B2B Payments

GE Accused Of $38B Accounting Fraud

General Electric has been targeted in accusations of massive accounting fraud by the whistleblower that called out Bernard Madoff's Ponzi scheme, reports in CNBC said on Thursday (Aug. 15).

According to reports, whistleblower and forensic accountant Harry Markopolos published a report accusing GE of financial fraud and efforts to cover up the matter. He accuses GE of undertaking "a bigger fraud than Enron" that has left the company "on the verge of insolvency."

The allegations stem from Markopolos' investigation into GE’s financials for an unnamed hedge fund client, reports said, and involved more than a year of probing.

"My team has spent the last seven months analyzing GE's accounting, and we believe the $38 billion fraud we've come across is merely the tip of the iceberg," he said in the report.

GE shares dropped more than 13 percent in the wake of the report's publishing, reports said.

In an interview with CNBC, Markopolos said the alleged fraud scheme "is going to make this company probably file for bankruptcy. WorldCom and Enron lasted about four months … we'll see how GE goes."

GE wholly denied the claims in a statement provided to the publication.

"The allegations we have heard are entirely false and misleading," the company stated. "The company has never met, spoken to or had contact with Mr. Markopolos, and we are extremely disappointed that an individual with no direct knowledge of GE would choose to make such serious and unsubstantiated claims.

"GE operates at the highest level of integrity and standards behind its financial reporting," the company continued. "We remain focused on running our businesses every day, following the strategic path we have laid out."

Part of that path included GE's divestiture of its financing operations GE Capital, with MUFG Union Bank announcing earlier this year it would acquire GE Capital's trade payables service. In 2015, BMO Financial Group acquired GE Capital's transportation finance unit, and Capital One acquired its healthcare finance operations.

GE's venture capital unit, GE Ventures, is also reportedly looking to divest 100 startups from its portfolio.

——————————

NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

TRENDING RIGHT NOW