Category: WorldCom

The question as to whether Bernie Ebbers, the co-founder and former chief executive officer of the WorldCom trial that led to his conviction for twenty-five years in federal prison was fair still remains unanswered and can only be proven by appraising his conduct and actions when he was the chief executive officer at WorldCom.

Ebbers was charged with conspiracy, security fraud, and making false filings to the Securities and Exchange Commission. (Ronald B, 2002). Several civil lawsuits were brought before Ebbers and other senior executives of WorldCom including the former chief financial officer Scott Sullivan but however dismissed after Ebbers and the other senior agreed to distribute over six billion dollars plus interest to stakeholders who had invested their money in the company stocks (Jennifer B, 2007).

Ebbers was also charged with the indictment of the state securities laws by defrauding investors of WorldCom on numerous occasions between the periods of January 2001 and March 2002 (Larry N, 2004).

Ebbers defense claimed that he did not receive a fair trial since they were unable to call senior executives from WorldCom to testify who would have cleared Ebbers by supporting his claims that he had no knowledge of the improper accounting practices which were not in accordance with the generally accepted accounting practices. The defense claimed that the trial judge should have allowed former WorldCom executives to testify without risking being charged with engaging or conspiring with the fraudulent and criminal activities that were happening around the time at WorldCom (Alan A, 2006).

Ebberss defense also claimed that the sentence handed over to Ebbers was outrageous and not in any way justifiable since they were not given enough opportunity and authority to mount a strong defense like the prosecution (Patrick M, 2005).

From the federal investigations carried out after the securities and exchange commission filed for a civil lawsuit against WorldCom and its executives, reliable evidence shows that Ebbers together with the other senior executives were guilty, and so the conviction ruling made by the trial judge would be deemed to be right. Ebbers claiming to have no knowledge was not sufficient reason and defense to plead innocence (Patrick M, 2005).

However, the sentence delivered to Ebbers by the trial judge could have been subject to question given that other senior executives were given very much less harsh sentences than Ebbers, including Scott Sullivan who openly admitted to having carried out the fraud with full awareness of its repercussions. He was only charged for a five years sentence, unlike Ebbers who received a twenty-five-year sentence (Larry N, 2004).

Certain corporate governance issues were challenged on the influence of both Scott Sullivan and Bernie Ebbers who were both senior executives at WorldCom on the audit committee. It is said that both senior executives had a strong influence on the audit committee, therefore, making it easier for them to alter the financial statements to make them look favorable to their advantage. This was a responsibility that should have been assumed by independent directors with great financial expertise (Alan A, 2006).

Ebbers was surely guilty since as an employee of WorldCom, and especially the chief executive officer he was assumed to know or have of the companys activities and attempts to defraud investors by devising a scheme together with other co-defendants which were against the Oklahoma Securities Act, therefore, comprising a violation (Patrick M, 2005).

Ebbers also a shareholder of the firm and at the same time an employee of the firm was expected to have knowledge of the companies activities because at one point he was seen to be interested in sharing his stock to pay off loans he had acquired for personal investment especially when the share prices began to fall, this was largely due to his fear that he would not be able to pay off the loans with the decreasing prices of the company stock which had been charged as collateral (Larry N, 2004). Senior executives had to convince them not to sell his stock and instead provided him with a loan to help pay off his debt.

Ebbers is also deemed to have full knowledge of what was happening since he was required to file the 10- q document with the Securities and Exchange Commission under federal law. This document was responsible for reflecting accounting entries that had been fraudulently prepared (Larry N, 2004). In fact, the accounting entries had been adjusted to reflect a favorable financial position for the company in order to boost the share price and to make the WorldCom stock attractive for investors to buy (Alan A, 2006). This was achieved by allowing certain material expenses to be understated as income was overstated. They credited certain expense accounts with the double-entry being debit of similar amounts in the reserve and capital accounts on the company balance sheet (Larry N, 2004).

There was a clear breach of corporate governance issues and ethical principles on the side of the independent auditors namely Author Anderson who reported no unusual transactions that took place which did not reflect a true account of the financial statements been prepared by WorldComs executives. In fact, it was their responsibility as independent auditors to introduce a conflict on the legality of such documents been prepared (Alan A, 2006).

Ebbers also the chief executive officer at WorldCom was said to be very influential and would use the board to support his bids. This is especially evidenced by the special loans given to him to finance his own personal investments to discourage him from selling his WorldCom stock, therefore denying the board and audit committee the required independence as effective corporate governance requires (Alan A, 2006).

