It seems that all too frequently, we hear about another disgraced CEO who was forced to resign or was arrested due to unethical behavior.
From fraud to harassment to corruption, unethical leadership ruins a company from the top down, just like good leadership trickles from the top down and sets a good example for all employees.
Today, we’ll be looking at several examples of famous unethical leadership behavior, including from business leaders like Enron’s CEO Jeffrey Skilling, former President Richard Nixon, and religious leaders like Tel Haggard.
From financial fraud to Ponzi schemes to unethical spying to sexual misconduct, read on to learn the juicy details!
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Famous Unethical Leadership Examples
1. Enron CEO Jeffrey Skilling
Photo by Markus Spiske
The Enron scandal is one of the most shocking examples of corrupt and unethical leadership driving a company into the ground. Enron was an energy and utility company, and at one point, it was the largest natural gas provider in the US.
It inflated its revenue artificially by using accounting methods such as mark to market under the leadership of Jeffrey Skilling.
Skilling used mark to market (MTM) to make the company seem more profitable than it was. MTM accounting allows companies to record unrealized gains from contracts – for example, when getting a contract to build a new power plant, the company might w the future expected profits from that plant.
However, Enron did not make corrections when those contracts did not turn out to be profitable.
The company also used special purpose vehicles to hide its debts and assets that were performing poorly, making it look like it wasn’t experiencing losses.
The company culture was one that focused exclusively on revenue and profit. The inflated value of the company meant, of course, that the price of the stock soared.
0xF8E8, CC BY-SA 4.0, via Wikimedia Commons
Under the unethical leadership of Jeffrey Skilling, Enron went even further and disrupted the lives of many people by creating blackouts in California. In 2001, California went through an energy crisis, experiencing frequent blackouts and power outages.
It wasn’t a mere inconvenience, as the crisis cost California residents billions of dollars. At one point, prices increased by 800%, and Enron had a big role to play by artificially manipulating supply and demand.
It shut down a power plant under false pretenses.
Did its leadership care about the lives of the people it was affecting? Absolutely not – the company culture, directed from the top, focused only on raking in bags of money (Enron made $1.6 billion dollars from the crisis).
Of course, you can’t keep doing these kinds of things forever. Enron’s shady accounting practices eventually came to light, leading to its stock going into free fall. Eventually, the company declared bankruptcy, and the scandal prompted legislators to take a closer look at accounting regulations.
Skilling was eventually sentenced to 24 years in prison, while Enron founder Kenneth Lay died while awaiting sentencing.
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2. Bernard Madoff of Madoff Investment Securities
U.S. Department of Justice, Public domain, via Wikimedia Commons
Another example of corrupt and unethical leadership is Bernard Madoff, perhaps the most infamous scammer in the US, who was behind one of the most shocking scams in US history. In fact, he masterminded the largest Ponzi scheme in history!
His company was thought to be respectable, which is perhaps one reason why so many investors trusted him. His wealth management company delivered good returns that were high but not shockingly so, so many people did not suspect anything and just kept quiet, enjoying the good returns.
He promised to help people invest, but he simply pocketed the money that investors gave him and put it in his own bank account. He paid off earlier investors with the funds deposited by later investors – a classic Ponzi scheme, but on a massive scale (around $65 billion!).
As with all Ponzi schemes, though, this one couldn’t last. Madoff was using funds from new investors to pay off redemption requests from prior investors, but as the stock market went into a crisis and the withdrawal requests started pouring in, he couldn’t keep up.
After an SEC investigation, Madoff was sentenced to 150 years in prison, where he died at the age of 82.
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3. Former President Richard Nixon
Department of Defense. Department of the Army. Office of the Deputy Chief of Staff for Operations. U.S. Army Audiovisual Center. (ca. 1974 – 05/15/1984), Public domain, via Wikimedia Commons
While most of the leaders on this list were CEOs, the President of the United States is a leader that many people look up to. While there are so many instances of presidents committing ethics violations, one of the biggest examples is Richard Nixon.
Richard Nixon was the only president in history for which an impeachment attempt forced him to step down from office. The impeachment was accepted by Congress, but Nixon resigned before he was able to be impeached and was pardoned by Gerald Ford, his successor.
So, what was the scandal that led to Nixon’s resignation? Known as the Watergate scandal, it is one of the biggest scandals and cases of political corruption in US history, involving the president himself and various government organizations such as the FBI and CIA.
