Classic Financial and Corporate Scandals


 
"Bankers who hire money hungry geniuses should not always express surprise and amazement when some of them turn around with brilliant, creative, and illegal means of making money."

Linda Davies

The quotation is from a speech by the financial thriller writer on the Psychology of Risk, Speculation and Fraud, at a conference on EMU in Amsterdam.


Part 1

[ The Credit Crunch |
| Brian Hunter and Amaranth Advisors | John Rusnak and Allied Irish Banks | Jerome Kerviel and Société Générale |
| Banco Ambrosiano and the Vatican Bank | Bank of Credit and Commerce International |
| Nick Leeson and Barings Bank | Kweku Adoboil and UBS | | Bre-X and Canadian Mining Scandals |
| Butcher Brothers and the United American Bank | Carousel Fraud |
| Cendant Corp. | Credit Lyonnais | Toshihide Iguchi and Daiwa Bank |
| The Dot-Com Bubble and Investment Banks | Enron Corp. and Arthur Andersen |
| The Flaming Ferraris | Jardine Fleming | Martin Frankel | Griffin Trading Co. |
| Conrad Black and Hollinger International | Harshad Mehta |
| Joseph Jett and Kidder, Peabody & Co. | Liu Qibing and copper futures |
| | Bernard L. Madoff Investment Securities | Misselling of Financial Products]

Continued in Part 2

See also  Money in Fiction History of Money

The Credit Crunch

Failure of HBOS linked to “colossal failure of senior management and the Board”, says Banking Commission
The Parliamentary Commission on Banking Standards has published its Fourth Report - ‘An accident waiting to happen’: The failure of HBOS. 5 April 2013.
 
HBOS: the bank that couldn't say no
Banking group HBOS was not driven to point of bankruptcy by the global financial meltdown, but by its own strategy of high-risk lending, over-ambitious growth targets and poor controls, according to a hard-hitting report by the parliamentary commission on banking standards. Guardian, 5 April 2013
 
Taxpayers face £500m bill for RBS Libor fraud
MPs warn of public fury at size of fines for wrongdoing, most of which will go to US watchdogs. The Independent 16 January 2013.
 
Libor scandal: Seven banks summoned in US probe
Seven banks, including HSBC and Royal Bank of Scotland, are to be questioned in the US for alleged manipulation of the Libor inter-bank lending rate. BBC, 15 August 2012.
 
Top executive suppressed report damning Barclays
Bank boss leaves after hiding criticism of 'revenue at all costs' strategy at US Wealth arm. The Independent, 21 January 2013
 
Barclays fined for attempts to manipulate Libor rates
Barclays has been fined £290m ($450m) for trying to manipulate a key bank interest rate which influences the cost of loans and mortgages. The fine is part of an international investigation into the setting of interbank rates between 2005 and 2009. BBC, 27 June 2012.
 
Goldman decides not to delay bonuses to beat tax
Goldman Sachs bowed to pressure and decided not to delay bonus payments to benefit from a lower rate of tax, just hours after Bank of England Governor Sir Mervyn King attacked the plans as “depressing”. The Telegraph, 15 January 2013.
 
Ex-Goldman Sachs director Rajat Gupta guilty of fraud
A former Goldman Sachs board member has been found guilty of four criminal counts of insider trading by a federal court in New York. BBC, 15 June 2012.
 
UK Uncut allowed to challenge Goldman Sachs tax deal
An anti tax-avoidance campaign group has won permission from the high courts to have a "sweetheart" deal between HMRC and the banking giant Goldman Sachs judicially reviewed for its legality. Guardian, 13 June 2012.
 
Why I Am Leaving Goldman Sachs
The resignation letter of Greg Smith, Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa. New York Times, March 14, 2012.
 
Goldman Sachs resignation: Muppet letter is everyone's fantasy
Many of us have imagined writing a letter of resignation that shakes our bosses to the core, but few have actually done it, and rarely even then has the letter been read by millions. Greg Smith, who quit Goldman Sachs this week, has realised our fantasy. BBC, 15 March 2012.
 
Goldman bankers get rich betting on food prices as millions starve
Goldman Sachs made more than a quarter of a billion pounds last year by speculating on food staples, reigniting the controversy over banks profiting from the global food crisis. The Independent, 20 January 2013.
 
The great hunger lottery - How banking speculation causes food crises
In The Great Hunger Lottery, the World Development Movement has compiled extensive evidence establishing the role of food commodity derivatives in destabilising and driving up food prices around the world. This in turn, has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.
 
Goldman Sachs handed record $550m fine over Abacus transaction
US regulators yesterday demonstrated their determination to crack down on Wall Street's excesses during the subprime mortgage crisis by handing Goldman Sachs a fine of $550m. Guardian, 16 July 2010.
 
Goldman Sachs: the bank that thought it ruled the world
Goldman Sachs was ‘doing God's work' - but it is now being investigated for fraud. Daily Telegraph, 19 April 2010.
 
