Yahoo Finance 10 big corporate scandals of 2018
Seldom does a year go by without a horrible corporate scandal. This year was no exception. In fact some companies have experienced so many different ones, that they’ve gotten hard to keep track of. In other cases, the same slow-drip of bad news and more bad news has meant the public has become somewhat inured to the misdeeds.
But in case you’ve forgotten, here are some of the year’s lowest corporate moments.
MBS, Khashoggi, and big business
After going to the Saudi consulate in Istanbul in October, Saudi journalist Jamal Khashoggi was never seen again. Just before Saudi Arabia's Future Investment Initiative, a conference filled with the biggest names in business and which is dubbed Davos in the Desert, reports emerged that Saudi Crown Prince Mohammed bin Salman was likely behind the disappearance, and which was found to have been premeditated murder.
At first the Saudis said they didn’t know anything about what happened, and then as the clues mounted — fresh paint in the embassy and a team of Saudi agents at the airport, for example — the story changed to “rogue agents.”
Business leaders slated to appear at the conference had to make quick choices whether to stay and pander to a leader who probably ordered a killing of a journalist, or leave and risk a business relationship. Eventually most business leaders dropped out. Some were faster than others.
In November, the CIA concluded that Saudi Crown Prince Mohammed bin Salman ordered the killing of journalist Jamal Khashoggi in Turkey.
Facebook and Cambridge Analytica and data breaches
It is so difficult to remember everything bad that happened regarding Facebook this year that BuzzFeed News and Wired both wrote specific articles about each of its 2018 scandals.
Probably the biggest black eye for Facebook was its Cambridge Analytica scandal, in which Cambridge Analytica, a data company linked with the Trump presidential campaign, was able to leverage millions of Facebook users' data. This resulted in CEO Mark Zuckerberg testifying not only in congressional hearings, but also answering questions from the EU Parliament.
And that wasn’t the social media giant’s only blunder to get exposed this year. In September, personal information for 50 million people was compromised.
In December, Facebook said that a bug may have exposed the photos of 6.8 million users during a 12-day period — this came a day after a talk-about-your-privacy pop-up in Manhattan — and the New York Times broke the news that Spotify, Amazon, Microsoft, Yahoo, and Netflix all had data-sharing relationships that were not disclosed to users.
Elon Musk’s “funding secured” debacle with Tesla
The sleepless CEO is second to only Donald Trump as an undisciplined tweeter, and it cost him and Tesla $20 million each when Musk claimed to have “funding secured” for Tesla to be taken private at $420 a share, and was considering doing so.
This, of course, turned out to not be true, and prompted the SEC to get involved, as Musk’s tweets had the potential to manipulate the market and crush the short sellers he frequently derides. The whole thing cost Tesla and Musk more than money, however. His and the company’s reputation suffered, Musk lost his chairmanship at the company, and it proved to be a major distraction to the goal of producing Model 3 cars.
Google’s slow drips
Google’s year of corporate scandal was less about one big horrible reveal and more about steady drips of mini-scandals. There was the Google Plus data breach that came out in October, which meant the end of a product few people used. There was the fact that CEO and co-founder Larry Page (or any Google executives) failed to show up for a congressional hearing in September while other tech executives came to testify about the ways Russia influenced the U.S. elections.
There was the #metoo scandal in which Andy Rubin, the founder of Android, was paid $90 million in an exit package, when the exit was related to sexual misconduct. That resulted in an employee walkout over the company’s response. Add on the possibility of a censored search engine in China and the company has had quite the rough year from a PR standpoint.
Goldman Sachs and 1MDB
Goldman Sachs’s media portrayals haven’t always been flattering. But its involvement in the 1MDB imbroglio, in which billions were embezzled from a state-run Malaysian fund, are among the worst. Goldman bankers have been charged with bribery and money laundering, having helped the fraud, in which a business man ended up buying gifts for celebrities Leonardo DiCaprio and Miranda Kerr.
The company has attempted to make it clear that these were rogue employees, but it’s been reported that top executives and committees share the blame. CNBC reported that current Goldman CEO David Solomon, former CEO Lloyd Blankfein, and CFO Stephen Scherr reviewed the deals, which came from the investment banking side, not the trading desk, which has been subject to issues in the past.
The Carlos Ghosn affair
Carlos Ghosn was supposed to bring together Nissan and Renault. Instead, he pulled the two companies into controversy when he allegedly underreported his income between 2010 and 2015 and misused company assets. He was arrested and subsequently ousted from his position leading an enormous part of the auto industry. He may have also taken money that was meant for other executives. This could spell major problems for Nissan, Mitsubishi, and Renault, which are linked by a partnership that Ghosn forged.
A few weeks later, Ghosn was re-arrested after new suspicions emerged that he had shifted personal losses to the company.
More money laundering for Deutsche Bank
Deutsche Bank is no stranger to controversy, from the Libor scandal, its role in the financial crisis, a 2017 money laundering fine from New York State and more. Once again, this year, the Frankfurt-based bank finds itself in the news hit by more money-laundering allegations.
Deutsche Bank processed around $150 billion in questionable payments for Danske Bank in Estonia, but said it terminated its relationship in 2015 following "suspicious activity."
Self-driving cars record their first death
In March, a self-driving vehicle operated by Uber hit and killed a pedestrian. Though a few people had died with Level 2 self-driving car technology in the past, using the Tesla autopilot feature, the Uber death was the first one that happened with fully-autonomous technology. The car was going 5 miles per hour under the speed limit when it hit a pedestrian walking a bicycle across the street in Tempe, Ariz.
The car was supposed to detect a person, and in the fallout Uber decided to suspend its self-driving programs, a blow to the advancement of the technology.
Facebook and Myanmar
Facebook’s platform, meant for “bringing people closer together” (to create shareholder value of course), appeared to exacerbate a horrible genocide through murder and rape in Myanmar in 2018. The Myanmar military used the platform to incite violence against the Rohingya Muslim community. A United Nations report called Facebook “slow and ineffective” at combating the false information.
WhatsApp propaganda
WhatsApp got pulled into the spread of technology-aided fake news this year, which led to the deaths of dozens of people in July in India. False rumors and altered videos that showed “child abductions” spread throughout WhatsApp via forwarded messages, often with local-identifying details. This led to bursts of mobs attacking people, culminating in the murder by lynching of over 40 people.
While old scores and other factors were at play, the role of WhatsApp – which is owned by Facebook – was criticized as a catalyst for the violence, leading the company to change its “forwarding” feature, which in the past did not show that a message had been forwarded from someone else. WhatsApp worked to put ads in local papers to help increase media and news literacy, but the problems difficulty became so pointed that the internet had to be shut down in parts of India at one point.
