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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 32: Comroad (Germany, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 190 Case 32: Comroad (Germany, 2002) For audacity and scale, few cases of accounting fraud can match… …: Accounting Fraud in European Companies 191 (1) a lack of clarity about the existence of a Hong Kong company named “VT Elec- tronics Ltd.”, and (2) a… …, in the wake of that firm’s role in the Enron fraud in the United States. KPMG’s merger talks with Andersen broke down as the Comroad scandal… …was removed, and in November 2002, CEO Bodo Schnabel was ultimately jailed for seven years for criminal fraud and market manipulation. The Wall Street… …total revenues and backed them up with the name of a Accounting Fraud in European Companies 192 non-existing Asian customer. By 2000, roughly 97%… …criminal judgment, German investors have not been very successful in their civil damages claims against Schnabel and the other members of the management… …. Still, the courts rejected most of the civil claims against Mr. Schnabel. KPMG said that it was victim of the fraud – and indeed, some observers… …thought that the “we were fooled, too” defense could be valid. “Comroad is not an account- ing issue. This is fraud,” said Hans-Georg Bruns, a member of… …series of accountings scandals in Germany that have badly damaged investors’ confidence in Accounting Fraud in European Companies 193 financial…

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  Case 33: Vivendi Universal (France, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 194 Case 33: Vivendi Universal (France, 2002) Initially, Jean-Marie Messier was being celebrated as a… …was only after the board dislodged Messier that the new management disclosed the company’s dire financial straits. The new CEO, Jean-René Fourtou… …. According to Le Monde, Vivendi had appeared to dispose of 400 million shares in BSkyB, but, instead of selling them, Accounting Fraud in European… …separate SEC probe. In December 2002, fraud squad detectives raided Vivendi’s Paris headquarters and the homes of its deposed CEO, Jean-Marie Messier… …, hauling away boxes of docu- ments and electronic records. “The situation for Vivendi looks quite dangerous,” said a lawyer specialized in securities fraud… …cases. “Vivendi has to defend itself at a time when public anger over corporate fraud is running high, and juries are increas- ingly willing to hand out… …big awards in such cases.” Accounting Fraud in European Companies 196 In December 2003, the SEC announced that it filed and simultaneously… …settled a civil fraud action against Vivendi and its former CEO. Specifically, the SEC com- plaint included the following allegations (see SEC Press… …Accounting Fraud in European Companies 197 planned to dispose of. In a self-justificatory book published in 2003, Messier sug- gested that he was a… …, the company had continued to apply French GAAP. Accounting Fraud in European Companies 198 References: Vivendi Universal, with its…

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  Case 34: Royal Ahold (The Netherlands, 2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 199 Case 34: Royal Ahold (The Netherlands, 2003) By the late 1990s, Royal Ahold N.V. ranked among… …have operated continuously (and honourably) for 100 years. However, shortly after the turn of the century, a case of Enron-style accounting fraud… …Amsterdam. “So many things have happened in the United States, but this is the first really large-scale fraud case we’ve seen on this side of the ocean.”… …, Ahold’s management team raised huge amounts of debt and equity capital over the years. With regard to the foreign operating units, Ahold’s top… …exactly where the company ran afoul. Senior management pres- sured lower-level managers throughout Ahold’s worldwide network to reach the sales and… …goals ultimately became unreachable. Accounting Fraud in European Companies 200 In 2002, Ahold faced trouble in Latin America: operating… …Michiel Meurs, each of whom had been implicated in the accounting fraud. Standard & Poor’s and Moody’s slashed Ahold’s credit rating, and the… …retailer announced that the fraud was much more extensive than previously thought. Ahold said that the American subsidiary’s earnings had been overstated… …figures shocked Ahold’s new management as much as it did analysts and investors. The company immediately authorized an investigation by law firm White &… …certain foreign joint ventures through fraudulent side letters. Accounting Fraud in European Companies 201 The earnings fraud at U.S…