RBS 'has duty to consider legal action against Goldman Sachs'
Royal Bank of Scotland directors will be obliged to consider legal action against Goldman Sachs if the US Securities and Exchange Commission succeeds in its fraud case against the American banking giant, say lawyers. The Scotsman, 19 April 2010.
 
Looting Main Street
How the nation's biggest banks are ripping off American cities with the same predatory deals that brought down Greece, by Matt Taibbi, Rolling Stone, March 31, 2010.
 
Wall Street's Bailout Hustle
Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash, by Matt Taibbi, Rolling Stone, February 17, 2010.
 
25 People to Blame for the Financial Crisis
A special report from Time Magazine.
 
Iceland: Report of the Special Investigation Commission
The Special Investigation Commission (SIC) delivered its report to Althingi on April 12 2010. The Commission was established by Althingi, the Icelandic Parliament, in December 2008, to investigate and analyse the processes leading to the collapse of the three main banks in Iceland.
 
Anglo Irish Bank Execs Face Trial In Dublin
Former Anglo Irish Bank bosses, Sean FitzPatrick, Pat Whelan and William McAteer are on trial for their alleged role in pushing the country's finances to the brink of collapse, prompting the bailout and austerity. Sky News 5 February 2014.
 
The Crisis of Credit Visualized
A video by Jonathan Jarvis created with the aim of giving form to a complex situation like the credit crisis by quickly supply the essence of the situation to those unfamiliar and uninitiated.
 
The Road to Ruin
A series of articles in the Guardian where writers look at the real story behind the economic slump discussing how boom turned to bust, who's to blame, and ways out of the mess we're in.
 
The Global Financial Crisis
News on developments from the BBC.
 
The Guardian: Credit crunch
News about the crisis from the Guardian.
 
Banking Crisis Timeline
A blow-by-blow account of developments from the Guardian.
 
Financial crisis of 2007-2008
An article from the Wikipedia.
 

Brian Hunter and Amaranth Advisors

Who's glad they aren't Brian Hunter?
An article about the rise and fall of Brian Hunter, star trader at Amaranth.
 
Hedge fund's $6bn gas price hit
Amaranth Advisors, the US-based hedge fund whose investments were hit by a misplaced bet on gas prices, has seen its losses reach about $6bn. BBC, 21 September 2006
 

John Rusnak and Allied Irish Banks

How to lose a billion
The John Rusnak case is reviewed in detail and compared with those of other infamous rogue traders such as Nick Leeson, Peter Young and Toshihide Iguchi. William Leith, the Guardian, October 26, 2002.
 
"Rogue" AIB trader pleads guilty to fraud
The Former currency trader pleaded guilty to one count of bank fraud and agreed to a reduced sentence in return for helping the investigation into whether other people were involved in the scandal. BBC, 24 October, 2002.
 
Allfirst's sale to M&T Bank is completed
Executives with M&T, AIB and Allfirst claimed that the sale was planned before news of the John Rusnak affair. The Baltimore Sun, April 2, 2003.
 
Rogue trader missing after $750m fraud
Allied Irish Banks (AIB) has named John Rusnak, a US citizen in his 40s, as the trader at the centre of a suspected $750m (£529m) fraud at its US subsidiary.
 
Allfirst rogue trader accused of costing AIB $750m
News about the scandal from Radio Telefís Éireann, the Irish National Public Service Broadcasting Organisation.
 

Jerome Kerviel and Société Générale

Jérôme Kerviel will need 177,000 years to repay €5 billion
Jérôme Kerviel, the rogue French trader sentenced to three years in jail for losing the bank he worked for €5 billion (£4.4 billion), has been ordered to repay the full amount despite calculations that it would take him more than 177,000 years to do so. Daily Telegraph, 5 October 2010.
 
SocGen trader Kerviel slammed for 'stratospheric' risks
Alleged Societe Generale "rogue trader" Jerome Kerviel took "stratospheric" risks that almost brought down the bank, an ex-colleague told a court. BBC, 10 June 2010.
 
Soc Gen trader's 'scapegoat' claim
Jérôme Kerviel has urged his ex-colleagues at Société Générale to come forward and give evidence in his defence. He said he wanted old trader colleagues to come forward as witnesses because he refused to become "a scapegoat" for what he claims was a much bigger problem and he has written a book about the case. The Connexion, 3 May 2010.
 
Jérôme Kerviel case: why is it so rare to see a banker behind bars?
Jérôme Kerviel's financial folly put him in prison, but others get away with it. The Telegraph, 6 October 2010.
 
Fraud Costs French Bank $7.1 Billion
The French bank Société Générale said Thursday that it had uncovered “an exceptional fraud” by a trader that would cost it 4.9 billion euros, or $7.1 billion. The fraud had been committed by a trader in charge of “plain vanilla” hedging on European index futures. New York Times, January 25, 2008
 
Rogue trader to cost SocGen $7bn
French bank Societe Generale says it has uncovered "massive" fraud by a Paris-based trader which resulted in a loss of 4.9bn euros ($7.1bn; £3.7bn). BBC, January 25, 2008
 

Kweku Adoboil and UBS

UBS rogue trader Kweku Adoboli jailed over 'UK's biggest fraud'
Junior City player, 32, sentenced to seven years after dispensing with hedging safety nets and racking up losses of over £1.5bn. Guardian, 20 November 2012.
 
