Counting the cost of corporate scandals – what are they and how to avoid them

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Fraud, corruption and deceit can cost investors billions. Here’s what you should look out for and two funds that could help you avoid a corporate scandal.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

5 October 2023

Avoiding companies with corrupt practices is one of our investors most important environmental, social and governance (ESG) related priorities*. And it’s easy to see why.

History is littered with corporate scandals that have cost unsuspecting investors billions.

Arguably the most infamous was US electricity turned energy trading company Enron. Using a variety of fraudulent accounting techniques, Enron appeared hugely profitable, even on projects that had barely begun. When the misdeeds were made public in 2001, the company collapsed, taking its auditor, Arthur Anderson, with it.

But corporate scandals aren't just consigned to the history books.

As recently as June 2022, energy company Glencore was convicted of a decade-long bribery