the S & P 500 and several other big banks (JPMorgan Chase, Bank of America, Flowering) after the scandal broke.
Wells Fargo’s February settlement with the judiciary included an extended prosecution agreement, depending on the bank’s “continued cooperation with further government investigations “.
Four years later, the epic scandal is far from over.
eBay attacks on users
The Ina and David Stein, the founders of the online retail blog eCommerce Bytes, were harassed in various forms in August 2019: strange threats mailed to their homes, including a bloody pig face mask, live spiders and cockroaches, pornographic photos and a book about mourning a couple; expensive late-night pizza take-out orders; and Craigslist advertisements for fashionable parties and property sales, the address of the couple.
The couple, who lived in Nadiq, Massachusetts, reported the incidents to the police.
It wasn’t until the couple found someone driving to monitor and track them that the police station began to have clues. According to the wall street journal, two different cars are rented and the lessee is a eBay employee. The criminal investigation found that eBay have been hostile to the two bloggers because they sometimes criticize eBay. in their reports
FBI statement showed that former eBay chief communications officer steve wilmore read a eCommerce Bytes post on the pay of then-ceo devon winniger in april 2019 and then sent a message to winniger, saying ,” we’re going to kill her .”
The woman refers to the author, Ina Stein.
Winnig and Vimo left the company in September 2019.
According to a statement earlier this year in a summary of the scandal ,” while Winnig did not authorize harassment ,’ inappropriate communication’ about his blog was’ one of the reasons why he left the company’.”
eBay said in another bloomberg statement that “none of the company’s and eBay’s current employees have been charged” and that eBay “was notified by law enforcement in august 2019 that its security personnel had acted suspiciously against a blogger who reported eBay company and his husband .”
The company said it had “fired all its employees” in September 2019″.
Investigators found that the group that planned the incident used prepaid debit cards, disposable cell phones, anonymous email accounts and VPN software to hide their identities and delete information records.
In September, four of the six individuals alleged to have been involved in the case admitted to the incident and quickly conspired to follow the Internet and bribe witnesses to confess guilt.
In theory, Carlos Gohn boarded a high-speed train from home to Tokyo on December 29,2019(he faces charges of financial irregularities in Tokyo and is free of charge).
But it wasn’t until early january that full details of mr ghosn’s escape from what he calls a “rigged japanese justice system” began to appear in the media. The train ride was supposed to be the first step in his flight to lebanon, and it seemed to copy the hollywood line. With the help of a former Special Forces officer, Ghosn hid in a box used to transport sound equipment, boarded a private plane to Istanbul, then transferred to a small plane to Beirut (he had a home in Lebanon and did not have to face Japanese extradition provisions).
What is the most surprising thing about the Goon adventure story? That’s how many of us naively assumed in january that it would be the business story of the year 2020.