International scamsPresented by-
Mukta chugh
Naazneen Noor
Pooja Raisinghani
Deepak Singh
Dinesh Tulsiani
Jasmine Arul
Scam?
Types of scams
National
scams International
scams
List of scams
• Enron
• WorldCom
• Adelphia
• Global Crossing
• Bre-x Minerals
• Xerox
• Qwest
• Lehman brothers
• 2G scam...
About Bre-x Minerals
• Mining company
• Founded by David walsh in 1989
• Group of Canadian companies based in Calgary, alb...
Timeline of Scandal
• May 1988- shares trading at 0.3 dollars
• 1992-1993:-
⁻ John Felderhof became new vice chairman.
⁻ H...
Continue…
• 1996:
₋ Started trading at Toronto stock exchange at $180
₋ Networth reaches 6 billion
₋ Gold estimated to be ...
Mysterious story of Bre-x
• Positive intervention of government.
• 1997- Insignificant amounts of gold.
• Smartly using fa...
• Shares plunges to $2.80
• False Suicide of Michael D’Guzman.
• Vanishing easily.
Question unanswered???
• Was it a fair ending?
• What about the investors?
Suggestions
What can be done to stop such scam??
Montgomery Hendry Lehman New York USA Richard S.
Alabama Emanuel Lehman Fauld jr
USA (1850) Mayer Lehman,
HISTORY OF LEHMA...
How big is Lehman Brothers?
• Prominent Investment bank in Wall Street.
• Huge Diversion
• Investment banker
2008
•Lehman
became
Layman
Initialization of Crisis
• Federal reserve chairman lowers interest rate to 1%.
• Banks on Wall St. started taking loan fo...
SUBPRIME MORTGAGE
CONTINUE..
why did Lehman brothers
collapse?
• Lehman Brothers was a big player in the mortgage-
backed securities market
• Most expo...
FILING FOR BANKRUPTCY
Lehman Takeovers
North America
Asia Division
The Beginning
It all begins with…
Houston Natural Gas = a gas utility headquartered in Houston, TX.
+
InterNorth Inc. = (1...
Enron- The company
• World wide leading energy concern
• fusion of two major gas providers.
• Largest gas provider in Brit...
Enron’s Products
• Enron Online : Petrochemical, Plastics, Power, Pulp & Paper, Steel,
Weather Risk Management.
• Oil & LN...
Enron Before its bankruptcy
Fortune magazine chose Enron
as it’s “Best Managed and
Most Innovative company”
#1 – Quality o...
Enron’s Surge to the top
• From Energy to Trading
• Mark-to-Market accounting
• Special purpose Entity
• A new Strategy
• ...
Enron Scandal- From Riches to Rags
So what went wrong???
Mark to Market accounting
“Enron was in charge of putting any possible number of earnings
(manipulation) and the technique...
SPECIAL PURPOSE ENTITIES
(SPE’s)
 SPE’s reflect a common financing technique for companies.
Companies can cut their risk ...
Enron’s Use of Special Purpose Entities
BU 667
June 13 2006
Pump and Dump
• During Enron’s fall, executives would encourage
employees and investors to buy more st...
The “Smartest Guys in the Room”
Kenneth lay Jeffrey Skilling Andrew Fastow
The key Players…
Then were said to be “ THE GUI...
•Provided multi million
dollars
•Security analysts
recommended “strong
buy”
Investment
banks and
commercial
banks
•Paid su...
Aftermath of Enron’s Bankrupcy
• 4500 employees lost their jobs
• 60 billion dollars went for a toss
• Citizens trust in t...
What could Enron have done to prevent what
happened?
An ethical corporate culture
In Brief about Arthur Andersen
• Founded in December 1913 by Arthur Anderson and Clarence
DeLany
• By 2000:
-85000 employe...
•Historical
background
 company started in 1913 in Chicago
named as Andersen, Delany & Co.
After Denlay left, company wa...
Accounting Scheme
Enron&AA
• Enron was Andersen’s second largest client.
• Provided both external auditing and Consultations.
• unethical me...
Thankyou
International scams
International scams
International scams
International scams
International scams
International scams
International scams
International scams
International scams
International scams
International scams
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International scams

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Gives indetail idea about 3 major scams i.e Bre-x minerals scam, Lehman brothers and Enron.

