Case Study of Business Ethics at Worldcom; Should Ebbers Have Gone to Jail?
Abstract Ethical decision making is becoming increasingly more important in the information and conscience-focused business world. WorldCom became one of the world’s largest long-distance telephone services. With Bernard Ebbers at the helm, the corporate giant went from Wall Street Darling to Wall Street Pariah because of unethical decisions. Ebber denied involvement and was rightfully sentenced to 25 years in jail.
The need for ethical decision making has become increasingly evident in today’s fast-paced business environment. In the case of WorldCom, a national company that would provide long-distance telephone services, it is hard to determine where the problem begins. Financial reports were falsely created, improper accounting practices were found, and securities fraud was prevalent throughout the corporation’s top executives. CEOs have to take responsibility for their actions. They need to show some backbone and demonstrate long-range vision for their actions impact more than just themselves. It seems most CEOs main defense is the I-don’t-know-anything defense. Total ignorance and being accused of incompetence is better than jails time. "If you 're seen as simply incompetent, you might escape prison time," Knapp said. "You go to jail for being a crook." (Lazarus, D. 2005). The antics of for WorldCom Chief Executive Officer Bernard Ebbers highlight the downward spiral of America’s economic, cultural and political mores and the need to make business decisions with an awareness of ethical ramifications.
It seems that WorldCom used a liberal interpretation of generally accepted accounting practices when preparing financial statements. “In an effort to make it appear that profits were increasing, WorldCom would write down in one quarter millions of dollars in assets it acquired while, at the same time, it "included in this charge against earnings the cost of company expenses expected in the future” (Mober, D & Romar, E. 2002). The results of these
The need for ethical decision making has become increasingly evident in today’s fast-paced business environment. In the case of WorldCom, a national company that would provide long-distance telephone services, it is hard to determine where the problem begins. Financial reports were falsely created, improper accounting practices were found, and securities fraud was prevalent throughout the corporation’s top executives. CEOs have to take responsibility for their actions. They need to show some backbone and demonstrate long-range vision for their actions impact more than just themselves. It seems most CEOs main defense is the I-don’t-know-anything defense. Total ignorance and being accused of incompetence is better than jails time. "If you 're seen as simply incompetent, you might escape prison time," Knapp said. "You go to jail for being a crook." (Lazarus, D. 2005). The antics of for WorldCom Chief Executive Officer Bernard Ebbers highlight the downward spiral of America’s economic, cultural and political mores and the need to make business decisions with an awareness of ethical ramifications.
It seems that WorldCom used a liberal interpretation of generally accepted accounting practices when preparing financial statements. “In an effort to make it appear that profits were increasing, WorldCom would write down in one quarter millions of dollars in assets it acquired while, at the same time, it "included in this charge against earnings the cost of company expenses expected in the future” (Mober, D & Romar, E. 2002). The results of these
Cited: Crawford, K. (2005, September 23). Ebbers gets 25 years: Former WorldCom chief, 63 years old, could spend the rest of his life in prison. Retrieved October 27, 2008, from http://money.cnn.com/2005/07/13/news/newsmakers/ebbers_sentence/ Jones, D. (2005, March 27). Many CEOs take Ebbers ' crime personally, want tough sentence. USA Today. Retrieved October 27, 2008, from http://www.usatoday.com/money/companies/management/2005-03-27-ebbers-usat_x.htm Lazarus, D. (2005, March 16). WorldCom verdict shows ignorance is no defense. San Francisco Chronicle, San Francisco, Calif. Moberg, D., & Romar , R. (2002). WorldCom. Retrieved October 27, 2008, from http://www.scu.edu/ethics/dialogue/candc/cases/worldcom.html