UBS 'rogue trader' Kweku Adoboli almost cost the bank £7.4bn, court hears
A UBS rogue trader who gambled away £1.4billion in the City's biggest ever fraud "believed he had the magic touch" but caused "chaos and disaster" to all around him, the court was told at his trial. The Telegraph, 15 September 2012.
 
Rogue trader: Kweku Adoboil was a 'nice guy', says former landlord
A rogue City trader arrested after losing his bosses a reported £1.3 billion was described as a "nice guy" and a "model tenant" by his former landlord. Daily Telegraph, 19 September 2011.
 
A five-point guide to rogue trading
In the wake of the UBS Kweku Adoboil affair, everything you need to know about losing money on an epic scale. Guardian, 19 September 2011.
 
Myners: rogue trader scandal shows reform need
Lord Myners, the businessman turned City minister, used the UBS scandal as the launch pad for a scathing attack on bankers in the House of Lords. Evening Standard, 16 September 2011.
 

Banco Ambrosiano and the Vatican Bank

Although this series of scandals first came to light in the early 1980s the Vatican Bank has continued to be dogged by scandal.

Prosecutors investigate Vatican Bank mafia link
Anti Mafia prosecutors have asked the secretive Vatican Bank to disclose details of an account held by a priest in connection with a money laundering and fraud investigation. Telegraph, 10 June 2012.
 
Vatican bank's former president accused of negligence
The ousted head of the Vatican bank was accused of negligence and leaked documents were published casting doubt on his mental health. Guardian, 10 June 2012.
 
Five are cleared in 'God's banker' case
The death of Roberto Calvi, an Italian banker found hanging from Blackfriars Bridge in London 25 years ago remains shrouded in mystery after a court in Rome cleared five people accused of luring him to his death. Daily Telegraph, 7 June 2007.
 
Four charged over Calvi killing
Four people have been charged with murder over the 1982 London death of Italian banker Roberto Calvi. BBC, 18 April 2005.
 
Mafia squad probe Calvi bag theft
Italy's anti-Mafia police are looking into the theft of files from the UK coroner, Paul Matthews, who is re-examining the death of Roberto Calvi. BBC, 4 May 2004.
 
Four go on trial for murder of God's banker
More than 20 years after the death of the banker Roberto Calvi was dismissed as suicide, four people, including a jailed Mafia boss, have gone on trial in Rome, charged with his murder. Guardian, March 17 2004.
 
Police investigating murder of God's Banker
Detectives investigating the murder of "God's banker" Roberto Calvi, have discovered more than $70 million hidden in a Bahamian bank. The money is believed to be connected to the collapse of the Banco Ambrosiano and is thought to be the proceeds of Mafia drugs deals. The Scotsman, 18 February 2004.
 
Calvi bank's $70m traced
Investigators probing the death of Roberto Calvi are close to seizing $70 million missing from the collapse of Banco Ambrosiano. The Observer, December 14, 2003.
 
Key witness held on Calvi
Police have arrested Odette Morris, the woman who provided an alibi for Flavio Carboni who has been charged with Calvi's murder. Evening Standard, 10 December 2003.
 
A son's quest for truth
Carlo Calvi has spent over two decades trying to get justice for his murdered father. Evening Standard, 7 October 2003.
 
'God's banker' death case reopened
Italian prosecutors have concluded the Mafia murdered the Italian banker, Roberto Calvi, who was found dead more than 20 years ago, and have named four people suspected of carrying out the killing. BBC, 24 July 2003.
 
New clue turns up in 'God's banker' death
Italian investigators have discovered a safety deposit box belonging to Roberto Calvi some 20 years after "God's banker" was found hanging from scaffolding under Blackfriars Bridge in London. The Guardian, October 14, 2002.
 
New tests 'say Calvi was murdered'
Long-awaited forensic tests into the death of Vatican banker Roberto Calvi - found hanging from a bridge in London in 1982 - are reported to show he was murdered. BBC, 19 April 2002.
 
Ban looms over Vatican bank movie
The film God's Bankers (I Banchieri Di Dio) based on the death of financier Roberto Calvi, could be pulled from cinemas over claims it slanders Flavio Carbonim an Italian businessman. BBC, 27 March 2002.
 
I Banchieri di Dio
Information about the film from the Internet Movie Database.
 
Who Killed Calvi?
An essay by Edward Jay Epstein.
 
Operation Gladio
by David Guyatt. Claims that there were links between the Calvi affair and Operation Gladio, a joint project of the US and British secret services to set up a Europe-wide network of anti-communist guerrillas who would fight behind the lines in the event of a Soviet invasion.
 
Exhumation of Italian banker's body
The remains of the prominent Italian banker, Roberto Calvi, were exhumed on 16 December 1998, 16 years after his death, to try and determine whether or not he had been murdered. BBC, 16 December 1998.
 