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International scams

  1. 1. International scamsPresented by- Mukta chugh Naazneen Noor Pooja Raisinghani Deepak Singh Dinesh Tulsiani Jasmine Arul
  2. 2. Scam?
  3. 3. Types of scams National scams International scams
  4. 4. List of scams • Enron • WorldCom • Adelphia • Global Crossing • Bre-x Minerals • Xerox • Qwest • Lehman brothers • 2G scam • Common wealth games scam • Fodder scam • Satyam scam • Telgi scam • Harshad Mehta scam • Ketan parekh securities scam
  5. 5. About Bre-x Minerals • Mining company • Founded by David walsh in 1989 • Group of Canadian companies based in Calgary, alberta • Involved in a major scandal
  6. 6. Timeline of Scandal • May 1988- shares trading at 0.3 dollars • 1992-1993:- ⁻ John Felderhof became new vice chairman. ⁻ He suggests exploration in busang, Indonesia ⁻ Hired Geologist Michael de Guzman as project manager. • 1993-1995:- ₋ During initial stages company claimed promising results ₋ Stock price increased to $14.87 ₋ claimed gold to be 30 million ounces ₋ stock price increased to $5o
  7. 7. Continue… • 1996: ₋ Started trading at Toronto stock exchange at $180 ₋ Networth reaches 6 billion ₋ Gold estimated to be 39 million ounces
  8. 8. Mysterious story of Bre-x • Positive intervention of government. • 1997- Insignificant amounts of gold. • Smartly using false gold samples. • Usage of gold dust. • Destroying all the records.
  9. 9. • Shares plunges to $2.80 • False Suicide of Michael D’Guzman. • Vanishing easily.
  10. 10. Question unanswered??? • Was it a fair ending? • What about the investors?
  11. 11. Suggestions What can be done to stop such scam??
  12. 12. Montgomery Hendry Lehman New York USA Richard S. Alabama Emanuel Lehman Fauld jr USA (1850) Mayer Lehman, HISTORY OF LEHMAN BROTHERS FOUNDER HEAD QUATERS CEO
  13. 13. How big is Lehman Brothers? • Prominent Investment bank in Wall Street. • Huge Diversion • Investment banker
  14. 14. 2008 •Lehman became Layman
  15. 15. Initialization of Crisis • Federal reserve chairman lowers interest rate to 1%. • Banks on Wall St. started taking loan form Federal at 1% other countries like China, Japan, Middle east also gave loans to banks on Wall St. • Banks started leverages. The Weekend that changed wall street
  16. 16. SUBPRIME MORTGAGE
  17. 17. CONTINUE..
  18. 18. why did Lehman brothers collapse? • Lehman Brothers was a big player in the mortgage- backed securities market • Most exposed banks to the US sub-prime mortgage market. •It became bankrupt as a large part of their loan portfolio comprised of loans for buying real estate. •It had a bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion.
  19. 19. FILING FOR BANKRUPTCY
  20. 20. Lehman Takeovers North America Asia Division
  21. 21. The Beginning It all begins with… Houston Natural Gas = a gas utility headquartered in Houston, TX. + InterNorth Inc. = (1979) Large Energy company based in Omaha, NE. Specialized in Natural Gas pipelines, and also a force in plastics, coal and petroleum exploration and production. 1985: Merger between InterNorth and HNG. 1986: Company run by former HNG CEO Kenneth Lay.
  22. 22. Enron- The company • World wide leading energy concern • fusion of two major gas providers. • Largest gas provider in Britain and America. • Active in 40 nations with a sales volume of 140 billion US$.
  23. 23. Enron’s Products • Enron Online : Petrochemical, Plastics, Power, Pulp & Paper, Steel, Weather Risk Management. • Oil & LNG Transportation. • Broadband. • Principal Investments. • Risk Management for Commodities. • Energy transportation and upstream services. • Capital and risk management services. • Energy and commodities services, etc.
  24. 24. Enron Before its bankruptcy Fortune magazine chose Enron as it’s “Best Managed and Most Innovative company” #1 – Quality of Management #2 – Employee Talent Chosen “the most innovative company” for 6 years in a row.
  25. 25. Enron’s Surge to the top • From Energy to Trading • Mark-to-Market accounting • Special purpose Entity • A new Strategy • Skilling’s plan
  26. 26. Enron Scandal- From Riches to Rags So what went wrong???
  27. 27. Mark to Market accounting “Enron was in charge of putting any possible number of earnings (manipulation) and the technique became a generator of huge earnings.”
  28. 28. SPECIAL PURPOSE ENTITIES (SPE’s)  SPE’s reflect a common financing technique for companies. Companies can cut their risk by moving assets into separate partnerships that can be sold to outside investors.  Accounting rules-> SPE´s legally isolated from the company that created it. ENRON´s CASE  Losing money assets were sold to partnerships  Listed as earnings.  Hide and to manipulate cash flows
  29. 29. Enron’s Use of Special Purpose Entities
  30. 30. BU 667 June 13 2006 Pump and Dump • During Enron’s fall, executives would encourage employees and investors to buy more stock, telling them the company would rebound, while selling large amount of Enron stock themselves. • By Enron’s collapse • Skilling made over $200M in Enron stock • Lay made over $300M in Enron stock
  31. 31. The “Smartest Guys in the Room” Kenneth lay Jeffrey Skilling Andrew Fastow The key Players… Then were said to be “ THE GUILTIEST GUYS IN THE ROOM”
  32. 32. •Provided multi million dollars •Security analysts recommended “strong buy” Investment banks and commercial banks •Paid substantial fees to CRA’s •Provided good investment ratings. Credit Rating Agencies
  33. 33. Aftermath of Enron’s Bankrupcy • 4500 employees lost their jobs • 60 billion dollars went for a toss • Citizens trust in the system was destroyed. • worst stock value loss in peaceful times. • The rules for company financial reporting were drastically sharpened: Sarbanes-Oxley Act(2002).
  34. 34. What could Enron have done to prevent what happened? An ethical corporate culture
  35. 35. In Brief about Arthur Andersen • Founded in December 1913 by Arthur Anderson and Clarence DeLany • By 2000: -85000 employees -350 offices in 84 countries -Top 5 accounting firm -1,00,000 clients including government and MNC’s. • Provided auditing and accounting services
  36. 36. •Historical background  company started in 1913 in Chicago named as Andersen, Delany & Co. After Denlay left, company was renamed as Arthur Andersen & Co 1930’s- public companies to submit their financial statements to independent auditor 1947 Andersen died and Leonard Spacek became the new CEO •Company Development Opened international offices in 1950 In 1954 they launched computer consulting business In 1960 they made huge profits In 1970s Consulting business expanded By 1979 half of its worldwide fees came from consulting Arther andersen Andersen consulting
  37. 37. Accounting Scheme
  38. 38. Enron&AA • Enron was Andersen’s second largest client. • Provided both external auditing and Consultations. • unethical methods used by AA • Blind fold by their own will. • Funeral of documents. • Bankrupcy of both companies.
  39. 39. Thankyou

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