Any other business

Five times businesses butted heads with the authorities

5 min read

29 March 2016

As the FBI announces it no longer needs Apple to help break into an iPhone, here are five of the most famous battles between government bodies and businesses, and who won them.

Apple published a lengthy letter to customers defending its decision not to collaborate with the FBI to a create a “back door” into iOS devices, but the US domestic intelligence service stood their ground until they had proof that an alternative method would work. And this is hardly the first time business leaders have found themselves locked in battle with law enforcement officials.

(1) News International vs. Metropolitan police

The scandal that eventually led to the end of the News of the World was the result of years of evading law enforcement, and involved almost a decade of police investigations before the boys in blue finally won.

The first hint that something untoward was going on occurred when the News of the World appeared to magically discern that Prince William had suffered a knee injury in 2005. But denials, internal reviews and police interviews which came to nothing continued until 2012, when News International chief executive Rebekah Brooks was arrested for phone hacking.

She and her husband were later acquitted of any wrongdoing after his lawyer argued the client was too stupid to have committed such a sophisticated crime.

The worst business financial scandals of the last 15 years

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(2) Arthur Andersen vs. Securities and Exchange Commission

Previously one of the world’s biggest five accountancy and audit companies, the management of Arthur Andersen came head-to-head with investigators after being in charge of auditing dodgy energy company Enron.

Not only did accountants at the firm fail to notice some of the glaring irregularities in Enron’s financial reports, they later shredded documents pertaining to the company’s audit, which hindered the investigators who were trying to get to the bottom of the events leading up to the energy company’s bankruptcy.

After two senior managers were found criminally complicit, the firm gave up its accounting license. Today the company lives on through operations consultancy giant Accenture, which split from its parent more than a decade before the scandal erupted. 

Read on to find out how a game company had to go up against Russian spies.

(3) Nintendo vs. the KGB

In the late 1980s, when Nintendo was preparing to launch the first ever Gameboy, the firm’s management were keen to secure a license to make Tetris available on the handheld gaming device. But despite a proliferation of copies of the game being sold in the US, its creator had lent the rights to the government of his home country.

When videogame licensor Henk Rogers travelled to the USSR to try and secure the rights that Nintendo needed, he was trailed by the KGB, who sat in on negotiations and questioned his intentions for hours.

Rogers eventually convinced the Russians to let his colleagues create a Game Boy version of the arcade game – and the rest, as they say, is history.

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(4) IBM vs. Direction Generale de la Securite Exterieure

American intelligence operatives had their suspicions that members of the French espionage service were spying on the burgeoning tech giant, but it took months before either side would acknowledge this, even after L’Express reported on the rumours in May 1990.

The spies are thought to have infiltrated the company’s foreign offices in order to try and steal corporate secrets, with the aim of passing them on to Compagnie des Machines Bull, a flailing tech company Compagnie des Machines Bull.

An FBI agent told the New York Times in 1990 that the US had taken action on the matter. Suffice to say, IBM continues to go from strength-to-strength, while Compagnie des Machines Bull languishes in obscurity.

Lessons to be learnt from the mismanagement of the FIFA scandal

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(5) Uber vs. Nevada Department of Business and Industry

Since launching in March 2009, Uber has made plenty of enemies all over the world, and been bombarded with restrictions. But after a lengthy court battle, a court in Reno, Nevada banned the ridesharing company from operating in the state in 2014.

The decision was made on the grounds of public safety, because Uber refused to make drivers comply with state licensing requirements. The judge who delivered the verdict choose the opportunity to declare himself a fan of the tech firm, describing its app as “a wonderful product” – a statement unlikely to provide much consolation for partygoers in the state who still have to wander around late at night trying to flag down traditional cabs.