DNA May Solve Banker's Murder
The latest investigation into the death of Roberto Calvi has produced evidence that could prove the Italian banker was murdered, and possibly even identify his assassin. The Guardian, December 30, 1998.
 
Who is Licio Gelli? Who is Licio Gelli? A Monster Of The Times
An article about Licio Gelli who is closely associated with the Vatican Bank. Toronto Street News, June 8-21, 2007.
 
Vatican Bank Claims
Allegations concerning the Role of the Vatican Bank in WWII. Among the allegations is the claim that the Vatican, through its banking system, laundered loot valued at hundreds of millions of dollars taken from Serb, Jewish, Ukrainian, and other victims of the Nazis and their Croatian supporters.
 
Nazi-Era Victims Demand Army, CIA Release Documents on Vatican
This is in connection with the class action lawsuit against the Vatican Bank and the monastic Franciscan Order. CNS, September 04, 2000.
 

Bank of Credit and Commerce International (BCCI)

Bank to launch massive costs claim against BCCI liquidators
The Bank of England will begin one of the biggest claims for costs in English legal history when it demands up to £80m from liquidators of the Bank of Credit and Commerce International. Jill Treanor, the Guardian, January 30, 2006.
 
BCCI liquidators drop £1bn case
Liquidators for BCCI have dropped their £1bn ($1.76bn) damages case against the Bank of England. BBC, 2 November 2005.
 
Bank of England accused over BCCI
Bank of England officials "shut their eyes and turned away" instead of clamping down on fraudulent activity at BCCI, the High Court has been told. BBC, 13 January 2004.
 
BCCI settlement costs top $1.2bn
Creditors of Bank of Credit and Commerce International are to receive another $1bn (£600m). The cost of the 11-year liquidation has topped $1.2bn. The Guardian, May 15, 2003.
 
Treasury in the dock over BCCI
Treasury officials are bracing themselves ahead of a High Court decision which could force them to release secret papers about the Government's role in the collapse of BCCI. The Observer, May 12, 2002. (According to a report in the Mail on Sunday, 5 May, that is not available on the web, the authorities turned a blind eye to fraud at the BCCI for political and intelligence gathering reasons).
 
Bank faces £1bn law suit
The Bank of England is to be sued for up to £1bn by the liquidators of the collapsed Bank of Credit and Commerce International (BCCI). The BBC, 23 March, 2001.
 
The Sandstorm Report
This is the report of an official investigation into the BCCI affair that the British government refused to publish. Along with other material on BCCI, the Sandstone Report is made available on the web site of AABA, the Association for Accountancy & Business Affairs.
 
BCCI Liquidators Sue Sheikh for £289m
Liquidators are suing the Sheikh of Sharjah for a debt they claim he owes the failed bank. The Guardian Wednesday August 11, 1999.
 
Key Player in BCCI Fraud Loses Appeal
History's biggest convicted commercial fraudster, Abbas Gokal, lost his appeal against his April 1997 conviction on charges involving £750 million. Friday March 12, 1999.
 
Accountants in BCCI Net
The role of accountants Price Waterhouse in auditing for four years the books of scandal-hit Bank of Credit and Commerce International is under investigation.Guardian, 8 January 1999.
 
Bank of Crooks and Criminals International
An outline of the main allegations that led to the bank being closed down with particular reference to its dealings with the US Government.
 
Congressional Report on the BCCI Affair
A Report to the Committee on Foreign Relations, United States Senate by Senator John Kerry and Senator Hank Brown, December 1992.
 
Crooked Banks
Allegations of CIA involvement with BCCI and other banks.
 

Nick Leeson and Barings Bank

The collapse of Barings Bank was probably the most discussed financial scandal of the 1990s. The bank was subsequently taken over by the Dutch-based ING Bank.

Bank of England

Conclusion of the Bank of England Report on the Collapse of Barings
 
IFCI Risk Institute
Not Just One Man - Barings
A detailed case study by the IFCI Risk Institute. It includes data on the positions taken by Nick Leeson, and a discussion of the lessons that can be drawn from the case.
 

Numa Financial Systems

The Collapse of Barings Bank
a collection of links to articles on the scandal maintained by Numa Financial Systems.
 

US Commodity Futures Trading Commission Response

Status Report on Regulatory and Self-Regulatory Responses to the Barings Bankruptcy
Article by Joseph B. Dial, Commissioner, Commodity Futures Trading Commission.
 

Other Articles on Barings

Deloitte & Touche negligent in Barings audit, rules judge
The high court has ruled that accountancy firm Deloitte & Touche was negligent in its auditing of Barings, the London merchant bank brought down by rogue trader Nick Leeson in 1995. Guardian, June 12, 2003.
 
Coopers fined in Barings disciplinary case
An appeal tribunal for the profession's senior watchdog today upheld its findings against Coopers & Lybrand for the firm's role as auditor in the collapse of Barings. Accountancy Age, 20 April 2002.
 