This was totally in contravention with the generally accepted accounting practices and reflected a false representation of the companys financial position. This information found in the 10-q document was expected to be used by investors when appraising the company in order to make sound and informed decisions when acquiring stock or WorldComs equity (Alan A, 2006).

It was also a total breach of the professional code of ethics for a senior executive of a large corporation who was required to always act fiduciary in the best interest of the company shareholders. It was also a perfect breach of the duty to care which Ebbers together with other senior executives at WorldCom were expected to exercise on behalf of WorldComs shareholders (Alan A, 2006).

In undertaking such responsibility Ebbers was seen to have engaged in an act of conspiracy whether or not, he was involved in the actual falsifying of documents, it was deemed that he was fully aware and had knowledge of the fraudulent activities being carried out by his colleagues and other employees of WorldCom(Jennifer B, 2007).

References

Alan A, (2006) choosing ethical solutions to RIM problems.

Jennifer B, (2007) Ebberss sentenced to 25 yrs in prison for 11 billion dollar fraud: New York Times.

Ronald B, (2002) The Enron ethics breakdown.

Gary F, (2005) Ebberss lack runs out in sweeping victory for the feds: USA Today.

Patrick M, (2005) Ebberss is found guilty in WorldCom fraud.

Larry N, (2004) former WorldCom CEO pleads guilty in corporate fraud case: Associated press.

WCFCG, (2005) Bernie Ebbers gets 25yrs for historys biggest corporate fraud.

The question as to whether Bernie Ebbers, the co-founder and former chief executive officer of the WorldCom trial that led to his conviction for twenty-five years in federal prison was fair still remains unanswered and can only be proven by appraising his conduct and actions when he was the chief executive officer at WorldCom.

Ebbers was charged with conspiracy, security fraud, and making false filings to the Securities and Exchange Commission. (Ronald B, 2002). Several civil lawsuits were brought before Ebbers and other senior executives of WorldCom including the former chief financial officer Scott Sullivan but however dismissed after Ebbers and the other senior agreed to distribute over six billion dollars plus interest to stakeholders who had invested their money in the company stocks (Jennifer B, 2007).

Ebbers was also charged with the indictment of the state securities laws by defrauding investors of WorldCom on numerous occasions between the periods of January 2001 and March 2002 (Larry N, 2004).

Ebbers defense claimed that he did not receive a fair trial since they were unable to call senior executives from WorldCom to testify who would have cleared Ebbers by supporting his claims that he had no knowledge of the improper accounting practices which were not in accordance with the generally accepted accounting practices. The defense claimed that the trial judge should have allowed former WorldCom executives to testify without risking being charged with engaging or conspiring with the fraudulent and criminal activities that were happening around the time at WorldCom (Alan A, 2006).

Ebbers’s defense also claimed that the sentence handed over to Ebbers was outrageous and not in any way justifiable since they were not given enough opportunity and authority to mount a strong defense like the prosecution (Patrick M, 2005).

From the federal investigations carried out after the securities and exchange commission filed for a civil lawsuit against WorldCom and its executives, reliable evidence shows that Ebbers together with the other senior executives were guilty, and so the conviction ruling made by the trial judge would be deemed to be right. Ebbers claiming to have no knowledge was not sufficient reason and defense to plead innocence (Patrick M, 2005).

However, the sentence delivered to Ebbers by the trial judge could have been subject to question given that other senior executives were given very much less harsh sentences than Ebbers, including Scott Sullivan who openly admitted to having carried out the fraud with full awareness of its repercussions. He was only charged for a five years sentence, unlike Ebbers who received a twenty-five-year sentence (Larry N, 2004).

Certain corporate governance issues were challenged on the influence of both Scott Sullivan and Bernie Ebbers who were both senior executives at WorldCom on the audit committee. It is said that both senior executives had a strong influence on the audit committee, therefore, making it easier for them to alter the financial statements to make them look favorable to their advantage. This was a responsibility that should have been assumed by independent directors with great financial expertise (Alan A, 2006).

Ebbers was surely guilty since as an employee of WorldCom, and especially the chief executive officer he was assumed to know or have of the company’s activities and attempts to defraud investors by devising a scheme together with other co-defendants which were against the Oklahoma Securities Act, therefore, comprising a violation (Patrick M, 2005).

