Should Worldcom Ceo Bernard Ebbers' Been Sentenced to 25 Years in Prison?
Introduction
The WorldCom fraud that came to light in 2002 was an example of many things that went
wrong within the organization. Unethical conduct by its senior leadership beginning with Chief
Executive Officer (CEO) Bernard Ebbers was certainly at the forefront of these problems. The
question is should a CEO like Ebbers have been sentenced to prison for his liability in the
WorldCom scandal? My answer is yes, he should’ve gone to prison as well as other CEOs who
engage in unethical conduct that results in laws being violated. I will support my answer by
taking a look at the duties of a CEO, focusing on leadership responsibilities and accountability. I
will discuss causes of ethical problems in CEOs and finish by discussing utilitarian and
deontological ethical issues as they pertained to Ebbers.
Background
As the telecommunications industry slowed in the late 1990s, WorldCom’s stock price began
to decrease. Ebbers came under pressure from financial institutions to cover margin calls on
WorldCom stock he used to finance other businesses (Vasatka, 2007). From 1999 to 2002, a few
WorldCom senior executives engaged in fraudulent accounting practices. These practices were
designed to portray losses as growth to the public. Ebbers resigned as CEO under pressure for
several reasons unrelated to the accounting fraud on April 29, 2002 (Beresford, Katzenbach &
Rogers, 2003). Cynthia Cooper led an internal audit investigation of suspected accounting irregularities in
May-June 2002. According to Ms. Cooper’s statement, she discussed the investigation with
WorldCom Chief Financial Officer (CFO) Scott Sullivan on June 12, 2002. She then discussed
her investigation with two others on June 13, 2002. They were Max E. Bobbitt, Chairman of the
Audit Committee, WorldCom Board of Directors and Mr. Farrell Malone, engagement partner of
KMPG, LLP, an external audit agency.
The Board of
The WorldCom fraud that came to light in 2002 was an example of many things that went
wrong within the organization. Unethical conduct by its senior leadership beginning with Chief
Executive Officer (CEO) Bernard Ebbers was certainly at the forefront of these problems. The
question is should a CEO like Ebbers have been sentenced to prison for his liability in the
WorldCom scandal? My answer is yes, he should’ve gone to prison as well as other CEOs who
engage in unethical conduct that results in laws being violated. I will support my answer by
taking a look at the duties of a CEO, focusing on leadership responsibilities and accountability. I
will discuss causes of ethical problems in CEOs and finish by discussing utilitarian and
deontological ethical issues as they pertained to Ebbers.
Background
As the telecommunications industry slowed in the late 1990s, WorldCom’s stock price began
to decrease. Ebbers came under pressure from financial institutions to cover margin calls on
WorldCom stock he used to finance other businesses (Vasatka, 2007). From 1999 to 2002, a few
WorldCom senior executives engaged in fraudulent accounting practices. These practices were
designed to portray losses as growth to the public. Ebbers resigned as CEO under pressure for
several reasons unrelated to the accounting fraud on April 29, 2002 (Beresford, Katzenbach &
Rogers, 2003). Cynthia Cooper led an internal audit investigation of suspected accounting irregularities in
May-June 2002. According to Ms. Cooper’s statement, she discussed the investigation with
WorldCom Chief Financial Officer (CFO) Scott Sullivan on June 12, 2002. She then discussed
her investigation with two others on June 13, 2002. They were Max E. Bobbitt, Chairman of the
Audit Committee, WorldCom Board of Directors and Mr. Farrell Malone, engagement partner of
KMPG, LLP, an external audit agency.
The Board of
References: (Continued) Lewis, J.J. Knowledge Quotes From Wisdom Quotes: Quotations to inspire and Challenge. Retrieved July 12, 2008 from http://www.wisdomquotes.com/cat_knowledge.html Lewis, Kenneth D. (2002). The responsibility of the CEO: Providing ethical and moral leadership. Vital Speeches of the Day, 69(1), 6-9. Retrieved July 17, 2008, from ABI/INFORM Global database. (Document ID: 219827251). Wilson, Robert C. (1989, May). No Fair Shake for Shareholders. Chief Executive, (51), 30. Retrieved July 17, 2008, from ABI/INFORM Global database. (Document ID: 899688). Weinberg, Neil. (2002). Asleep at the switch. Forbes.com. Retrieved July 18, 2008 from http://www.forbes.com/forbes/2002/0722/038.html Waggoner, John. (2002). WorldCom troubles started as early as 2000. USA Today. Retrieved July 18, 2008 from http://www.usatoday.com/money/telecom/2002-07-15-worldcom-inside.htm