Professional Documents
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How Unethical Practices Almost Destroyed World Com
How Unethical Practices Almost Destroyed World Com
How Unethical Practices Almost Destroyed World Com
Group Members
Amit Yadav Samarpal Singh Ravindra Kumar Apporva Verma Saurabh Tripathi Udit Varshney Vimal Verma
WORLDCOM LEADERSHIP
COMPANY BACKGROUND
Worldcom founded in 1983 in hattiesburg , mississippi Initially called LDDS- Long Distance Discount Service Bernard Ebber as CEO in 1985 Growth=survival $650000=$1.5 m Worldcom went public in 1989 1993-metromedia co. & resergens communication 1995- william technology 1998-Biggest acquisition($40 billion revenues)
1999 sprint merger worth $129 billion crashed Stock declined by 2000 Heavy loans unstabilized his position as he left he said New CEO-John Sidgmore & CFO Scott Sullivan investigation launched by :SEC (Security exchange commission) Internal auditor Purchased by Verizon communication on 2001 known as Verizon business.
Inorganic growth
Acquisition of business units Financed by companies high value stock Industrial slow growth rate and recession
Failing leadership
No technical qualification , no experience Priority to personal interest over organization's interest. No backup plan
Unalert top management Whimsical CEO Large pay packages of top executives Unreasonable long tenures of board members Unreasonable loans and benefits given to Ebbers
Other reasons
Recession of the economy Vast oversupply of capacity Unhealthy focus on profits
WorldCom also defaulted to give 0.60 dollar on its MCI group tracking stock. This step was taken by WorldCom stating the fact that by this it can save upto 284 million dollar a year.
Arthur Anderson had series of audit fraud including Enron and WorldCom. Observers commented that Arthur Anderson could have paid more attention towards aggressive practices when it was aware of such practices before.
Summary
WorldCom is not only about greed Corporate fraud is the result of how a corporation is led, how employees are motivated, the nature of the work, and the degree of individual autonomy Ethics training and compliance programs dont work in a culture that is exclusively materialistic and that devalues the dignity of work and workers The basic assumptions about how corporations are organized and run need to be rethought Corporate executives must re-learn how to lead Leadership training must be holistic, emphasizing free will, personal responsibility and transparency i.e.: continuous, open, information-sharing
Why good managers make bad ethical choices ( Four Rationalizations To Justify Questionable Conduct 1) Believe that the activity is not really illegal 2) Believe that it is in the individuals or corporations best interest 3) Believe that it will never be found out 4) Believe that the company will condone actions that are taken in its interest and will even protect the managers responsible
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Conclusion
A good way to avoid management oversights is to subject the control mechanisms themselves to periodic surprise audits The point is to make sure that internal audits and controls are functioning as planned It is a case of inspecting the inspectors and taking the necessary steps to keep the controls working efficiently It is up to Top Management to send a clear & pragmatic message to all employees that good ethics is still the foundation of good business
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What will it profit a man if he gains the world but loose his own soul? (Mark 8:36)Jesus Christ