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  Case 35: Parmalat (Italy, 2003)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 206 Case 35: Parmalat (Italy, 2003) Parmalat, one of Italy’s most significant commercial entities and… …and EBIT of about EUR 600 million, Parmalat had Accounting Fraud in European Companies 207 become a global rival to Nestlé, Danone and… …, Tanzi did not bring much-needed high-level expertise into his management ranks by recruiting senior executives from other big global firms. Instead… …account linked to the Cayman Islands subsidiary known as “Bonlat”, which appeared to be at the heart of the fraud. The Bank of America revealed that a… …creditors all lost money heavily. The case Accounting Fraud in European Companies 208 sent shockwaves through Italy where Parmalat was a household… …Italian banks. The management of the company went over to Enrico Bondi, a turn- around specialist well known in Italy. Bondi had been appointed as a… …revenues through fictitious sales. The core of the fraud was a system of double-billing to supermar- kets and other retail customers. By billing twice for… …divisions. For example, one amount of EUR 65 million found its way to AC Parma, the soccer Accounting Fraud in European Companies 209 team owned… …located in tax havens around the world, and it engaged in complicated bond and derivative deals. The fraud was certainly not of the blatant “take-the-… …had echoes of several other recent scandals (see Trueman 2004, p. 4): – The fraud appeared to have been incremental, growing in magnitude over a…

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  Case 37: Siemens (Germany, 2006)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in European Companies 218 Case 37: Siemens (Germany, 2006) For over 160 years, Siemens has stood for technological… …and I really mean zero toler- ance,” CEO Klaus Kleinfeld said in a statement. Accounting Fraud in European Companies 219 The Munich… …public prosecutor initially believed that a small criminal gang within Siemens was behind the fraud scandal, with money being channelled from the com-… …. Accounting Fraud in European Companies 220 The scope of the investigations was unprecedented, authorities said. German and American investigators… …collected more than 100 million documents and conducted more than 1,700 fraud interviews in 34 countries; Debevoise & Plimpton racked up 1.5 million… …small central management enthroned above them was mainly responsible for company-wide issues. The division heads learned to value this new-found free-… …conceal the identities of the officials who authorized such payments. At the same time, Siemens central management tight- ened its anti-corruption… …guidelines – at least on paper. According to court docu- Accounting Fraud in European Companies 221 ments, Siemens just created a “paper program”, a… …discussed how to better disguise its illegal payments, while making sure that the employees didn’t pocket the money. Accounting Fraud in European… …railway lines. In a separate investigation, a member of Siemens’s central management, Johannes Feldmayer, was arrested by prosecutors on charges…

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  Case 38: Daewoo Group (South Korea, 1999)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …226 2.3 Accounting Fraud in Asian Companies Case 38: Daewoo Group (South Korea, 1999) At the end of 1999, the Daewoo Group, one of… …the largest conglomerates in the world, collapsed in a spectacular fashion. The accounting fraud that was uncovered was described as one of the… …he once said. However, Kim’s global expansion far outstripped the group’s financial and management capabilities. But he ignored warnings that he was… …. The lending Accounting Fraud in Asian Companies 227 banks maintained rather lax standards, focusing on revenues and sales volume, instead… …“rags-to-riches” founder of Daewoo Group ended in a big corporate fraud scandal. Although the government prosecutor’s office released only scant details, it… …accounting fraud in a variety of ways. However, a substan- tial degree of the fraud occurred through asset swaps among Daewoo subsidiaries. One subsidiary… …illegitimately propped up Daewoo’s failing companies. Accounting Fraud in Asian Companies 228 Cover-ups of failed ventures When, e.g., Daewoo… …Motor attempted to cover up its failed USD 200 million investment in a car plant in Ukraine, the fraud bordered on the farcical. Daewoo Motor (the… …accounting fraud. Daewoo companies with questionable credit status would issue new stock that the overseas institutions would acquire, technically as equity… …for personal enrichment by Kim and senior Daewoo managers. Accounting Fraud in Asian Companies 229 Daewoo was not an isolated incident; a…

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  Case 39: Seibu Railway (Japan, 2004)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in Asian Companies 232 Case 39: Seibu Railway (Japan, 2004) Yoshiaki Tsutsumi, the former chairman of Seibu Railway, was… …president Terumasa Koyanagi to under-report the size of stakes held in Seibu Accounting Fraud in Asian Companies 233 Railway by its largest… …. According to sources close to the company, Koya- nagi had been questioned by prosecutors almost every day since Seibu had made the fraud public. The… …affairs department in charge of stocks was found dead on a beach Accounting Fraud in Asian Companies 234 in Yamagata Prefecture, after financial… …(“Corporate responsibility for financial reports”) and 404 (“Management assessment of internal controls”). “The new guideline is a departure from the… …, several other high-profile scandals rocked the nation. Accounting Fraud in Asian Companies 235 References: Japanese tycoon resigns in… …Koyanagi found hanged, www.japanaddicted.com, February 20, 2005 Japanese mogul arrested for fraud, www.news.bbc.co.uk, March 3, 2005 Japan arrests former… …world’s richest person over fraud, People’s Daily Online, March 3, 2005 Japan Arrests Rail Tycoon in Insider Trading Case, The New York Times, March 4… …, 2005 Koizumi supporter arrested on fraud charges, Times Online, March 4, 2005 Tsutsumi held over Seibu share scam, insider trade, The Japan Times…

