Norris, Floyd. "Accounting World, Still Resisting Sunlight." The New York Times. The New York Times, 24 Oct. 2013. Web. 7 Nov. 2013.
"Waste Management Founder, Five Other Former Top Officers Sued for Massive Fraud." Waste Management Founder, Five Others Sued for Massive Fraud. U.S. Securities and Exchange Commission, 26 Mar. 2002. Web. 11 Nov. 2013.
Waste Management Accounting Scandal
Resolution
Conclusion
Team 2:
Lauren Jiron Quan Tran
Gina Tong Kenny Halperin
Jessica Adam Danny O'Regan
- Sarbanes–Oxley Act
- 1) PCAOB
- 2) Auditor Independence
- Waste Management agreed to pay $457 million in class action lawsuit
- Waste Management has agreed to pay $26.8 million to settle a lawsuit brought by SEC against four former top executives
- One of the most egregious accounting scandals in the history resulting in an estimated loss of $6 billion for the investors
- Waste Management fraud scandal marked the beginning of the end of Arthur Andersen and serves as a building block for the government to author the Sarbanes-Oxley Act
- Lesson learned: Honesty pays dividends in both peace of mind and dollars. $$$
Stakeholders
- Shareholders of Waste Management stock lost $6 billion.
- All management
- Dean L. Buntrock: founder, chairman, and CEO
- Phillip B. Rooney: president, COO, director, and at one point CEO.
- James E. Koenig: executive vice president and CFO
- Thomas C. Hau: vice president, corporate controller, and chief acct. officer.
- Herbert Getz: senior vice president, general counsel, secretary
- Bruce D. Tobecksen: vice president of finance
- Arthur Andersen
Frameworks
- Deontology (Kant):
- Senior officers had poor motives, did not follow their duty
- Bad consequences
- Did not establish good ethical standards to apply universally
- Used people for their own self-enrichment
Blindspot
- Virtue Ethics (Aristotle):
- "We are what we repeatedly do."
- Actions do not express good character & virtues.
- Virtues are not cultivated.
Is This An Ethical Issue?
- Yes - wrong from right
- Driven by greed & status
- Buntrock created a fraud culture within Waste Management
- "netting" - reports looked better than they actually were
- Inflated earnings & reduced expenses
Who Are They?
- Largest environmental solutions provider in North America
- Serves customers in the United States, Canada, and Puerto Rico
- Role in the community
- Help communities and organizations become greener
- Renewable energy provider
- Residential recycler
Scandal
- $1.7 billion were reported in fake earnings between 1992-1997
- Methods of restatement
- Avoid depreciation expenses on garbage trucks
- Assign salvage values to other assets that previously had no salvage value
- Refrained from recording expenses for any decreases in value of landfills
- Increased environmental reserves to avoid irrelevant operating expenses
design by Dóri Sirály for Prezi