The salad oil scandal, also referred to as the soybean scandal, was an American major corporate scandal in 1963 that caused over $180 million ($1.72 billion today) in losses to corporations including American Express, Bank of America and Bank Leumi, as well as many international trading companies.[1] The scandal's ability to push otherwise cautious and conservative lenders into increasingly risky practices has prompted some comparisons to later financial crises including the 2007–2008 subprime mortgage crisis.[2]
The scandal involved the Allied Crude Vegetable Oil company in New Jersey in the United States, owned by Anthony "Tino" De Angelis, a former commodities broker. De Angelis had been in trouble with the law previously for supplying schools with beef from uncertified sources under the National School Lunch Act.
De Angelis was awarded a contract with Food for Peace, a federal program which sold excess food stocks to poor countries.[1] He discovered that he could obtain loans based upon Allied's fraudulently-inflated inventory of salad oil.[3] Ships supposedly full of salad oil for Allied would dock and inspectors would certify the cargo, allowing Allied to post the oil as collateral and obtain millions of dollars in bank loans. In reality, the ships tanks contained only water, with a few feet of salad oil floating on top to trick inspectors. When inspectors audited Allied's facilities, the company would transfer the same oil stock from tank to tank to fool the inspectors while entertaining them during lunch.[4] In all, Allied posted 1.8 billion pounds of soybean oil as collateral to fraudulently obtain $180 million in loans, when the actual stock was a mere 110 million pounds.[1]
ImpactEdit
The scandal was exposed when the Russian soybean market did not open up, and soybean prices fell drastically as a result, causing the investors to attempt to cash in. American Express stock dropped more than 50% as a result, which cost the company nearly $58 million. De Angelis was convicted of fraud and conspiracy charges in connection with the scandal and served seven years in prison, gaining his release in 1972.[5]
^Justice Litle (2007-09-05). . Financial Sense Editorials. Archived from the original on 21 September 2007. Retrieved 2007-11-26. Given CFC's size and general reputation (tarnished subprime activities aside), the company's woes bear at least passing resemblance to the 'salad oil scandal' that hit American Express in the 1960s. Alt URL
^Staff (January 3, 1964). . Time. Archived from the original on January 8, 2010. Retrieved 2007-09-01.
^Staff (June 4, 1965). . Time. Archived from the original on October 15, 2007. Retrieved 2007-09-10.
October 15, 2023
salad, scandal, salad, scandal, also, referred, soybean, scandal, american, major, corporate, scandal, 1963, that, caused, over, million, billion, today, losses, corporations, including, american, express, bank, america, bank, leumi, well, many, international,. The salad oil scandal also referred to as the soybean scandal was an American major corporate scandal in 1963 that caused over 180 million 1 72 billion today in losses to corporations including American Express Bank of America and Bank Leumi as well as many international trading companies 1 The scandal s ability to push otherwise cautious and conservative lenders into increasingly risky practices has prompted some comparisons to later financial crises including the 2007 2008 subprime mortgage crisis 2 The scandal involved the Allied Crude Vegetable Oil company in New Jersey in the United States owned by Anthony Tino De Angelis a former commodities broker De Angelis had been in trouble with the law previously for supplying schools with beef from uncertified sources under the National School Lunch Act Contents 1 Fraud 2 Impact 3 See also 4 ReferencesFraud EditDe Angelis was awarded a contract with Food for Peace a federal program which sold excess food stocks to poor countries 1 He discovered that he could obtain loans based upon Allied s fraudulently inflated inventory of salad oil 3 Ships supposedly full of salad oil for Allied would dock and inspectors would certify the cargo allowing Allied to post the oil as collateral and obtain millions of dollars in bank loans In reality the ships tanks contained only water with a few feet of salad oil floating on top to trick inspectors When inspectors audited Allied s facilities the company would transfer the same oil stock from tank to tank to fool the inspectors while entertaining them during lunch 4 In all Allied posted 1 8 billion pounds of soybean oil as collateral to fraudulently obtain 180 million in loans when the actual stock was a mere 110 million pounds 1 Impact EditThe scandal was exposed when the Russian soybean market did not open up and soybean prices fell drastically as a result causing the investors to attempt to cash in American Express stock dropped more than 50 as a result which cost the company nearly 58 million De Angelis was convicted of fraud and conspiracy charges in connection with the scandal and served seven years in prison gaining his release in 1972 5 See also EditThe Great Salad Oil Swindle book References EditNotes a b c Malone Noreen 2012 04 01 Salad Oil Swindle New York Retrieved 2020 02 07 Justice Litle 2007 09 05 Tactical View A Little Help From Our Friends Financial Sense Editorials Archived from the original on 21 September 2007 Retrieved 2007 11 26 Given CFC s size and general reputation tarnished subprime activities aside the company s woes bear at least passing resemblance to the salad oil scandal that hit American Express in the 1960s Alt URL Staff January 3 1964 Justice Steps In Time Archived from the original on January 8 2010 Retrieved 2007 09 01 Salad Oil Scandal Investopedia Retrieved 2007 09 01 Staff June 4 1965 The Man Who Fooled Everybody Time Archived from the original on October 15 2007 Retrieved 2007 09 10 Retrieved from https en wikipedia org w index php title Salad Oil scandal amp oldid 1089497377, wikipedia, wiki, book, books, library,
