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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...