Ebbers also a shareholder of the firm and at the same time an employee of the firm was expected to have knowledge of the companies activities because at one point he was seen to be interested in sharing his stock to pay off loans he had acquired for personal investment especially when the share prices began to fall, this was largely due to his fear that he would not be able to pay off the loans with the decreasing prices of the company stock which had been charged as collateral (Larry N, 2004). Senior executives had to convince them not to sell his stock and instead provided him with a loan to help pay off his debt.

Ebbers is also deemed to have full knowledge of what was happening since he was required to file the 10- q document with the Securities and Exchange Commission under federal law. This document was responsible for reflecting accounting entries that had been fraudulently prepared (Larry N, 2004). In fact, the accounting entries had been adjusted to reflect a favorable financial position for the company in order to boost the share price and to make the WorldCom stock attractive for investors to buy (Alan A, 2006). This was achieved by allowing certain material expenses to be understated as income was overstated. They credited certain expense accounts with the double-entry being debit of similar amounts in the reserve and capital accounts on the company balance sheet (Larry N, 2004).

There was a clear breach of corporate governance issues and ethical principles on the side of the independent auditors namely Author Anderson who reported no unusual transactions that took place which did not reflect a true account of the financial statements been prepared by WorldCom’s executives. In fact, it was their responsibility as independent auditors to introduce a conflict on the legality of such documents been prepared (Alan A, 2006).

Ebbers also the chief executive officer at WorldCom was said to be very influential and would use the board to support his bids. This is especially evidenced by the special loans given to him to finance his own personal investments to discourage him from selling his WorldCom stock, therefore denying the board and audit committee the required independence as effective corporate governance requires (Alan A, 2006).

This was totally in contravention with the generally accepted accounting practices and reflected a false representation of the company’s financial position. This information found in the 10-q document was expected to be used by investors when appraising the company in order to make sound and informed decisions when acquiring stock or WorldCom’s equity (Alan A, 2006).

It was also a total breach of the professional code of ethics for a senior executive of a large corporation who was required to always act fiduciary in the best interest of the company shareholders. It was also a perfect breach of the duty to care which Ebbers together with other senior executives at WorldCom were expected to exercise on behalf of WorldCom’s shareholders (Alan A, 2006).

In undertaking such responsibility Ebbers was seen to have engaged in an act of conspiracy whether or not, he was involved in the actual falsifying of documents, it was deemed that he was fully aware and had knowledge of the fraudulent activities being carried out by his colleagues and other employees of WorldCom(Jennifer B, 2007).

References

Alan A, (2006) choosing ethical solutions to RIM problems.

Jennifer B, (2007) Ebberss sentenced to 25 yrs in prison for 11 billion dollar fraud: New York Times.

Ronald B, (2002) The Enron ethics breakdown.

Gary F, (2005) Ebberss lack runs out in sweeping victory for the feds: USA Today.

Patrick M, (2005) Ebberss is found guilty in WorldCom fraud.

Larry N, (2004) former WorldCom CEO pleads guilty in corporate fraud case: Associated press.

WCFCG, (2005) Bernie Ebbers gets 25yrs for history’s biggest corporate fraud.

There are multiple factors that stand behind the successful implementation of the P-O-L-C framework. It is important to prioritize some of them duly in case a company faces serious issues, or when the market indicates upcoming challenges. The collapse of WorldCom in 2002, that led to one of the largest accounting scandals in the US, provides a nice example of the lack of proper communication in a corporation. The inability of various top managers and accountants to communicate efficiently in order to prevent frauds is always disastrous.

WorldCom grew rapidly under Bernard Ebbers who managed to jump at the multiple opportunities that the growing interest for telecom services provided at that time. Nevertheless, the company went bankrupt in a matter of a few years. Moreover, Ebbers faced several charges, including one count of conspiracy, one count of securities fraud and seven counts of filing false statements with securities regulators. The fact that the large portion of Ebber’s wealth was in WorldCom stocks, let alone several loans and loan guarantees from the company, was also scrutinized.

The top managers of the company faced numerous charges and started to testify against each other. Moreover, Ebbers and his subordinates alike claimed to know nothing of the fraudulent schemes. According to Knecht (2020), up to 80% of employees generally believe that their opinions are not taken into account. Therefore, the major factor that led to the collapse of the telecom giant was the diminished quality of communication within the company.

