World Com Ethics

Reflecting on the article entitled "Uncooking the Books" written by Susan Pulliam and Deborah Solomon led me to adverse reactions in regards to the WorldCom scandal. My initial and most intense reaction was disgust. I felt disgusted in the actions of fraud committed by many higher executives, especially Scott Sullivan (WorldCom's CFO), Bernard Ebbers (CEO), David Meyers (Comptroller), and Burford Yates (Director of Accounting). These men purposely committed fraud to drive up the price of WorldCom's stock. Perhaps they did so to protect the company and its employee's, perhaps they did so out of sheer greed, or perhaps it was a combination of both. However, fraud in any sense and for whatever reasons offered is not only illegal but also immoral.

Another reaction I had was anger. Where was the United States Government? Where was the Securities and Exchange Commission? I am admittedly ignorant of accounting practices and principles. However, I find it extremely troubling that a small group of executives could perpetuate such a massive fraud upon its shareholders and stakeholders. In the book entitled "The Ethical Challenge" written by Noel M. Tichy and Andrew R. McGill, C.K. Prahalad wrote "Checks and balances are required when we explicitly recognize that in our economy and society there are competing interest, and they must be explicitly balanced" (79). I am aware that Mr. Prahalad was referring to the entire capitalism system, but I chose to make it literal. Four or five executives in such a large company should not have been able to escape detection for two years. Eventually, due to the checks enacted by WorldCom's own internal accounting employees the fraud was discovered, but only after "they had unearthed $3.8 billion in misallocated expenses and phony accounting entries" (Pulliam & Solomon).

Yet another reaction I had to both the article and the book as well was fear. How can I or anyone else have any trust in the economy and the government? Think of all the people WorldCom and Enron negatively affected. All those poor employees who were layed off, whose retirement funds were wiped out. Why should I have any faith in the economic system and the seemingly unscrupulous people who lead that system? I can almost excuse the government for being asleep at the wheel during WorldCom and Enron because nothing had happened like that before, so while being unprepared is not an excuse, it can be a reason. Luckily, I was only abstractly affected by Enron and WorldCom so I was, in fact, starting to develop some trust in the economy and government again. Then Bernie Madoff became news. I was absolutely stunned that yet again a few executives were able to perpetuate such an incredible fraud and escape unnoticed for such a long period. I understand that the circumstances between the three companies were different but the principle is the same. No person or small group of people should be able to commit fraud for such a large amount of money and for such long periods. This led me the reaction I had after thinking about the scandals. That reaction was simply that the system needs to be fixed. If people have no faith in the system the system is doomed to fail.

I believe that one obvious reason for the WorldCom scandal was greed. If the executives inflate the stock they stand to make more money. For some, money is the be all and end all; they will do anything to earn it, even if the acts they take to earn it are akin to stealing. I am sure they were able to justify their actions to themselves, which helped to alleviate the guilt they should have felt. After a time they had to commit fraud to cover up the original fraud and a vicious circle ensued.

Another cause I believe was the economic system itself. Public companies have to show continued growth for their stake and stock holders. They even want that growth during periods of economic downturns. This can add so much pressure you can almost understand why a high executive would commit fraud. They may almost have to in order to keep from getting fired. I am not disparaging capitalism; I recognize that it is the best economic system developed as yet. I just feel with the system the way it is it almost invites fraud. Similar to how Major League Baseball had no checks for steroids, so the less moral players used them and put up fraudulent statistics. That was the system these players were in, so they took advantage for the money and the glory, just like all the key players in the WorldCom and Enron scandals did also.

I obviously do not know Ms. Cooper personally so I can only speculate on why she took the road she chose. I choose to believe that it was because she was an honest person. The same is also true for Mr. Morse (the person