10 Biggest Recent Accounting Scandals in UK

In our list of 10 biggest recent accounting scandals in UK you are going to read some interesting stories, to say the least, about something so close and dear to us all – money. It is said that money is the root of all evil. Not sure about it, but money was the main motive behind all these scandals. The desire to have it all, to possess enormous wealth or claim power was what drove individuals or groups over the edge. The UK is not a lone case. The USA also shared similar experiences described in our article 10 biggest recent accounting scandals in America.

The main criteria in creating our list was the size of the penalty received. We focused on the amount the company was/is due to pay either to the state or to the investors – whoever was damaged in the process. Of course, some of the companies went bankrupt along the way, or precisely due to the reason they couldn’t repay as much as was requested from them. That fact did not affect the list since it would be too complicated to measure e.g. the company’s yearly revenue and how the loss makes up for that. Not to mention the people who suffered the most, i.e. employees or investors. Looking at cold hard figures is the best and unbiased option since after all, it is all about the money. Interestingly enough, the top of our list has the highest penalty, and the worst outcome too – its bankruptcy. Another spoiler alert: since all these companies were found guilty, they are the ones who had to pay for the trial expenses.

The majority of the unfortunate events on our list happened only a few months ago, and the culprits are paying their fines as you are reading this (with an option of more to come to foot the bill). The year given is the year when the case officially closed, not when the wrongdoing started. After all, everyone is innocent until they are found guilty.

To find the biggest recent accounting scandals in UK, we first turned to AccaGlobal and SFO for suggestions. SFO or the Serious Fraud Office is the UK government’s organization responsible for putting most of the criminals from the list behind bars. If you are interested in the prospective scandals, make sure you check out their current cases under investigation. As we were exploring the given examples, we encountered more cases in Business Insider, Telegraph, BBC and other reliable media. Then, we listed them according to their fines.

It is time to start and see who they are and what happened. There are different enterprises, and on some occasions, they are the ones who organized everything, while on some others they simply proved to be too gullible and trustworthy of their employee(s). Here is our list of the biggest recent accounting scandals in UK.

10. Innospec Bribery Scandal

Loss: around £10 million

Year: 2014

The sum is rather modest, as you shall observe later. The matter, however, is very serious. Innospec was bribing Indonesian officials in order to sell prohibited chemicals in Indonesia and Iraq. The toxic matter in question was a fuel additive which is extremely harmful to children. The USA was the first in the world to ban leaded gasoline in the 70s, and the European countries followed this step a few years later. Innospec was one of the last producers of it, so naturally, they felt very anxious once they heard Indonesia is going to forbid the matter, too. The Guardian says they spent more than 12 million pounds on bribes, so the penalty, along with some lay offs, is not what we would call an enormous one. The next one on the list sounds much more impressive.

9. TESCO’s Fake Revenue

Loss: £214 million

Year: 2017

Anyone who has ever been to the island recognizes this brand. If you are living in the USA, just imagine if Walmart suddenly admitted to cooking books. That is how big the shock is. Unfortunately, there will be other candidates that are household names, too. So, what did  TESCO do? Well, just lied about its revenues in 2014. The Guardian informs us they overstated the figure by “mere” 326 million pounds. The three people accused claimed they are innocent, but eventually, the company settled with SFO about a £129 million fine. We should also add the £85 million they promised to pay the investors as a way of apologizing.

8. HBOS’ Frauds

Loss:£350 million

Year: 2017

HBOS belongs to Lloyds Banking Group, and apparently, even when they purchased it in 2008, the frauds had already been organized. Telegraph tells us people responsible are about to serve their sentences for approving loans that should have been declined. They are guilty of defrauding, bribery and money laundering. Lloyds lost £250 million in the process and is obliged to pay additional £100 million to the victims whose businesses suffered or completely failed.

7. RBS and Dash for Cash

Loss: £400 million

Year: 2016

This shocking incident is also known as “Dash for Cash” scandal. RBS stands for the Royal Bank of Scotland. BusinessInsider gives all the details. In a nutshell, the amount they had to pay was for deliberately forcing small and medium-sized enterprises (SMEs) into taking the loan from them. RBS systematically bankrupted the companies and later was buying them off for peanuts. HeraldScotland says they make up a group of almost 500 businesses.

6. Polly Peck International 20 Years’ Case

Loss: £550 million

Year: 2012

We are continuing our list of biggest recent accounting scandals in UK with the case that actually started in 1990, but the year is 2012 because that is when its founder and person responsible for its doom finally came back to the UK and was found guilty, a.k.a. proclaimed to be a thief. For the previous 20 years, he had been living abroad. BBC explains Asil Nadir practically escaped after SFO raided the Polly Peck International premises and found irregularities. The company ended up owing £550 million which were never paid to anyone.

5. BT Italian Division Scandal

Loss: £530 million

Year: 2017

It appears that sometimes it is easier to commit crimes outside the island. BT or the British Telecom is the next one on the list of biggest recent accounting scandals in UK because it lost £530 million due to what The Guardian quotes as “inappropriate management behavior” of BT’s Italian branch. What that really comprises are the frauds and bullying. As it is expected, the company’s shares are plummeting at the moment, but cutting down the CEOs’ salaries should help a little. British Telecom has also announced major lay-offs as well. Since it happened in 2017, and the sum is pretty high, this is one of the biggest recent accounting scandals in UK.

4. Rolls-Royce’s International Bribery

Loss: £671 million

Year: 2017

Rolls Royce stands for elegance, tradition, and wealth. Sadly, they are not immune to greasing palms, which is another business tradition. Who would have thought they would get their hands dirty and mess with the numbers? Bribery settlement cost them dearly. Even though BBC has just reported the aftermath, the cases involved were happening over a span of 25 years, and the ones affected are mainly outside the UK. The company apologized, but even though the sum seems impressive, it has not harmed their business much. Especially when we compare it to the next example of a recent accounting fraud in the Great Britain.

3. Equitable Life’s Life Insurance Scandal

Loss: £1.5 billion

Year: 2000

Equitable life was a life insurance company which ceased its life when it was unable to pay the fine mentioned above after losing the court case. What they did was promise certain conditions and amounts to be paid which worked for them pretty well in one period, but when the economy trends changed (as they so often do), it ended up not being able to pay the clients what they deserve. The clients were mostly retired citizens, and some of them are still fighting to get some consolation money. The downfall was hard for a company which was originally founded in 1762. Now, let’s see the top two entries on the list of biggest recent accounting scandals in UK.

2. Barclays’ Currency Rigging

Loss: £2.3 billion

Year: 2015

It may not appeal to the Barclay bank we are only naming them, but since the Telegraph says their revenue was the highest, they also deserved the highest penalty for currency rigging. They were not alone in this funny business. RBS, HSBC, JPMorgan, UBS, Citigroup and Bank of America also had to pay £2.8 billion. Who would have thought the competition would cooperate so much. The traders doing this even made up a “witty” nickname for themselves, “The Cartel.” Strangely enough, Barclay’s shares in the market were not affected. Perhaps the world already thinks such bank behavior goes without saying.

1. BCCI’s Outrageous Crimes

Loss: £20 billion

Year: 2012

Bank of Credit and Commerce International holds the infamous first place in our list of 10 biggest recent accounting scandals in UK. It took 21 years to finally make them pay this fine and force them to go bankrupt. You have read about various types of recent accounting shocking frauds, so what made this one the biggest British banking scandal? Let’s just say that The Guardian informed us the crimes were of various kinds, from arms trafficking to prostitution. Sadly, first, place well deserved in every view.