Barings: A Random Walk to Self-Destruction
This article argues that regulators and human nature do not always coincide in their objectives. In the old days, speculators were protected by the twin devils of fear and greed - the gambler's emotions. Computers do not know fear or greed, they do not have any common sense, either. Anyone trading off a screen soon loses touch with reality and common sense. The article appeared in Scandals in Justice which regularly publishes online articles attacking the British legal system.
 
Leeson Scandal 'could happen again'
A report from the BBC following the premier of the film Rogue Trader.
 
Leeson paid £61,000 for speech
The former Barings trader was paid $100,000 (£61,000) to speak at a business conference in the Netherlands, BBC Friday 29 October 1999.
 

The central figure in the debacle has written a book about the Barings affair.
Rogue trader by Nick Leeson.

Locking the Stable Door After the Horse has Bolted

Whenever a scandal like the Barings debacle is uncovered there is a demand that legislators and regulators should ensure that nothing similar occurs again. All too often such action is merely a case of locking the stable door after the horse has bolted. Could frauds on a massive scale be foreseen? Regulators are hardly likely to answer yes because that would undermine their excuses for their failures.

However, immediately after the news of the Barings affair broke, Allan Fotheringham writing in the leading Canadian news and current affairs magazine Maclean's made the following points.

Author Linda Davies has proven a point made years ago by Marshall McLuhan, who said that artists can warn us of future disasters. Three years ago, Davies wrote the novel, Nest of Vipers, about a computer whiz-kid who decides to exploit the system and make tons of money while being employed as a mole by the Bank of England. She wrote what 28-year-old Nick Leeson accomplished in Singapore last week. Leeson has been able to upset world economies more than J. P. Morgan, the Vanderbilts, or the Rothschilds ever could.
See also the Psychology of Risk, Speculation and Fraud the text of a speech by Linda Davies at the European Research Center's annual Financial Panel, Amsterdam, 11 June 1997.
 

Bre-X and Canadian Mining Scandals

The Archived Official BRE-X website
The official website of the company has been preserved by the Wayback Machine which archives a huge number of internet sites.
 
BRE-X :The Inside Story by Diane Francis.
A description of her book from the website of Diane Francis
 
On the Road to Busang with BRE-X
Brief notes from Business Week magazine on some of the big-name players that had close dealings with Bre-X Minerals.
 
Stranger than Fiction: The Bre-X Gold Scandal
Recordings of items about BRE-X in TV and radio programmes from the CBC archives.
 
Bre-X Survivor Clarifies Why He Invested
John Kutyn explains why he bought BRE-X shares and recommended them to others.
 
Gold mine scandal tales only scratch the surface
More reviews of books on the scandal.
 
Canadian Court Puts Bre-X in Bankruptcy
Bre-X Minerals Ltd. was put into bankruptcy by the Court of Queen's Bench of Alberta.New York Times, November 6, 1997.
 
Bre-X Class Action
Case Summary from Sutts Strosberg LLP acting on behalf of BRE-X shareholders who were residents of Canada.
 
The Deloitte & Touche Inc's Forensic Investigative Associate Inc. (FIA) Report
The full text of a report on how the mineral samples were tampered with.
 
Bre-X's Busang site full of red flags: expert
Graham Farquharson, president of Strathcona Mineral Services Ltd, the firm that produced a detailed report on the tampering process, claimed that questions should have been raised much earlier. May 30, 1998.
 
Mining Watch: More Precious than Gold.
The notorious Vancouver Stock Exchange (VSE), is synonymous with the financing of junior mining companies around the world. Since the late seventies, the VSE has been infamous as a high risk, scam-ridden institution that has been called "the Sodom and Gomorrah of modern day financial markets." That description, by Equity Magazine, is quoted in this article at the Mining Watch website.
For a treatment in fiction of the Vancouver Stock Exchange financing a diamond deal see Wilderness of Mirrors.

The Butcher Brothers and the United American Bank

Whirlwind
The website of Sandra Lea, the author of the authoritative book on the rise and fall of the multi-state banking empire, Whirlwind: the Butcher Banking Scandal. A story of unbridled lust, greed and insatiable passions, the book has been described as a cross between Dallas and The Godfather. Sandra Lea's website contains additional information about the Butcher brothers scandal, as well as information from the book and where to order it.
 
Schledwitz v. United States
This ruling from the Court of Appeals in 1999 has background information about the Butcher brothers and the collapse in 1983 of the United American Bank of Knoxville in what was the fourth-largest bank failure in U.S. history. After their banking empire collapsed Jake and C.H. Butcher were convicted of fraud.
 

Carousel Fraud.

Q&A: the fraud carousel
An explanation of how the fraud works. Simon Newark, Best Practice 20 July 2006.
 
Carousel fraud bill to reach £5bn
VAT carousel fraud will cost the cost the British government at least £5bn this year, according to a study by mid-tier firm Grant Thornton. Accountancy Age, 4 Dec 2006.
 
Treasury sees a rise in VAT fraud
The UK Treasury has said it lost between £2bn and £3bn in 2005-06 because of carousel fraud. BBC, 6 December 2006.
 

