Real Scandal: From 2005 to 2006, energy giant FirstEnergy was getting in increasingly deep water with the feds. The company was facing criminal charges for an alleged 2002 coverup of a reactor head ready to blow at its Davis-Besse nuclear plant in Ohio. In January 2006, FirstEnergy ponied up $28 million, on top of a previous $5.45 million penalty, to make the criminal charges go away. The cost of the replacement reactor head? $605 million, according to the Toledo Blade.
Film Scandal:
Erin Brockovich
Real Scandal: Bernard Madoff: Two words say it all. Madoff piloted the most devious Ponzi scheme ever, finding new suckers to give him money as he paid (some) old ones off, eventually defrauding his investors of an
estimated $18 billion. He'll now finish his life in prison.
Film Scandal:
Wall Street
Real Scandal: The story of telecom beast WorldCom epitomized the first wave of corporate scandals that bookended the 2000s. Originally called Long Distance Discount Services, WorldCom in the 1990s used strategic acquisitions to go from midlevel player to king of the mountain. And sitting on top was WorldCom CEO Bernie Ebbers. But all of a sudden, in the late 1990s, technology wasn't so profitable anymore. Billions of dollars were unaccounted for in WorldCom's financial ledger, plucked out of air by Ebbers and other WorldCom executives to quell investors. Officials finally decided WorldCom had been claiming $11 billion it didn't have. WorldCom filed for the then-biggest bankruptcy in the United States, and Ebbers was
convicted of securities fraud and conspiracy. A different Bernie has since supplanted Ebbers as the nation's requisite bad guy, but for a while, Bernard Ebbers was public enemy No. 1.
Film Scandal:
Fun With Dick and Jane
Real Scandal: Texas-based construction company Fluor has prominent anti-corruption policies, including a relationship with Transparency International. That's good for a global company dealing in countries where ethics rules are sometimes undefined. But here on U.S. turf, three former Fluor employees in Richland, Washington, were
indicted last week for fraudulently charging about $560,000 in goods and services. They allegedly weren't using just any old stolen credit card, either. The charges claim it was a credit card issued by the federal government and distributed by Fluor for work-related purchases.
Film Scandal:
The Towering Inferno
Real Scandal: After a
series of articles on Salon in 2001 exposed pay-for-play practices by major radio station companies, particularly Clear Channel, not much happened. Although stations are required to say when they are playing a particular song because they were paid by a record label to do so, radio stations flouted the rule. Then-New York Attorney General Eliot Spitzer stepped in four years later, and the pressure mounted on stations to comply with the law. Four major chains, including Clear Channel, paid out $12.5 million in 2007 and agreed to play 4,000 hours of music (roughly 167 days' worth) produced by independent labels to settle the suit brought by Spitzer.
Film Scandal:
The Front Page
Real Scandal: Indonesian officials made out like bandits from 1998 to 2004, netting $20 million to $30 million from Phoenix-based Freeport-McMoRan, one of the most recognizable names in the copper and gold mining business. According to a 2005
exposé in The New York Times, Freeport made the payments directly to local military commanders, sometimes without documentation. The payments were strongly encouraged by a powerful military commander, then-Gen. Prabowo Subianto. If substantiated, the actions uncovered could have violated the Foreign Corrupt Practices Act. "Our books and records are transparent and accurately reflect the support that we provide," the company told the Times. Charges against Freeport have not been filed.
Film Scandal:
Matewan
Real Scandal: JPMorgan Chase has been coming up roses during the financial mess, snatching up rivals at discount rates and fully paying back government bailout funds. But there's at least one incident that came to light last year that the company would rather forget. It began with $3 billion and a dream—to refinance the Jefferson County, Alabama sewer system while the county was facing bankruptcy. But for the bank to secure its place as underwriter of the bond, bribes totaling $8 million were paid by JPMorgan employees and others to friends of local elected officials,
according to Securities and Exchange Commission charges. JPMorgan settled the case without admitting wrongdoing, waived proposed fees of $647 million, paid the county $50 million and was slapped with a $25 million fine.
Film Scandal:
It's a Wonderful Life
Real Scandal: The Travelers Companies, the largest U.S. supplier of business and commerical auto insurance, agreed to settle a class-action suit in late 2007. The case involved charges of submitting false bids and conspiring with an insurance broker for contingent commissions. The conditions of the arranged settlement also ended the investigations of six state attorneys general who were looking into the company's "
compensation and insurance placement." Total cost for the clean slate settlement? $77 million.
Film Scandal:
Double Indemnity
Real Scandal: Shelf space at Home Depot is valuable territory, but in 2006 certain Home Depot managers began lining their pockets in exchange for lining customers' floors with specific products. The fraud became public in 2007, when the retail behemoth fired four of its buyers for taking bribes. Federal prosecutors looked into the kickbacks, as well as mail fraud, wire fraud, and money laundering. Three of the managers involved
pleaded guilty in 2009, in addition to two others who were implicated in a similar scheme and had allegedly collected more than $8 million from suppliers.
