A Look Inside The WorldCom Scandal Essay

Deception, whether intentional or not, did occur. The shareholders had a right to know the financial state of WorldCom. In Ebber’s defense, he had unscrupulous bed fellows on this board. Their intentions are also at question especially regarding their eagerness to grant Mr. Ebbers a breathtaking loan for $341 million dollar at an interest rate of 2% to shield the instability of the company’s financial situation from shareholders. There were also some concerns whether such loans were ethical from the Security Exchange Commission Enforcement official Seth Taube. He stated that large loans to senior executives are commonly sweetheart deals involving interest rates that constitute a poor return on company assets. Federal prosecutors in New York cited Ebbers 's expensive lifestyle, and his overspending, as a motive to hide WorldCom 's mounting financial troubles. The impropriety associated with the largest loan any publicly traded company has lent to one of its officers in recent memory is evident. Unfortunately, if Ebbers had pressed the matter and sold his stock, he would have escaped the bankruptcy financially whole, but Ebbers honestly thought WorldCom would recover.”

External auditors at the time failed to expose the fraudulent financial practices taking place at WorldCom. Although internal auditors expressed concern about the classification of operating expenses as capital expenditures, their efforts were purposely neglected by top level financial executives allowing the fraud to continue (Lyke,2002) WorldCom's financial standing was manipulated to show that the company was profitable when in reality was on the brink of bankruptcy; on top of that, WorldCom's CEO got a $400 million personal loan with lack of oversight from the board of directors (green 2004, p37 paper). The Sarbanes–Oxley Act brought about a series of financial regulations that could have prevented WorldCom's fraudulent practices. Sarbanes–Oxley requires principal executive and financial officers to certify the accuracy of financial statements and the effectiveness of internal controls for the compilation and disclosure of these statements with enforcement provisions such as fines or imprisonment. The Act prohibits the boards of directors from granting loans to executives. The Sarbanes–Oxley Act also established the Public Company Accounting Oversight Board to oversee the audits of publicly traded companies and regulate accounting practices. If all

The whole board of directors were recouped with an entire new board of directors to assure loyal decisions. Where the scandal happened in Mississippi, finance and accounting firm was closed down. As new employees of Worldcom were being hired, about more than half of the existing employees were layed off. Telecommunications market has dropped in 2002, after the scandal. Though the market dropped the bankruptcy of Worldcom was a downfall, but this made it advantage for Worldcom's competitors to survive. Looking outside of the company many others were affected. However the New York State retirement fund has one of the biggest pension fund, it had many investments through Worldcom and lost over $300 million. Another investment by HGK Asset Management which stands for Harris, Greenhouse, Kutzel, lost it all over $130 million of the debt securities and all in the

Due to these criminal activities, many top executives were convicted fraud and sentenced to spend time in prison. WorldCom activities did not align with the company's overall mission and goals. The actions taken by management were not in the best interest of the customer instead they were consumed with acquisitions and increasing the value of WorldCom Shares. The management also should have considered general accounting practices during their strategic planning. Furthermore, create procedures that protect all stakeholders within the firm.

Bernard John Ebbers is the former CEO of WorldCom. WorldCom committed into fraud and conspiracy because he did false financial reporting and eventually cause loss to investors and the amount of loss is USD 100 billion which is a huge amount. Bernard John Ebbers had to distribute more than USD 6.13 million to more than 830000 individuals and institutions who held WorldCom’s stocks and bonds. Bernard John Ebbers agreed to give up a portion of his assets which included his home, his interests in a lumber company, hotel, marina, thousands acres of real estate, and golf course later on. Bernard John Ebbers was left with only USD50000 in his total assets reported by the newspaper. In addition, he was sentenced to 25 years of prison.