Cendant Corp.

Massive Financial Fraud at CUC and Cendant Corp.
The Securities and Exchange Commission brought civil and administrative fraud and other charges against seven former officials of CUC International Inc. (CUC) and Cendant Corporation for their involvement in a massive financial fraud that caused billions of dollars in losses for investors. June 14, 2000.
 
Cendant pays $3.2 billion to clear fraud settlement
Cendant Corp., the marketing and franchising company battered by accounting problems in 1998, has agreed to pay $3.2 billion to settle a shareholder lawsuit accusing it of fraud. May 28, 2002.
 

Credit Lyonnais

Credit Lyonnais' Tangled Tale
A timeline of the developments involving Credit Lyonnais and Executive Life. Business Week, July 30, 2001.
 
Credit Lyonnais probe widens
The US financial authorities are considering prosecuting French bank Credit Lyonnais for conspiracy and money laundering, BBC, 6 September 2001.
 
A California Law Suit Makes Paris Tremble
An article from Salon magazine about the legal problems of Credit Lyonnais. February 22, 2000.
 
Trichet trial could halt ECB handover
A magistrate in Paris has ruled that Jean-Claude Trichet, governor of the Bank of France and heir-apparent to European Central Bank president Wim Duisenberg, must face the courts over events at the then state-controlled Credit Lyonnais in the early 1990s. The Guardian, 17 July 2002.
 
How an Italian Thug Looted MGM, Brought Credit Lyonnais to its Knees, and made the Pope Cry
An article about Giancarlo Parretti.
 
The Bank Scandal That Keeps Growing
An article by David McClintick outlining developments in the troubled bank.
 
Financiers flamboyants, contribuables brules
par Ibrahim Warde, Le Monde Diplomatique, Juillet 1994. Article in French about how deregulation has led to scandals in various countries, e.g. Credit Lyonnais in France and Banesto in Spain.
 

Toshihide Iguchi and Daiwa Bank

Toshihide Iguchi - Epilogue to My Billion Dollar Education
No English language edition of Toshihide Iguchi's book My Billion Dollar Education has been published. This epilogue to it is published her with his permission.
 
Bank Bosses Pay $775m Fraud Charge
A group of senior executives at Daiwa have been ordered to pay more than $750m (£535m) in compensation for losses incurred during fraudulent trading. BBC, 20 September, 2000.
 
Criminal Complaint & Indictment Against Daiwa Bank
The official account of the prosecution's case against Daiwa Bank in the Toshihide Iguchi affair.
 
Daiwa Bond Trader Puts His Spin on Scandal
Details of claims by Toshihide Iguchi in his book.
 

The Dot-Com Bubble and Investment Banks

Swiss banks reach deal with US regulators
Leading Wall Street brokerages, including the investment arms of Switzerland’s two biggest banks, have reached a settlement with US regulators over charges of issuing biased stock research.
 
Deal clears path for Quattrone to reconstruct banking career
Frank Quattrone has won a deal from prosecutors in a New York that means an end to his legal troubles, clearing the way for him to return to the investment-banking career that had made him one of Wall Street's most powerful technology bankers. Seattle Times, August 23, 2006.
 
Quattrone gets 18 months in prison
Frank Quattrone, who rose to investment banking stardom during the dot.com boom, has been sentenced to 18 months in a federal prison and two years probation for obstructing justice and witness tampering. CNN Money, September 8, 2004.
 
Star US banker faces jail after guilty verdict
Frank Quattrone, one of the most high-flying investment bankers on Wall Street during the dotcom boom, came crashing to earth when he was found guilty of obstruction of justice. Guardian, May 4, 2004.
 
Inside Frank Quattrone's Money Machine
The rise and fall of the high-tech investment banker who was an architect of Silicon Valley's financial culture. Business Week, October 13, 2003.
 
Star of dotcom boom is arrested
The first criminal charges were brought yesterday against a Wall Street banker for actions during the stock market bubble when Frank Quattrone, formerly of Credit Suisse First Boston, was arrested for obstruction of justice. Guardian, April 24, 2003.
 
Merrill Lynch investment scandal
The role of investment banks in recommending that investors bought shares in companies which, allegedly, the analysts were privately describing as junk.
 
Schadenfreude for Eliot Spitzer, fallen crusader
The "sheriff of Wall Street" admits involvement in a call-girl scandal. Daily Telegraph, 11 March 2008.
 
Wall Street's Top Cop
Time Magazine chose Eliot Spitzer, the New York attorney general, as its Crusader of the Year 2002.
 

Enron Corp. and Arthur Andersen

Enron - the Play
A play by Lucy Prebble tells the story of Enron from the perspective of a former employee.
 
Skilling Sentence Shows Enron Changed Everything
An article by Ann Woolner for Bloomberg about the significance of the 24 year sentence handed down to Jeffrey Skilling.
 
The Fall of Enron
A detailed account of the debacle and the main characters in the story. Business Week, December 16, 2001.
 
