One of the biggest scandal, as its based upon the misrepresentation of the accounts of the company by the top hierarchy.

1. WASTE MANAGEMENT SCANDAL
PRESENTED BY: LAKSHYA ARORA
HARSIMRAN KAUR
NAVYA VATS

2. IN 2002 THE SECURITIES AND EXCHANGE
COMMISSION OF US FILED SUIT AGAINST
THE FOUNDER AND FIVE FORMER TOP
OFFICERS OF WASTE MANAGEMENT
COMPANY. IT ACCUSED THEM
PERPETRATING A MASSIVE FINANCIAL
FRAUD FOR MORE THAN 5 YEARS
(1992-1997)

3. Waste Management Inc.
Brief:
• Founded in in 1968
• Founders - Wayne Huizenga, Dean L. Buntrock, and Larry Beck
• Headquarter – Texas, USA
Services Offered:
• Manages and reduces waste
• Provides collection, transfer, recycling, and disposal services
• Recovers resources and creates clean and renewable energy
• Removal of Methane Gas from landfilled facilities which was used in electrical generation

4. Customer Base:
• Industrial Corporations
• Municipal Corporations
• Residential Households
• Other Waste Management Companies
----------------------------------------------------------------------------------------------
By 1971 the company already had:
• 133 Acquisitions
• $82000000 Revenue
• 21000000 million customers (US & Canada)

5. When Did The Scandal Started?
The Fraud Process Start In
1992, Is Based On Forgery And
Falsification Waste
Management’s Financial
Statements.

6. Who Were Involved?
• Dean L. Buntrock, Waste Management’s Founder and Chairman
of the Board of Directors.
• Phillip B. Rooney, the President and Chief Operating Officer.
• James E. Koenig, the Executive Vice President and Chief
Financial Officer.
• Thomas C. Hau, The Vie President and Chief Accounting Officer.
• Herbert Getz, Senior Vice President and General Counsel.
• Bruce D. Tobecksen, the Vice President of Financial Department.
• Arhtur Andersen LLP, and independent Auditor.

7. How They Did It?
• Avoided depreciation expenses on their garbage trucks.
• Assigned arbitrary salvage values to other assets that before had no
salvage value.
• Failed to record expenses for decreases in the value of landfills as
they were filled with waste.
• Didn’t record expenses needed to write-off the costs of unsuccessful
and eliminate landfill development projects.
• Established inflated environmental reserves (liabilities).
• Inappropriately capitalized a variety of expenses.
• Failed to establish acceptable reserves (liabilities) to pay for income
taxes and other expenses.

8. Who Discovered The Fraud? And How?
• A new CEO (David P. Steiner) ordered a review of company’s accounting
practices.
• After restating the financial statements, it came to the management’s attention
that the financial statements had misstated its pre-tax earnings by
approximately $1.7 billion.

9. How Did They Hide It?
Internally:
• All were corporate headquarters
• Frequent Top- level adjustments
Externally:
• Disclosures of misleading financial statements
• Using “netting” ($490 million) and “geography” (tens of millions of $)
• The company’s long term auditor, Arthur Andersen LLP.

10. Effect Of The Fraud
• Shareholders lost more than $6 billion when stock prices dropped by
more than 33%.
• Waste Management was bought and merged with a smaller company,
USA Waste Services Inc. in 1998.
• Waste Management had to pay $457 million in a class action suit to
shareholders.
• Arthur Anderson LLP was fined $7 million.
• In 2005, the fraud accounting lawsuit against the former executives
was settled for $31 million.
• The men were banned from serving as officers and directors of a
public company.

11. Waste Management At Present
Although, Waste Management, Inc., with the help of auditor, Arthur
Andersen, was investigated, charged with a suit, and required to
restate their financial statements, the company was able to continue
operations.
The Company is currently operating in North America
• The Largest Solid Waste Provider in North America.
• The leading Provider of Integrated Environmental Solutions in the
country.
• The Largest Recycler of the state.
• Owns Largest Truck Fleet in the North American Industry.
• Provide employment to more than 50000 people.
• Has a customer base of more than 21 million people.

12. THANK YOU