The 101 Dumbest Moments in Business, 2007

Ah, what a dumb year it was! And that’s the positive spin on it. Consider the alternative. Like, if selling poisonous toothpaste to children isn’t dumb, what is it? If the constant slide and imminent collapse of air travel isn’t dumb, what then? If all the hyperintellectuals who created the subprime mess aren’t functional dummies, what might they be, huh? No, we’ll take dumb over evil, inept, and greedy any day. In fact, our hats are off to all of these, the absolutely dumbest of the dumb that the gods of fate and humor delivered into our laps—and yours—this past year. Thanks to each and every one of them!

1. That’s the good news. The bad news is that 2008 is the Year of the Rat. During 2007, the Year of the Pig, Mattel is forced to recall almost 20 million items made in China because of lead paint on toy cars and tiny magnets that could be deadly if swallowed. Lead paint problems are also found in 844,000 Chinese-made Barbie accessories and toys with the Sesame Street brand. Pet food makers recall more than 60 million cans of food laced with tainted melamine in wheat gluten from China. A huge underground distribution network for steroids, human growth hormones, and other bodybuilding drugs is traced to 37 companies in China. Chinese-made lunch boxes, given away by the California Department of Public Health to promote healthy eating habits among children, are found to contain lead. Nike recalls 235,000 football helmets because the Chinese-made chin cup has a defective strap and has caused at least two concussions and a broken nose. Ethylene glycol is found in Chinese-made toothpaste. The government of China executes the former head of its State Food and Drug Administration.

2. Thank God. We’ve been so worried since Lucky dyed his hair jet black and started listening to the Smiths. Eli Lilly wins FDA approval to put Prozac into chewable, beef-flavored pills to treat separation anxiety in dogs.

3. If she were your master, you’d need a lifetime supply of Prozac too. Upon her death, Leona Helmsley leaves $12 million to her white Maltese, Trouble.

4. Mission accomplished! In the first quarter of 2007, thanks to its $1.3 billion purchase of First Franklin Financial, Merrill Lynch becomes the world’s top underwriter of subprime mortgage-backed securities. Nonetheless, with the market in meltdown just a few months later, Merrill CFO Jeffrey Edwards tells analysts that the firm’s subprime exposure is “limited, contained, and appropriately marked.” In October, Merrill announces a quarterly loss of $2.24 billion after $7.9 billion in subprimerelated write-downs.

5. Payback is a bitch. In August and September, as his company is racking up the largest quarterly loss in its 93-year history, Merrill Lynch CEO Stanley O’Neal squeezes in 20 rounds of golf, including three rounds on three different courses in a single day. In October, O’Neal announces his “retirement,” walking away with a compensation package valued at $161.5 million.

6. Not so flush. Citigroup CEO Chuck Prince resigns after the company takes an $11 billion write-down.

7. Too bad nobody gave one of these to Chuck Prince. Japanese manufacturer Toto apologizes to customers and offers free repairs for 180,000 high-tech toilets— thrones that feature heated seats, air purifiers, blow dryers, and water sprayers—after at least three catch fire. “Fortunately nobody was using the toilets when the fire broke out,” says a company spokesman. “The fire would have been just under your buttocks.”

8. Ooh, gross! A video clip showing hordes of rats in a closed-for-the-night KFC/Taco Bell outlet in New York City gets nearly a million hits on YouTube.

9. Ooh-la-la, gross! The French daily Le Monde calls Ratatouille, Pixar’s movie about a rat in a kitchen, “one of the greatest gastronomic films in the history of cinema.”

10. Election officials in Florida promptly order 5,000 units. Diebold tightens security after it is revealed that a simple virus can hack its electronic voting machines. Months later a hacker uses a picture of a key from the company website to make a real key that can open the company’s machines.

11. A touch of understatement. “I touched the delta tower.”— Captain John J. Cota, the pilot of the container ship Cosco Busan, after the vessel strikes the San Francisco–Oakland Bay Bridge and spills 58,000 gallons of diesel fuel from a 160-foot gash in its hull.

12. Deep doo-doo. The parents of two Florida toddlers sue Procter & Gamble after they are surprised to find images of their children on packages of Luvs diapers. The parents say they were paid a “nominal fee” at a casting call but were promised an additional payment if the photos were selected.

13. It’s a fat world, after all. Disneyland announces plans to close the “It’s a Small World” attraction to deepen its water channel after the ride’s boats start getting stuck under loads of heavy passengers. Employees ask larger passengers to disembark—and compensate them with coupons for free food.

14. Getting buff. The Fitworld gym in Heteren, the Netherlands, introduces Naked Sunday.

15. But officer, it was the Toy of the Year! Australia’s Toy of the Year, a bead toy called Bindeez made by Moose Enterprise, is pulled from stores after scientists discover that the beads contain a chemical that converts into the date-rape drug GHB when ingested.

16. And the Patricia Dunn Pretexting Award goes to … While working on an article about Microsoft, Wired contributing editor (and former FORTUNE writer) Fred Vogelstein receives a 13-page dossier about himself, describing him as “tricky” and his stories as “sensational.” The document, prepared by the company’s public relations firm, Waggener Edstrom Worldwide, as background for Microsoft executives, was sent inadvertently to the writer.

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