The reasons for all the misunderstanding and complicated series of negotiations between Ebbers, directors and accountants are rooted in barriers to communication that include motive distortion and extreme self-absorption. The top managers and professionals who were expected to lead the company tended to prioritize their own interests and receive only the parts of information and data that was convenient to them. Thus, the atmosphere created by such an attitude eventually led to the collapse of the corporation, as a result of the lack of decently organized teamwork.

References

Knecht, Z. (2020). Social communication crises in the company and their overcoming. Journal of Decision Systems, 29(sup1), 129–138. Web.

Introduction

Three of the most influential and powerful companies in the world were charged with fraudulent acts. These are unethical business procedures that should not go unpunished. On the other hand, some argue that this is part of the game, the Darwinian view that only the strong will survive is also applicable in the world of business. In other words, there are times when business executives can be pardoned for trickery to gain that much-needed advantage. The following cases will show that there is no excuse for their actions because, in the long run, they indirectly destroy lives.

Business Ethics

Some believe that business ethics should be thrown out of the window because business is all about the survival of the fittest. One of the golden boys behind the rise and fall of Enron, Jeffrey Skilling believed in this philosophy so much that he developed a brutal system for evaluating employee performance, forcing several employees to be given the pink slip at the end of the year (Fusaro & Miller, 2002). This idea is prevalent in many circles that many are willing to cut corners to achieve that much-needed competitive advantage. Age-old wisdom also dictates that a lie can be said so many times and in so different ways that the general public is forced to accept it as truth even if it is not.

The story behind the scandals and the media frenzy that it has generated seems to support the idea that crime does not pay and in the end, it is not profitable to break the law or to engage in ethically wrong business practices. The top leaders of Enron and WorldCom are now spending time behind jail while the image of Philip Morris has been tarnished beyond repair. In the long run, it will be discovered that companies, adhering to high ethical standards are those that will survive the test of time. These are also the companies that offer a product or service that customers continue to patronize even after many decades of existence.

The meteoric rise and the equally devastating fall of Enron and WorldCom is a classic example of greed and how human passion and hubris can easily destroy a company even if it is one of the world’s biggest enterprises. Philip Morris on the other hand experienced a backlash when it tried to cover up a health issue regarding their product. Although government agencies and the general public continue to make the business a challenge for Philip Morris, the tobacco giant stands apart from Enron and WorldCom because Philip Morris was not involved in any financial chicanery just like the other two. This would explain why Philip Morris’ image may have been damaged and its revenue stream affected somehow by the discovery of a cover-up, yet on the other hand, it still stands, owing to its success not in small part to its continuous production of a very addicting product, which is another issue that will not be covered in this study.

Enron

Enron started as an obscure company in Houston. Its core business at that time has to do with natural gas and the laying down of pipelines. This is a business model that is easy to understand. An investor can easily follow the evolution of the company and it is also fairly easy to monitor if it is profitable or not. In this manner, they can decide to invest more or to pull out their money. But the rising prices of crude forced the industry to reevaluate the importance of natural gas. The sudden increase in value allowed Enron to become a major player in the region and then after some time, it became one of the most important companies in the United States.

Although Ken Lay the CEO of Enron was a brilliant man himself, it was his protégé, Jeffrey Schilling who came up with the idea that Enron should not be limited to the selling of natural gas and the distribution of the same (Fusaro & Miller, 2002). Schilling proposed that Enron can be more proactive and instead of connecting consumers to the source of natural gas via pipelines, Enron will become a trader of energy. It required a paradigm shift for the company because for them to do that they had to transform Enron from a supplier of natural gas to a company that behaves like Wall Street.

In the beginning, the ploy was a magical idea. It provided Enron hundreds of millions of dollars in revenue (Saporito, 2002). The rapid success coupled with Schilling’s philosophy of only the best will survive created a culture in Enron that is not much different from other cutthroat businessmen who wore a suit. This time around Enron’s success gave them respectability and they were able to leverage deals, making it difficult to resist (Saporito, 2002). How can an investor resist a proposition that will allow them to make money in the shortest possible time? The corporate leaders, as well as the traders at Enron, understand this aspect of human nature so well and they are willing to exploit it as long as they could.

