What is the Salad Oil Scandal?

The Salad Oil Scandal of 1963 was a case of corporate fraud perpetrated by the Allied Crude Vegetable Oil Company, which resulted in serious losses for major banks acting as its creditors.

How Does the Salad Oil Scandal Work?

Banks for the Allied Crude Vegetable Oil Company granted it a substantial line of credit demanding its vegetable oil inventory as collateral. Consequently, cargo ships carrying the company's salad oil were subject to inspection in order to ensure that Allied Crude Vegetable Oil was delivering its finished product. The company discovered that it could circumvent the inspection process and stretch its vegetable oil output by filling the containers with a high volume of water and float several inches of vegetable oil above. Upon inspection, officials would discover true vegetable oil without reason to suspect foul play. The company's deceitful practices were exposed in 1963 when it was discovered that the company could not account for the absence of more than $175m in salad oil.

Why Does the Salad Oil Scandal Matter?

Allied Crude Vegetable Oil's CEO Tony De Angelis was indicted on charges of corporate fraud and conspiracy and was sentenced to serve a prison term of seven years. The scandal resulted in more than $150m in losses among involved banks. Most notably, American Express experienced a halving of the market value of its stock taking a loss of close to $60m.

Ask an Expert about Salad Oil Scandal

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Salad Oil Scandal.

Be the first to ask a question

If you have a question about Salad Oil Scandal, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users