Enron Email Dataset
The corpus contains a total of about 0.5M messages, mostly from senior management at Enron. This data was originally made public, and posted to the web, by the Federal Energy Regulatory Commission during its investigation.
 
British bankers to face Enron charges
Three British bankers will be sent to the United States to stand trial in connection with the collapse of Enron even though the offense of which they are accused was committed in the UK and the United States has prevented people wanted in connection with IRA terrorist offences from being extradited to Britain. Guardian, June 27, 2006.
 
Three win Enron trial extradition reprieve
Three Natwest bankers facing extradition to the United States for alleged involvement in the Enron scandal haveb been given permission by the High Court to challenge their treatment by the Serious Fraud Office. Scotsman, 8 April 2005.
 
UK bankers face extradition in Enron case
Three former NatWest bankers, Gary Mulgrew, Giles Darby and David Bermingham, should be extradited to the US to face trial over Enron-related fraud charges, a judge has ruled. Guardian, October 15, 2004.
 
My life with the Enron high-rollers
Robert Kelsey, author of the novel The Pursuit of Happiness: Overpaid, Oversexed and Over There, included thinly-disguised portraits of the three former Greenwich Nat West bankers charged with siphoning off £4.8m from their employer. Evening Standard, 12 July 2002.
 
No business as usual after "perfect storm" of Enron scandal
A wide-ranging review in the aftermath of Kenneth Lay's indictment. Seattle Times, July 11, 2004.
 
Guardian Special Reports: Enron
A directory of articles from the Guardian on Enron.
 
Fraud-charge trio fight extradition
Three London-based former NatWest investment bankers should be extradited to the US after taking part in a $20m (£11m) Enron-related scam to defraud their former employer, a court was told. Evening Standard, 21 June 2004.
 
Enron Traders Caught On Tape
When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated. CBS June 1, 2004.
 
The Hijackers of Harvard - a name and address
An article about Herbert S. "Pug" Winokur, Chairman of the Enron Finance Committee who claims he was misled by Enron management.
 
Bankers charged over Enron
Four former Merrill Lynch bankers have been charged with taking part in the securities fraud at the energy giant. BBC, 18 March 2003.
 
Enron energy trader pleads guilty
The former head of Enron electricity trading has pleaded guilty to a charge of conspiracy to commit fraud for his part in manipulating California's energy market to drive up power prices. BBC, 17 October, 2002.
 
The curse of Enron
Enron is the most infamous and mind-boggling financial scandal ever seen. It has decimated the money markets more effectively than the best efforts of Osama bin Laden, Saddam Hussein or even Norman Lamont. The Independent, 25 August 2002.
 
As Enron scandal spreads, US starts to question cash for influence culture
A report on the political implications of the Enron debacle. The Guardian, January 16, 2002.
 
The Enron Black Magic
The first of a number of articles from Skolnick's Report.
 
A final accounting
Articles from the Chicago Tribune on the problems afflicting Arthur Andersen since its involvement with Enron.
 
Durant's Big Scam : The Transcontinental Railroad and Enron
In this January 2003 essay, New Yorker financial columnist James Surowiecki investigates the Crédit Mobilier scandal behind the financing of the Union Pacific railroad, and compares it to the Enron scandal nearly a century and a half later.
 

The Flaming Ferraris

Because of the relatively small sums involved this is unlikely to go down in history as a classic financial scandal but it is one that in February and March 1999 received plenty of publicity following reports that a member of the team had been involved in illegal trades in the Swedish stock market.

Securities and Futures Authority Disciplinary Action
The report on three of the Flaming Ferraris.
 
Archer son lied to cover his tracks
The Securities and Futures Authority found that Mr Archer, along with Adrian Ezra and David Crisanti, lacked the integrity to work in the City. Guardian July 28, 2001
 
Flaming Ferraris sacked
James Archer, whizz-kid son of Lord Archer, the millionaire novelist, was sacked along with two of his colleagues by Credit-Suisse First Boston, the investment bank, for their role in an alleged attempt to manipulate share prices on the Swedish stock exchange. Guardian, March 6, 1999.
 
How 'Flaming Ferraris' burned their bridges
The five 'Flaming Ferraris', the world's most successful share traders, based their reputation on a simple publicity stunt. Observer, February 28, 1999.
 

Jardine Fleming

Jardine Fleming's Rogue Trader Scandal: Time Line
An account of the Colin Armstrong affair and its effects on Jardine Fleming. 9 September 1996.
 

Martin Frankel

Court Upholds 17-Year Sentence For Insurance Co. Looting
Martin Frankel's 17-year prison sentence for looting $209 million from seven U.S. insurance companies was upheld by the federal appeals court in Manhattan. October 25, 2011.
 
Guilty plea from $200m fraudster
Martin Frankel pleaded guilty to 24 federal charges including racketeering, securities fraud and conspiracy. BBC, 16 May, 2002.
 
The Pretender
Information based on the book by the Wall Street Journal reporter Ellen Joan Pollock on how Martin Frankel fooled the financial world and led the Feds on one of the most publicized manhunts in history. The book is also available from Amazon.com.
 
