In a year when the news was dominated by the global pandemic, business scandals that would have normally made front-page headlines in the business press, slipped under the radar.
Now, with the situation easing, it is as good a time as any to remind ourselves of some of the juiciest scandals that didn’t get the attention they deserved.
1 Nikola and the hydrogen-powered truck that wasn’t
September was the month when it all started to go wrong for hydrogen-powered truck startup Nikola.
Hindenburg Research (ironically a name that has some history with hydrogen blowing up) was the company that put the cat amongst the pigeons.
Hindenburg Research reported that Nikola and its CEO, Trevor Milton, had made seriously flawed claims that misrepresented the company’s core technology. Perhaps the most brazen was the 2016 video that showed the hydrogen-powered truck in action. In actual fact, the truck was filmed rolling down a hill powered by nothing more exotic than gravity.
Nikola did admit to the deception, but claimed they had never said that the truck was hydrogen-powered, merely that it was in motion.
The timing of the Hindenburg Research article couldn’t have come at a worse time for Nikola, coming two days after the company had announced plans for a major partnership with General Motors.
The outcome – Trevor Milton resigned, General Motors pulled the plug on the deal, and shares slipped from a high of $79.73 to $17.
2 Twitter and the tweets that weren’t
In July of 2020, Twitter had to shut down all verified accounts as a series of famous accounts began tweeting a Bitcoin scam. Amongst the unwilling participants were names such as Elon Musk, Barack Obama, and Kim Kardashian.
Fearing a massive and highly sophisticated hack that was possibly state-sponsored, the company began to investigate. As it transpires, the action was nothing more than a teenager with too much time on his hands.
Floridian Graham Ivan Clark had fooled a Twitter employee over the phone into revealing all the credentials required to reset the passwords and log in to the accounts.
Twitter has since tightened up on the number of people with access to such information and has issued a comprehensive report on how the hack happened.
Graham Ivan Clark is currently awaiting trial.
3 Wirecard and the $2.1 billion that wasn’t
Wirecard has been called the Enron of Germany. It is now confined to history, but for a short while, it was Europe’s preeminent Fintech company and appeared as if it could do no wrong.
Former CEO Markus Braun plays a similar role to that of Enron’s late CEO Kenneth Lay. He took over the ailing company in 2002, immediately began to attract new capital and the company’s fortunes seemed to be on the rise.
However, behind the scenes a series of dodgy accounting practices that regulators and auditors failed to spot meant that Wirecard’s $27 billion valuation was based on business that didn’t exist.
The warning signs had always been there, but despite doubts raised by Financial Times reporter Dan McCrum, the authorities took no immediate action. Indeed, they initially launched an investigation, not against Wirecard, but of the Financial Times.
It couldn’t last, however. In June 2020 Wirecard announced that it was missing $2.1 billion. An announcement that pre-empted the resignation of Braun, and shortly afterward the company admitted that in all likelihood the money didn’t exist.
Braun was arrested and remains in custody awaiting trial. The company’s shares went from a high of €233 to €0.43.
4 McDonald’s and the CEO who isn’t (anymore)
This saga began not in 2020 but at the end of 2019 when CEO Steve Easterbrook was fired for “sexting” a colleague in what McDonald’s said was a consensual relationship.
This was thought to be the end of the matter with Mr. Easterbrook saying in an email to employees – “Given the values of the company, I agree with the board that it is time for me to move on.”
However, this was merely the start, as since Mr.Easterbrook’s departure McDonald’s has filed a lawsuit against him. The company alleges the ex-CEO had sexual relationships with three employees in the year before he was fired and approved stock grants worth hundreds of thousands to one of the women.
McDonald’s also claims that Mr. Easterbrook had hidden evidence during its initial investigation and that he should repay his severance in light of the new allegations. Mr. Easterbrook fired back saying that the company was always aware of the stock awards and relationships when the severance was negotiated.