Money makes the world go round, which is why it's a common issue among business partners and families, and in courtrooms. As a business person, you are not only responsible for your own finances but for your company’s, as well.
However, because of people’s extrinsic goal to be financially secure, money can be tempting. And some fall for the pretty face of dirty money. If you are dealing with money that is not solely yours – whether big or small – it’s always important to be transparent about everything.
If you are accused of a financial crime, the first and best thing to do to prevent the situation from worsening is to call a financial lawyer. Legal matters of any nature are best dealt with early because, according to Freemans Solicitors, “Financial penalties for regulatory breaches and business-related crime are significant, as is the potential for reputational damage.”
Early engagement with a lawyer gives you better chances of weathering this predicament. But, as the adage goes: prevention is better than cure. For this reason, be the wiser person and learn from other people’s mistakes.
In 2017, six bankers from HBOS were jailed for a combined 47 years for fraud. The offenders used the money of the bank’s business clients to fund their holidays and host sex parties. Apart from these entertainments, one of the conspirators, David Mills, was also found to have applied for a second card on his American Express account, issued under the name of his business associate and co-conspirator Lynden Scourfield.
Jurors were told the fraud amounted to £245 million. However, victims and authorities claimed that the fraud can be well worth £1 billion. Victims were left penniless and lost livelihood as a result of the scam.
Recently, the Lloyds Banking Group, which owned HBOS, gave the victims compensation for the scam, which was worth £76 million. About £63 million was given to compensate for victims' inconvenience and direct losses. However, contrary to its public promise to get to the bottom of the HBOS scandal, Lloyds appears to have mishandled and failed to disclose the fraud.
Lesson: Business operations, especially in financial institutions like banks and lending companies, are complex; more so if they have subsidiary companies. Business owners should require all transactions to be transparent and should hire only honest people. In the event of scams and business misconducts, owners should launch an official investigation and fully cooperate with financial watchdogs, such as the Financial Conduct Authority.
In 2012, British pharmaceutical company GlaxoSmithKline (GSK) was involved in the biggest criminal case concerning a drug company in U.S. history. GSK pleaded guilty for this healthcare fraud and was fined US$1 billion and US$2 billion for criminal and civil fees, respectively.
The fraud included the antidepressant Paxil. GSK sold this drug to patients under the age of 18 when it was approved exclusively for adult use only. Apart from this, the company also marketed Wellbutrin as a drug for weight loss and treatment for sexual dysfunction. These uses of Wellbutrin were not approved, as well.
Additionally, GSK was found to have paid kickbacks to healthcare professionals and failed to report safety data for the prescription drugs.
Lesson: A company’s compliance with government and public safety regulations is essential. Promoting the unapproved and off-label use of drugs is putting the public in danger. It is also a big question in a company’s ethical conduct. Pharmaceutical companies should always put patient safety over profit.
To say the least, these crises and crimes were painful and financially draining to all parties involved. But, these will serve as valuable lessons for businesses that wish to avoid scandals and maintain their excellent reputation in the financial industry and the eyes of the world.