Film Scandal:
Before the Devil Knows You’re Dead
Real Scandal: In the last year and a half, four purchasing managers at some of the nation's largest food manufacturers—Kraft, Frito-Lay, Safeway, and B&G Foods—have admitted to taking bribes. The owner of SK Foods, one of the largest tomato purveyors, is thought to be at the center of the
far-reaching fraud that involved selling millions of pounds of defective tomato products. Frederick Scott Salyer was arrested on February 4 in New York City and indicted weeks later on charges of racketeering, fraud, and obstruction of justice. Salyer was fingered in 2008 following the wiretap of a conversation in which he promised one of the purchasing managers to help with tax payments. The bribery accusations stem as far back as 1998, and SK Foods dissolved in bankruptcy last year.
Film Scandal:
The Insider
Real Scandal: Glenview-based Illinois Tool Works was ordered to pay $142,000 in civil restitution over charges by the Commerce Department that it exported chemicals to Brazil without the correct licenses. The exported chemicals had potential commercial uses, but were also known to be used in the building of chemical weapons. Tool Works did not confirm or deny the allegations in agreeing to pay the fine.
Film Scandal:
Norma Rae
Real Scandal: Health-care fraud is relatively common and incredibly expensive. The most common method is pilfering identities, which contributes to the estimated $100 billion that is skimmed from the system every year,
according to the National Health Care Anti-Fraud Association. Earlier this week, two Texas doctors pleaded guilty to fraud and conspiracy related to nearly a decade of charging for pain-management care that was never performed. The duo, a married couple, face eight and 15 years in prison, respectively. Meanwhile, Terrence Hicks in Jackson, Mississippi, was sentenced to 40 months in prison and a $5 million restitution fine last Monday after pleading guilty to one count of health-care fraud. According to the district court indictment, Hicks bribed Medicare beneficiaries with cash in exchange for claiming to receive medical services from two clinics that were filing bogus claims with Medicare.
Film Scandal:
Lorenzo’s Oil
Real Scandal: For nearly two decades beginning in the 1950s, Lockheed made a series of illegal payouts to foreign government officials in exchange for aircraft contracts. The scandal, which involved West Germany, Italy, and Japan, was uncovered in 1976 by a Senate subcommittee. The pattern of fraud led Lockheed's chairman and president to resign, and contributed to the 1977 passage of the Foreign Corrupt Practices Act, which established bribing foreign officials as a federal crime.
Film Scandal:
Charlie Wilson’s War
Real Scandal: In the largest fine ever imposed, Pfizer coughed up $2.3 billion last fall over civil and criminal charges that it
illegally marketed Bextra, a painkiller. The record sum (which accounts for a mere three weeks of Pfizer sales) was levied amid other allegations of false marketing of other drugs including Geodon and Lyrica. To resolve accusations of a similar scheme, AstroZeneca agreed to pay $520 million in a civil settlement to absolve itself of allegations that it illegally marketed an anti-psychotic drug with off-label uses that are not included in the label approved by the FDA.
Film Scandal:
Brain Candy
Real Scandal: In 2007, Chevron agreed to pay $30 million without admitting or denying charges of paying Iraq in exchange for oil it purchased in 2001 and 2002. The SEC alleged that the oil giant shelled out money for around 78 million barrels of crude oil during the year ending May 2002 without ensuring that the Iraqi sellers were not accepting surcharges on the oil, as
mandated by U.S. law. Prior to Chevron's payout, four other companies agreed to settlements with the SEC over alleged kickbacks to Saddam Hussein during the same time, include Textron, Ingersoll-Rand, and York International.
Film Scandal:
Syriana
Real Scandal: Tech-watchers predicted a harsh verdict in the case nicknamed "Gates vs. the States" and in 2000, U.S. District Court Judge Thomas Penfield Jackson fulfilled expectations. Justice Jackson found Microsoft guilty of violating federal and state antitrust laws by maintaining a monopoly on operating systems, and using that monopoly to keep its Internet Explorer browser on top. The company had extended "
an oppressive thumb on the scale of competitive fortune." After the verdict, there was a looming threat that the government might break up Microsoft, but instead it was able to settle by sharing some of its programming details with third-party companies.
Film Scandal:
Hackers
Real Scandal: Hewlett-Packard is accused of going too far to get business in Russia. Both German and Russian authorities are investigating whether the technology giant paid nearly $11 million in bribes seven years ago in order to get a $46 million computer contract with the prosecutor general of the Russian Federation, by way of a German subsidiary. Russian prosecutors
raided the company's Moscow offices earlier this month, upon the urging of German authorities, who arrested three suspects—including one current H-P exec—in connection with the case. None were formally charged. The U.S. Securities and Exchange Commission has opened its own investigation, in consideration of the Foreign Corrupt Practices Act.
Film Scandal:
The Net