Things began to go out of hand. People at Enron started to get greedy. To create an image of high profitability, the corporate leaders began tolerating an unethical practice, which is the manipulation of financial data. For instance, in preparing their financial reports some expenses were listed as assets. Those who are not accountants can easily be fooled by this trick. Others may not care but for many investors, financial statements are important tools to gauge the company’s profitability. The increase in the number of investors’ money pouring into Enron is proof that this strategy worked but it is unethical. This is because, in the long run, people will come to realize that the company is not doing great and the moment panic ensues then all the stakeholders – including employees and other businesses connected to Enron – will suffer.

WorldCom

In 2001 Enron was under the microscope. A year later it was WorldCom, the nation’s second-largest long-distance company filing for bankruptcy and embroiled in yet again another major financial scandal (Beltran, 2002). That statement is enough to make corporate America shudder. But there is more. At the time of filing for Chapter 11, WorldCom had $107 billion in assets, almost double that of Enron which was only listed as $63.4 billion (Beltran, 2002). How can a corporate giant like WorldCom succumb to external and internal pressures? What kind of force will make an organization like that bend its knees?

The simple answer can be traced to another business chicanery not much different from the trickery used by Enron officials. The official report from WorldCom was an attempt at euphemism when it declared that, “…it had improperly booked $3.8 billion in expenses. The next question must be raised, how is it possible to make a mistake as big as three billion and eight hundred million dollars? This is not a few hundred dollar bills that were erroneously filed by an erring accountant; this report is talking about billions and millions of dollars.

Just like Enron, WorldCom was led by brilliant strategists and business executives such as Bernie Ebbers. And like Enron it started as an obscure company called LDDS, when it purchased MCI, the country’s second-largest long-distance provider behind AT&T Corp., Ebbers changed its name to WorldCom (Beltran, 2002). The problem began when WorldCom officials started to manipulate its financial statements and incorrectly accounted billions of dollars in operating expenses and intentionally capitalized it as assets (Young, 2008). This was made possible by another sleight-of-hand which is the paying down of expenses using money from reserve accounts allocated for other purposes (Young, 2008). Naturally, this gave a false idea that WorldCom is robust, going strong, and ready to take in more investors’ money. This is where unethical business practices come in.

The motivation for doing all of this trickery can be easily understood. WorldCom needed to survive in a tough competitive environment. But what made many people angry is the fact that business executives are not only breaking the rules to save the company they exist to line their pockets with money acquired wrongfully. In the ensuing investigation, it was discovered that CEO Bernie Ebbers was able to access $366 million in personal loans from the company. No one can explain why he needed that much money considering that he was paid well. There is no question that these practices are fraudulent because when WorldCom went under, it brought with it hundreds of jobs and threatening a telecom infrastructure that promised to serve its customers by providing quality products and services.

Philip Morris

The case of the tobacco giant Philip Morris – part of the Altria group of companies – is much different from that of Enron and WorldCom. There was no manipulation of financial statements and intentionally deceiving investors to pour in more money to a company that is not profitable but in reality losing money. The issue with Philip Morris has something to do with full disclosure. This leads to the question of whether a company is obligated to tell the truth and nothing but the truth knowing that it will hurt its sales performance.

This is where the argument about ethical standards comes in. At first, it is not easy to decide against Philip Morris because it can be argued that they are businessmen and they are only doing whatever they can to make a profit. On the other hand, there are other factors regarding their product that make it a challenge to form a conclusion regarding ethical standards.

First of all, at the time when Philip Morris was found guilty of covering up information regarding health issues and its link to tobacco smoking, there was not enough solid scientific evidence that smoking kills. Without a doubt, one can observe the deterioration of the health of a regular smoker but it can also be argued that if taken moderately smoking is beneficial to the person. If smoking makes a person happy, then how can anybody prevent him or her from buying a pack of cigarettes? The problem with Philip Morris is that it is aware of the health risks created by its products and yet chose to continue selling (Salinger, 2005). Upon the discovery that passive smoking is also dangerous to the health of people, Philip Morris went on the offensive.

Philip Morris went as far as to infiltrate the British scientific establishment. This was uncovered due to a massive lawsuit filed in the state of Minnesota and this document containing the strategy to infiltrate science was part of the cache of 39,000 that was used against the said company (Dyer, 1998). According to investigators, “Philip Morris, the world’s biggest tobacco company, is shown to have masterminded a global campaign to influence opinion on passive smoking through the secret recruitment of paid scientists” (Dyer, 1998). If undetected the tobacco giant could increase revenue while at the same time increase the number of people who will die due to the inhalation of tobacco smoke.

