Corporations are the cornerstone of the North American economy. While they were first formed as non-profit organizations created for the public good in European societies, by the 17th century, the focus for many corporations changed and the drive to make money took precedence over working for the betterment of society. Even so, corporations provide millions of jobs for citizens in our communities and are a key component in the success of a prosperous economy. But what happens when corporations don’t follow the rules? How does this affect the employees who work for the corporations and the communities they live in? Several high profile corporate fraud cases in both United States and Canada such as Enron, World Com, Tyco, BreX, Hollinger Inc. have been reported over the last decade.
[...] (Access date: April 14th, 2009) New Internationalist, short history of corporations”, FindArticles.com, http://findarticles.com/p/articles/mi_m0JQP/is_2002_July/ai_89148684 Addison-Hewitt Associates, Sarbanes-Oxley A Guide To The Sarbanes-Oxley Act, http://www.soxlaw.com John Lorinc, “After Enron”, CA Magazine.com, http://www.camagazine.com/1/0/9/5/4/index1.shtml Corporation”, DVD. Directed by Mark Achbar (Canada: Big Picture Media Corporation, 2003). Imdb. Internal Revenue Service, “What is Corporate United States Department of Treasury, http://www.irs.gov/compliance/enforcement/article/0,,id=121468,00.html George Macdonald, “Enron Scandal At-A-Glance”, BBC News, http://news.bbc.co.uk/1/hi/business/1780075.stm “From collapse to convictions: a timeline”, CBC News, http://www.cbc.ca/news/background/enron/ Ken Belson, “WorldCom's Audacious Failure and Its Toll on an Industry”, The New York [...]
[...] On May 18th the US Supreme Court announced that it will review the fraud convictions.[14] The abuse of power shown by each of the executives proves that governance and ethics regulations in North America were insufficient to protect both employees and investors. These cases had the affect of eroding public confidence in Corporate America. After the collapse of Enron and WorldCom, the US government drafted new regulations to tighten up the way corporations could operate. The Sarbanes-Oxley Act, passed in 2002, gave the government new powers to restore confidence in American corporations. [...]
[...] In conclusion, corporate North America has come through a period of instability where several high profile fraud cases have damaged their credibility and led to an overall decline in confidence in financial markets. However, prompt action on the part of both the American and Canadian governments to implement policies and regulations has helped to reverse the negative impact of these cases. Prosecution of the fraud cases in courts of law were an important component to the recovery as this sent a signal to both investors and corporations that these types of unethical and criminal behavior would not be tolerated. [...]
[...] Corporate fraud includes: accounting fraud, mail and wire fraud, money laundering, and tax fraud.[6] Accounting fraud accounts for many of the recent cases in the news, where corporations have overstated their earnings. Specifically, in 2001 and 2002, America saw the collapse of two major corporations, Enron and WorldCom. Enron started as a pipeline company, but quickly grew into the world's largest trader in several different types of energy such as gas, electricity, and water. At its peak, the company employed 21,000 people in over 40 countries.[7] However, things began to unravel when the Chief Executive Officer, Jeffrey Skilling left the company in August 2001. [...]
[...] Since March telecommunications employees have been laid off.[10] Additionally, the corporation Tyco was prosecuted for corporate fraud in 2002. Tyco employed over 240,000 people in 100 different countries. In 2002 Tyco's top executives were examined by the Securities and Exchange Commission, a group founded in 1934 that performs federal checks on the investment market. The investigation uncovered that top executives had taken over 170 million dollars in loans, without consent of the compensation committee, and they also neglected to inform the shareholders. [...]
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