Waste Management Fraud
Waste Management, Inc. today is dedicated to serving our communities by collecting and disposing of garbage and recycling. Over the years they have had to deal with a rise of issues such as environmental and global warming. Waste Management has also tried to reduce its waste collections while turning any valuable resources it can into clean and renewable energy. Waste Management has been around since the late 1800’s, and is a holding company that has all its daily operations conducted through its subsidiaries. Since there are relatively few garbage disposal companies around, Waste Management has been able to grow and advance into a huge corporation that has built an employee base of 45,000. And with any growing …show more content…
But the executives repeatedly refused to make the adjustments and finally entered into a secret agreement with Arthur Anderson to write off the “errors” and actually change the accounting practices for future periods. And if this wasn’t bad enough, the fact that most of the executives involved in the scheme had at one point worked for Arthur Anderson as auditors and 14 former employees of Arthur Anderson had worked for Waste Management in key accounting positions. It was also reported in the SEC report that Arthur Anderson had a related entity and billed millions of dollars for non-audit fees for a business structure designed to increase shareholder value. So not only did Arthur Anderson help Waste Management get away with the scheme, it looked like they were also profiting as well. Arthur Anderson could have stopped this scheme in the very beginning but they didn’t.
In mid-1997, Waste Management got a new CEO and this new CEO wanted a review of the company’s current accounting practices which ultimately led to the restatement of the Company’s financial statements since 1992. After the statements had been restated, the company acknowledged that it had misstated earnings by about $1.7 billion. This led to Waste Management’s current shareholders to lose over $6 billion in market value for their investments. Stock price dropped by more than 33% because of the restatement. All of the top executives were fired and in the weeks and months after, a total of three