Conflict in Ethical Decision Making at Worldcom

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Conflict in Ethical Decision Making at WorldCom
Kerry Seeley
Business Ethics
National American University
September 25, 2007
Craig Chaplin

This paper explains how WorldCom began and where it’s at now. It didn’t take long for WorldCom to become the second largest long distance phone company. WorldCom provided a legal framework for people working in communication projects on an individual basis, mainly in Central America, but they also developed projects together with partners in Latin-America, Africa and Europe, occasionally in cooperation’s with major Dutch funding organizations. As shares hit record highs WorldCom became known as a valuable company. In the year 2002 WorldCom hit bottom when scandalous acts were discovered.

Upon doing research on a business ethical problem, I found that many companies have been involved in one. I found that WorldCom had conflict in ethical decision making. Following will be the history of WorldCom through current position, the role of auditing, and what could have been done differently to prevent or address the current issue at hand. In 1983, two businessmen, Murray Waldron and William Rector laid out a plan to start a discount long-distance provider called Long-Distance Discount Service (LDDS). The company began in Jackson, Mississippi. In 1985, LDDS selected Bernard Ebber, who was an early investor, to become chief executive officer. LDDS went public in August 1989 when it acquired Advantage Companies, Inc. LDDS name was changed to LDDS WorldCom in 1995, which later became known as just WorldCom. During the 1990s, LDDS growth under WorldCom was fueled mainly through acquisitions and reached its peak with the acquisition of MCI in 1998. Among the companies acquired or merged with WorldCom, LDDS merged in an all-stock deal with discount long-distance service provider Advanced Telecommunications in 1992. In 1993, LDDS acquired long-distance providers Resurgens Communications Group and Metromedia Communications in a three-way stock and cash transaction that creates the fourth-largest long-distance network in the United States. LDDS acquired domestic and international communication network IDB Communications Group in an all stock deal in 1994. In 1995, LDDS acquired voice and data transmission company Williams Telecommunications Group (WilTEl) for $2.5 billion cash and changed its name to WorldCom. WorldCom merged with MFS Communications Company, which owned local network access facilities via digital fiber optic cable networks in and around major U.S. and European Cities, and UUNet Technologies, an internet access provider for businesses, which took place in 1996. In 1998, WorldCom completed three mergers: the largest in history at this time was with MCI Communications for $40 billion. The other two WorldCom merged with at this time was with Brooks Fiber Properties for $1.2 billion and CompuServe for $1.3 billion. “On October 5, 1999 Sprint Corporation and MCI WorldCom announced a $129 billion merger agreement between the two companies. The deal would have been the largest corporate merger in history up to that time. The new company was to have been WorldCom and would have been the largest communication company in the United States. The merger would have put AT&T in the number two spot of the largest communication companies in the US for the first time in history. However the deal did not go through because of the pressure from the US Department of Justice and the European Union (EU) on concerns of it creating a monopoly. On July 13, 2000, the Board of Directors of both companies acted to terminate the merger. Later, in 2000, MCI WorldCom renamed itself WorldCom without Sprint being a part of the company.” (Editor. 2002) The acquisition of Digex (DIGX) in 2001 was complex. WorldCom acquired Digex’s corporate parent, Intermedia Communications. WorldCom then sold all of Intermedia’s non-Digex assets to Allegiance Telcom. As early as June 2001, evidence showed that...
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