Ethical business and financial practices aren’t solely for the benefit of the consumer, but rather are meant to protect companies as well. Chief financial officers are responsible for the financial health of their organization, but what happens when a CFO or similar figure within the company falters?
1. $132 million. That’s the amount stolen by CFO Yasuyoshi Kato from Day-lee Foods, Inc., which is headquartered in Santa Fe Springs, California. In 1991, Kato began writing fraudulent checks and forging account entries to cover his theft and begin living an extremely lavish lifestyle. Though his wife Ann Beiler-Hozumi was not involved in the scheme, she was also sued in a civil action after the embezzlement was discovered in 1997.
2. $74 billion. CEO Jeff Skilling and former CEO Ken Lay were behind the Enron Scandal that robbed $74 billion from investors. This affected thousands of employees and investors, many of whom lost their retirement savings and jobs as a result of the scandal. Whistleblower Sherron Watkins discovered the scandal after questioning high stock prices. Before the scandal, Enron had been named the “Most Innovative Company in America” by Fortune Magazine. Skilling was sentenced to 24 years in prison and Lay has since died.
3. $11 billion. CEO Bernie Ebbers was behind the WorldCom scandal in 2002, which resulted in the loss of $11 billion, 30,000 lost jobs, the firing of the CFO and the bankruptcy of the company. Ebbers was caught after the company’s internal auditing department discovered $3.8 billion worth of fraud.
As CFOs continue to become leaders in their organizations, they play an integral role in setting the tone for preventing embezzlement and fraud scandals. To do this, CFOs must secure the commitment of senior management, because the tone at the top matters. Compliance programs only succeed when senior management and stakeholders support the initiatives.
By pursuing anti-corruption training and messaging, CFOs can also help safeguard companies against inside jobs that would otherwise cause devastating financial damage. Periodic anti-corruption program audits keep departments and employees in check, preventing scandals from developing. CFOs should pursue whistleblower protections, ensuring that those interested in business integrity feel safe in ferreting out wrongdoing.