Deception by insiders that a watchful board should have questioned.
Off-balance-sheet partnerships run by CFO Andrew Fastow hid debt and inflated profits. Enron collapsed into bankruptcy.
The board had waived its own ethics code so Fastow could run the partnerships. Its special committee’s Powers Report later faulted the board for weak questioning and monitoring.
A passive board that approves what it doesn’t understand shares the blame.
VW admitted installing ‘defeat device’ software to cheat US diesel emissions tests. Shares fell about 30% in a week.
CEO Martin Winterkorn resigned days later, though he denied knowing. The supervisory board pledged to pursue those involved.
A board dominated by insiders and family interests struggles to challenge management.
Auditor EY couldn’t confirm €1.9B said to be held at two Philippine banks. The banks denied any dealings with Wirecard.
CEO Markus Braun resigned and was arrested; COO Jan Marsalek was fired. Wirecard became the first DAX member to file for insolvency.
Boards must chase red flags (short-seller and press warnings) and not hide behind auditors.
The blood-testing startup claimed tests it couldn’t deliver. Its board was packed with ex-cabinet members and generals.
After criticism, the board was reshaped in 2015 and big names moved to an advisory ‘board of counselors’. Too late: the company later collapsed.
Board prestige is not expertise; you need directors who can test the core claims.