You see, Republican Richard Nixon, the 37th president, was up for reelection. Under his leadership and with help from the CIA and FBI, his minions broke into the Democratic National Committee offices at the Watergate complex (shown in the picture below) to carry out illegal surveillance activities, including wiretapping.
Indutiomarus, Public domain, via Wikimedia Commons
The scandal not only involved illegal wiretapping of the opposing party that would help Nixon win his reelection, but a massive cover-up that included the kidnapping of Martha Mitchell, the wife of Nixon’s attorney general who they thought would go to the media.
While Nixon pretended he didn’t know anything about the illegal activities, it was eventually revealed that he was in on it, a great ethics and legal violation that led to his impeachment and resignation.
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4. Harvey Weinstein of The Weinstein Company
Luisa Pisani, CC BY-SA 3.0 , via Wikimedia Commons
Harvey Weinstein is a disgraced film producer, who committed sexual assault and rape while head of The Weinstein Company. He was charged with rape and sexual assault and will likely spend the rest of his life in jail.
Over 80 women accused Weinstein of assault, battery, and sexual coercion over several decades.
His casting couch techniques eventually landed him in trouble, but for many years, actresses were afraid to speak up, as he would remove them from projects if they did. The film industry is a difficult one, and he would require women to have sex with him to get roles and often would outright rape them.
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5. John Stumpf of Wells Fargo
Photo by Deane Bayas, Pexels
John Stumpf was the CEO of Wells Fargo and was charged by the SEC for misleading investors about the infamous Wells Fargo scandal, one of the largest banking scandals in the US in recent history. He eventually paid a $2.5 million penalty and had to resign as CEO.
The Wells Fargo scandal involved Wells Fargo employees opening up new accounts in customers’ names without their consent. This type of cross-selling was pushed by leadership – employees were pressured to get customers to open as many new accounts as possible, regardless of the methods used.
Millions of accounts, including checking and credit card accounts, were opened. Various fees were charged to consumers as well ($2 million in fees were charged to consumers, as thousands of these accounts involved fees).
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6. Scott Thompson of Yahoo
Coolcaesar, CC BY-SA 3.0, via Wikimedia Commons
While many of these CEOs committed ethics violations after becoming CEOs, Scott Thompson, former CEO of Yahoo, is an example of a leader who obtained his leadership position under false pretenses.
Thompson embellished his resume, adding a nonexistent computer science degree to his list of accomplishments, which helped him rise through the ranks and get that position.
What sparked the controversy? A shareholder alleged that Thompson actually graduated with an accounting degree, not a computer science degree, and that the college he attended did not even offer a computer science degree at the time.
If Thompson had admitted his error and apologized, the board probably would have stood behind him, but he decided not to go down that route and instead tried to get some board members to stand behind him nonetheless.
Eventually, though, he was forced to step down (a twist in the story was that he was diagnosed with thyroid cancer around the same time, which he cited as one of his reasons for stepping down).
It might not seem like a major ethics violation, but it is definitely unethical, especially considering a company like Yahoo. Having a major in computer science in the Silicon Valley is certainly more valuable than having a degree in accounting, so lying about that wasn’t that insignificant.
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7. Dennis Kozlowsky of Tyco
David Keddie, CC BY-SA 4.0, via Wikimedia Commons
Dennis Kozlowsky made it to Time Magazine’s list of the top 10 crooked CEOs. While he started his career at Tyco as an auditor, he eventually became CEO.
As the company’s leader, he used company funds and assets to lead an extravagant, highly luxurious lifestyle. The company paid for his $30 million apartment in New York as well as half of the cost of a $2 million birthday party for his wife.
That’s not the end of it, though. He was arrested for misappropriating $170 million in company funds and stealing $430 million in fraudulent stock while hiding that information from shareholders.
Dennis was sentenced to 6.5 years in prison for fraud.
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8. John Rigas of Adelphia
Adelphia Communications Corporation, Public domain, via Wikimedia Commons
John Rigas truly came from humble beginnings. The son of Greek immigrants in New York, he served in the army during World War II.
He turned a $300 investment in his startup into the fifth-largest cable provider in the country. Adelphia Communications Corporation, the Rigas family business, had 5.6 million customers across 30 states.
In 2002, though, he was sent to prison, convicted of crimes such as wire fraud. The SEC called it, “one of the most extensive financial frauds ever to take place at a public company.”
Rigas and his family used billions of dollars of company funds for their personal use, including building a golf club for almost $13 million, buying luxury condos, and even spending $40,000 on the services of a personal masseuse.