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  Case 40: Kanebo (Japan, 2005)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …prevent the fraud was a consequence of “serious deficiencies” in its internal controls. As a result of inspect- ing Chuo Aoyama, the firm-wide management… …Accounting Fraud in Asian Companies 236 Case 40: Kanebo (Japan, 2005) By the late 1990s, Kanebo Ltd. ranked among Japan’s largest public… …crisis” in the United States. Japan’s business press quickly referred to the Kanebo fraud as “Japan’s Enron”. In March 2006, Takashi Hoashi pleaded… …learned of this scheme from reading the published reports of the Enron fraud.) When the executives were no longer able to sustain the scam in 2005, they… …announced that an internal inquiry had found “instances of accounting fraud” in the past. Finally, they admitted overstating oper- ating results by… …charged in connection with the Kanebo fraud admitted helping the company to hide losses. They had pointed out irregularities, but no Accounting… …Fraud in Asian Companies 237 demand had been made to have Kanebo’s statements corrected, resulting in an audit approval. According to the… …company’s poor financial health (the three defendants never admitted as much, though). During trial, the auditors testified that shortly before the fraud… …. Accounting Fraud in Asian Companies 238 As well as causing an exodus of audit clients, the punishment of Chuo Aoyama also helped to fuel extreme… …that it was also Accounting Fraud in Asian Companies 239 “unprecedentedly cleverly devised”. Despite these remarks, he handed suspended…

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  Case 41: Livedoor (Japan, 2006)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in Asian Companies 240 Case 41: Livedoor (Japan, 2006) The Livedoor saga is probably one of the most eye-catching episodes… …accounting fraud; prosecutors depicted him as a greedy and lawless figure who had manipulated the books to inflate his company’s stock price. The trial was… …, who had used Accounting Fraud in Asian Companies 241 “smoke and mirrors” to create riches that honest and hard-working businessmen could… …, Horie was accused of falsifying the company’s accounts. The alleged fraud centred on Livedoor’s group financial statements for the business year ending… …Accounting Fraud in Asian Companies 242 hours for three months because of capacity problems. The TSE announced to put Livedoor on monitoring status, and… …. In March 2007, following a six-month trial which gripped Corporate Japan, Horie was found guilty of fraud and sentenced to two years and six months in… …came to dominate the company. Horie testified: “I never studied accounting. A management book I read said to leave that to spe- cialists, so… …statements, the Livedoor affair is “pretty small beer”, said another observer. The trial was political retaliation for Horie’s challeng- Accounting Fraud… …the Japanese appetite for reform is limited. Livedoor still exists today under new management, but it is a mere shadow of the high-flying… …College Dropout Turned Internet Tycoon, The New York Times, January 18, 2006 Livedoor founder arrested for fraud as delisting beckons, The Independent…

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  Case 43: Sanyo Electric (Japan, 2007)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in Asian Companies 247 Case 43: Sanyo Electric (Japan, 2007) Like other Japanese electronics makers, Osaka-based Sanyo… …temporarily after being implicated in financial statement fraud at Kanebo, the cosmetics firm. It had also been the auditor for Nikko Cordial, which had to… …restate past results to correct accounting irregularities as well. And now, Accounting Fraud in Asian Companies 248 Sanyo was believed not to have… …March 2007, Tomoyo Nonaka quit as CEO and chairwoman of the troubled elec- tronics firm. Nonaka, a former TV journalist with little senior management… …falsely reported a profit instead of a loss. Sanyo apologized to investors, saying it would strengthen its management team and internal controls, but… …, but also for a string of management failures that badly dented Sanyo’s image. The company had repeatedly promised a turnaround under what was billed as… …“innova- tive management”, but Nonaka failed to engineer Sanyo’s recovery. She announced a bold programme (dubbed “Think Gaia”) to transform Sanyo into a… …manufacturing company like Sanyo, which had started by making bicycle lamps in 1947. “Think Gaia was a good strategy,” said a financial Accounting Fraud in… …going green will get them out of the red.” References: Sanyo’s Accounting Fraud, www.home.comcast.net, February 23, 2007 Sanyo Earnings Probe… …Sends Shares South, E-Commerce Times, February 23, 2007 Sanyo probed for securities fraud, www.news.webindia123.com, February 23, 2007 Sanyo Probed over…

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