Conclusion

The cover-up, the unethical campaign meant to discredit critics and the manipulation of financial data are all examples of fraudulent business practices. All of these are unethical behavior and these companies deserved to be punished. The most deplorable action is not only the use of deception to lure in investors and to keep the companies afloat, it is also the way the executives made obscene profits out of the hard-earned money of honest people. This is true for WorldCom and Enron. This is also true for Philip Morris who continues to sell products that kill (PhilipMorrisUSA, 2009). There should be a law against that.

References

1. Beltran, L. (2002) WorldCom files largest bankruptcy ever. CNN.com. Web.
2. Dyer, C. (1998). Philip Morris Skulduggery in England. Guardian Media Group.
3. Fusaro, P. & R. Miller. (2002) What went wrong at Enron. New Jersey: John Wiley & Sons, Inc.
4. PhilipMorrisUSA. (2009) Smoking and Health Issues. Web.
5. Salinger, L. (2005). Encyclpedia of white-collar & corporate crime. CA: Sage Publications, Inc.
6. Saporito, B. (2002) How Fastow Helped Enron Fall. Time.com.
7. Young, B. (2008) WorldCom. In Corporate Governance. R. Monks & N. Minow (eds.) New Jersey: John Wiley & Sons, Inc.

During the 1990s, WorldCom disrupted the telecom industry through multiple acquisitions. The company acquired over 60 companies. The compathe any acquired MCI in 1997 to become the second largest data carrier. By 2001, the company controlled a third of all data cables in the US (Obringer, 2011). The company eventually collapsed due to mismanagement arising from the greed of the executives who defrauded the company off billions.

Major characters

The main character in the WorldCom fraud was the former chief executive officer Bernie Ebbers. The former chief finance officer Scott Sullivan was his accomplice. Ebbers borrowed over $365 million to allegedly cover losses in the stock. The amount was not repaid. Additionally, he secured huge loans from the company for personal investments. These included the purchase of a Canadian ranch.

He netted nearly one hundred and forty million US dollars from the transactions associated with the corporation. Sullivan served as the company treasurer and secretary in addition to CFO. He directed employees to make fabricated bookkeeping entries. He individually made fabricated and deceptive public statements about the company finances. He netted $45 million from company sales (Boatright, 2011).

The ethical issue faced

The practice of dubious accounting practices and deception drove the company to insolvency. The deceitful reports and public statements made by the CFO contribute to the unethical issue of fraud. The root of the fraud was the siphoning of the company’s finances for personal use through loans that were not reflected in the books of accounts. The records were kept a ‘secret’.

Ethically, it is erroneous to withhold such information from investors who put huge amounts of capital in the company. There was a faked price increase in the company proceeds through financial records that were set aside. The amount set separately as the reserve was recorded as profits.

Reconciling reaction to the issue

The main players in the fraud conspired to deceive the stakeholders. The financial statements indicated that the company was making profits. In reality, the company was making losses because the loans extended to top executives were not repaid.

The audit conducted revealed that the management would not account for the extra profits. Having a reserve account is not illegal or unethical. However, the executives inflated the reserves with a hideous plan. They would reach the reserve account to gratify the investors.

The stakeholders affected by the decision

the The major stakeholders affected by the fraud were the investors. They lost millions in investment in the company’s stock.

The involvement of the investors was loose. When internal auditing was taking place, the investors were often unaware. Information was held back from them. The dubious accounting practices impacted the company’s employees. When the company filed for insolvency and the related legal matters, many workers were laid off.

How stakeholders were affected by the decision

The declaration of bankruptcy by the management was detrimental for the company investors. Considering that the company was insolvent, they could not sell their stock or receive dividends. The move also saw the laying off of many employees to minimize expenses.

An alternative course of action

The company’s management should have implemented operational internal controls. The strategy would have prevented the executives from manipulating the subordinate staff since the fraud would have been detected before billions were lost.

Proper checks and balances should have been implemented. The separation of duties made it easy for top managers to be manipulated by the CEO and the CFO. When the company was declared insolvent, the government should have intervened to save the thousands of jobs that were lost since they affected the economy.

References

Boatright, J. R. (2011). Ethics and the conduct of business. Upper Saddle River, NJ: Prince Hall.

Obringer, L. A. (2011). How cooking the books works.