Prosecutors started investigating when they discovered that the family had used the company as a loan bank, having taken out $2.3 billion in loans from Adelphia at the time, in total.
He was eventually sentenced to 15 years in prison, although he was released a little early on compassionate grounds, as he was battling cancer. He died soon after.
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9. Tony Alamo of the Alamo Christian Foundation
en:user:freakofnurture, Public domain, via Wikimedia Commons
Religious leaders are individuals that many of us look up to. With more than 80 percent of the world’s population identifying as religious, we often turn to religious leaders for guidance and advice on life and spirituality.
We usually hold them in high regard and respect. However, sometimes, religious leaders abuse that respect and misuse their positions, engaging in unethical practices that hurt their followers and go against the religious values they preach.
Tony Alamo is one of the most infamous disgraced religious leaders in the United States.
Mr. Alamo started off as a street preacher and eventually built a ministry that was worth millions of dollars. His apocalyptic style was unique, and his followers believed in modern day miracles and called themselves Jesus Freaks.
The preacher maintained tight control over his followers, determining who got to eat, who got to wear what, and who got to marry whom.
This unique style of Pentecostalism attracted many people for its fiery teachings. However, Mr. Alamo had some questionable ideas, claiming that God had authorized polygamy and supporting underage marriage, stating that puberty was consent.
Tony owned several businesses, which funded his ministry. He was first convicted for tax evasion and served several years in prison, but that was the least of his sins.
After being released from prison, he continued in his bad ways. This time, though, he was convicted of more serious crimes, including taking young girls (one just nine years old) across state lines for sex.
Various women accused him of being forced into marriage with him while underage, and Mr. Alamo eventually died in prison.
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10. Jim Bakker, American Televangelist
Photo by Enron scandal, Pexels
Jim Bakker is a televangelist, born in 1940. He is one of the most famous televangelist ministers in the US – televangelists are people who use television or radio to spread the gospel.
Mr. Bakker was embroiled in various scandals involving illegal and unethical conduct. He founded the PTL Satellite Network, which aired religious programs, but he soon came under investigation by the FCC for misusing funds he raised on air.
While he promised to use those funds for overseas missions, he used them to build a Christian-themed watermark and theme park called Heritage USA. He also used funds for personal expenses.
He wasn’t charged for that, but a later IRS report alleged he used $1.3 million in ministry funds for personal use.
However, what really started to bring him down was not that, nor was it the financial fraud and accounting irregularities (he had two sets of books for sketchy accounting purposes).
It was a payoff of almost $280,000 to church secretary Jessica Hahn for her silence – allegedly, Bakker and a co-host on PTL drugged and raped her. Not only was there a payoff, but the payoff was made with PTL funds.
That wasn’t the end of his troubles. He was convicted of financial crimes for sketchy fundraising practices and keeping money he raised without giving people the benefits he promised them in return for their donations.
11. Tel Haggard of New Life Church
Adammeliski, CC BY-SA 4.0, via Wikimedia Commons
Finally, we have Tel Haggard, another one of the most famous unethical religious leaders in the US. He is an American evangelist, and he founded New Life Church in Colorado (shown in the picture above).
Mr. Haggard riled against the legalization of same-sex marriage, claiming it was a sin.
Unfortunately, Mr. Haggard did not live up to what he taught. It was revealed that over the course of three years, he had paid a male prostitute for massages and sex.
The allegations were made by Mike Jones, the male prostitute, who said he did not know of Tel’s identity at first and only came forward when he discovered it. The fact that there was someone preaching against homosexuality while having gay sex made him angry, he said.
It’s certainly unethical to say something is forbidden and a sin while you engage in those activities yourself.
Not only that, but Haggard also purchased and used crystal meth, according to Jones. While Haggard initially denied the claims, a voicemail got leaked, and he eventually admitted to it.
Later, additional allegations emerged, including that he touched two members of his church inappropriately, including one who was a minor at the time.
Wrapping It Up
There have been many more unethical leaders, including business leaders, spiritual leaders, and leaders of countries and states. This article only offers a glimpse into the type of unethical leadership that exists.
When choosing a leader to follow and respect, it’s important to ensure that you don’t blindly support someone. Many people reached their leadership positions not because they were worthy of it but because they were ambitious.
Finally, as a leader of your own company, you must always engage in ethical practices and shy away from unethical conduct – as you can see, the consequences can be severe.
