Xerox and Ford

Chapter 1: Lessons Learned from Companies Caught in the Act

Posted by Dawn Lomer in on March 3rd, 2015
Chapter 1: Xerox and Ford

Xerox

Loss Value: From $50-100 million

In 2002, the SEC filed fraud charges against Xerox at around the same time the Enron and WorldCom scandals broke. It was reported that management at Xerox had accelerated revenue and violated the generally accepted accounting principles (GAAP) to make the company’s financial position look better.

Unlike many of the other companies found guilty of similar violations, Xerox failed to cooperate with the SEC during the investigation. This was reflected in the penalty the company received. The $10-million fine was the largest one handed down at that time.

Lessons Learned

  • Communication is key
    • After the scandal, Anne Mulcahy stepped in as CEO. Mulcahy sends other executives the message to get out of the office and talk to those who matter – employees, customers, other business leaders and managers – at the company’s operations in other countries.
  • Cooperate during an investigation
    • Companies that cooperate with the SEC during investigations receive much lower fines and sanctions.

Unlike many of the other companies found guilty of similar violations, Xerox failed to cooperate with the SEC during the investigation.

Ford

Loss Value: From $50-100 million

In November 2010, a former Ford employee pleaded guilty to stealing trade secrets from the company. The former employee downloaded the design documents, which weren’t related to his job at the company, onto an external hard drive and took it with him after his last shift.

Lessons Learned

  • Implement access controls
    • Employees should have access only to the information and documents they need in order to do their jobs. Product- or client-related information should have tight controls.
  • Establish a network security policy
    • Eliminate the ability for employees to connect any sort of media storage devices to the network. Ensure there are no unsecured Wi-Fi access points.

Chapter 2: Siemens and Satyam

Chapter 3: Tyco and Hewlett-Packard

Chapter 4: Johnson & Johnson and Mattel

Chapter 5: BAE and Google

Chapter 6: International Monetary Fund and Verizon

Chapter 7: Happy Days Children’s Wear

 


Dawn Lomer

Dawn Lomer

Managing Editor