Does Frankel's journal provide map to missing millions?
An article from the Toledo Blade about the efforts to find the money taken by Martin Frankel. May 6, 2001.
 

Griffin Trading Company

Derivatives firms shut down
The UK's Securities and Futures Authority (SFA) forced two firms to close down after John Ho Park lost at least £6.2m, in the biggest trading scandal to hit the City of London since Nick Leeson broke Barings Bank.
 

Conrad Black and Hollinger International Inc.

Conrad Black
On July 13, 2007, former media mogul Conrad Black was found guilty on three counts of fraud and one count of obstruction of justice.
 
Black Hole
An editorial about the findings of the internal investigation into financial malpractice within Hollinger conducted by Richard Breeden, a former chairman of the US securities and exchange commission. There are links to many other Guardian articles on Conrad Black and Hollinger. Guardian, September 2, 2004.
 
Walter Mitty life of media magnate turned robber baron
An article about the career of Conrad Black. The Scotsman, 2 September 2004.
 

Harshad Mehta

"Big Bull" Harshad Mehta dead
The man accused of India's biggest stock market scam died on 31 December 2001.
 
How Harshad Mehta did it again
An outline of the long-running Indian stock market scandal of the 1990s by Sucheta Dalal.
 
Sucheta Dalal's Website
Sucheta Dalal is the journalist who helped to expose the Harshad Mehta scandal and she is the author of The Scam, a book on it. Her article 10 years of financial scams puts that case in perspective.
 

Joseph Jett and Kidder, Peabody & Co.

Wall Street Lynching
The story of Joseph Jett, the man falsely accused of bringing down Kidder, Peabody & Co.
 
Jett and Kidder Peabody
A series of articles on the Jett-Kidder Peabody bond trading case by Steven Huddart, Smeal College of Business, Penn State University.
 
GE's Investment in Kidder Finally Pays Off
A Wall Street story that began in the 1980s concluded in December 2000 with the buyout of PaineWebber by the Swiss investment bank UBS.
 

Liu Qibing and copper futures

China's copper crisis
Chinese authorities have rejected reports of any link with Liu Qibing wThe story sounded more appropriate for a spy novel than a sober financial broadsheet: rogue copper trader goes missing, as the Chinese government denies he ever worked for it. Yet in this case, truth has turned out to be at least as strange as fiction. Liu Qibing, a trader for China's State Reserve Bureau (SRB), which accumulates stockpiles of commodities for the nation's needs, has disappeared, leaving his employers on the hook for massive short positions in copper on the London Metal Exchange (LME).ho was said to have worked for Beijing but vanished after making wrong bets on copper futures contracts that could potentially cost hundreds of millions of dollars. The Economist 18 November 2005.
 
Spotlight on Beijing as copper trader goes missing
Liu Qibing, a copper trader for a secretive, high-level Chinese government agency has gone missing. The Standard, November 16, 2005.
 

Bernard L. Madoff Investment Securities

Madoff aides plead not guilty to charges
Three of Madoff's employees plead not guilty to a litany of criminal charges. Daily Telegraph, 25 March 2010.
 
Bernard Madoff gets 150 years in prison
Bernard Madoff was sentenced to the maximum term of 150 years in prison for the biggest swindle in the history of Wall Street. Los Angeles Times, June 30, 2009.
 
The 17th Floor, Where Wealth Went to Vanish
The epicenter of what may be the largest Ponzi scheme in history was the 17th floor of the Lipstick Building, rising 34 floors above Third Avenue in Midtown Manhattan. The New York Times, December 14, 2008.
 
British banks losing billions to ‘one big lie’ in biggest ever fraud
The eye-popping scale of what is being billed as the world’s largest swindle has become apparent as wealthy investors and banks around the world emerged as the victims of Bernard L. Madoff. The Times, December 16, 2008.
 
Madoff fall-out spreads worldwide
Banks around the world have revealed their exposure to Maddoff's firm. Financial Times, December 15, 2008.
 

Misselling of Financial Products

The Financial Ombudsman - Mis-Sold Payment Protection Insurance new!
Advice from the Financial Ombudsman Service on how to complain if you think that you were mis-sold payment protection insurance.
 
RBS admits thousands of SMEs were sold interest rate swaps
The Royal Bank of Scotland has broken ranks with its high street peers to reveal that it sold controversial interest rate swaps to thousands of small businesses. Telegraph, 27 March 2012.
 
Banking industry gives up on PPI mis-selling battle
The banking industry has abandoned a legal fight over the mis-selling of payment protection insurance (PPI). Barclays said it had set aside £1bn to pay compensation, and HSBC £269m, while RBS added £850m to the £200m it had already paid or provided for. The previous week Lloyds Banking Group made a £3.2bn provision for possible claims.BBC, 9 May 2011.
 
PPI Reclaiming Guide: £1,000s for missold loan insurance
The misselling of expensive Payment Protection Insurance (PPI) has been rife. This is a step-by-step guide, including free templates, to reclaiming loan insurance.
 
 

Go to Part 2 of Classic Financial Scandals


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