Bernard Ebbers was the CEO of Worldcom.WorldCom was the second largest telecommunications company in the US at the time.Ebbers made the business what it was.He also owned a motel chain.The company had been discussing a merger with Sprint.The merger was denied by the Department of Justice because they were nervous it would become a virtual monopoly.This dropped the stock price tremendously.Bernie Ebbers owned a whole lot of stocl from WorldCom.As the company started to go down banks demanded the Ebbers give them over $400 million in margin calls.Ebbers convinced WorldCom to give him the money so he could sell the substantial stock. WorldCom couldn’t pay expenses.They ended up with a $3.8 billion in expenses.This made the Department of Justice

It is clearly seen that there is the violation of the laws as Ebbers used allegedly funds for other business ventures and drop down the stock price which brought questions to WorldCom as “Earning”. The staff within the company did not want whistleblower for a fugitive false account. There are laws that required to follow at the corporate level.

On March 15, 2005 former CEO of WorldCom, Bernard Ebbers sat in a federal courtroom waiting for the verdict. As the former CEO of WorldCom, Ebbers was accused of being personally responsible for the financial destruction of the communications giant. An internal investigation had uncovered $11 billion dollars in fraudulent accounting practices. Later a second report in 2003 found that during Ebber’s 2001 tenure as CEO, the company had over-reported earnings and understated expenses by an astonishing $74.5 billion dollars (Martin, 2005, para 3). This report included the mismanagement of funds, unethical lending practices among its top executives, and false bookkeeping which led to loss of tens of thousands of its employees.

What if message was told that the CIA have been hiding secrets that can marred the human race? The cia’s secrets have been leaked which shows documents and other things that show the history of the CIA and some of their inhuman experiments. While some may argue that the CIA is good and act for the best of humanity and humans, through the use of research, it is clear that, that is false because of the secret human experiments that the CIA have been doing to humans and top secret of has come out of secrecy; therefore, the monitoring of all CIA experiments by any form of *super* high authority should happen.

The stakeholders in this fraudulent case of WorldCom consist of Bernie Ebbers, Scott Sullivan, Buford Yates, David Myers, Cynthia Cooper, and Betty Vinson belong to the company. While the other stakeholders would consist of the creditors, Andersen (accounting firm), investors, and the public. This fraudulent act committed within WorldCom impacted every single stakeholder in a way. Either in a negative or positive way, most of the impact was caused with harm to everyone. The main individuals such as Ebbers, Sullivan, and Vinson all had major consequences as resulting with the fraud. Criminal trials were a major result with their fraudulent acts within WorldCom. Cooper was a lifesaver by most of the community. Aside from these individuals, the rest also got affected by the fraud. Investments conducted by the investors were all lost within the fraud process. The impact towards much of the image for Andersen was ruined. Many of the public lost their trust on the honesty and professionalism of Andersen and other certified public accounting firms. The entire employees from the top management to the smaller group of workers stayed unemployed and some with criminal punishment.

The perfect fraud storm occurred between the years 2000 and 2002 involving two of the largest energy and telecom corporations in the United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht & Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concealing the fraud until exposed and rectified.

The WorldCom case presents two different responses to WorldCom's financial difficulties. Betty Vinson acted unethically and illegally, was caught and was punished for it. Cynthia Cooper acted ethically and legally, was recognized and lauded for it. While their ethical positions might initially seem simple, the reality is complex.

P., & Coulter, M. K., 2012, p. 152), although it seems none of WorldCom’s executive management team seemed to feel this way. Many steps could have been taken to prevent the collapse of the WorldCom empire, but only a few key managers held the power and none were willing to take action. One control that did not exist in WorldCom’s culture was allowing both internal and external auditors access to all necessary documents and statements. Without full disclosure of these items no one could see how many risks the company was taking by making fraudulent entries against their books. Also the external audit team, Arthur Anderson, held WorldCom as one of its best customers which was a major conflict of interest. This relationship lead to many fundamental mistakes from Anderson not keeping pressure on WorldCom and getting all vital information that would prove how poorly the company was being run. Had they been operating transparently, auditors and employees would have seen the accounting deception and could potentially have stopped it prior to the company’s collapse. In addition, by employing multiple auditing firms many of the mistakes being made may have been caught and discontinued from the beginning.

WorldCom was U.S based Telecommunications Company. It was second greatest long partition phone association in U.S., which had been working together since 19th century. It was built up in 1968. It was the benchmark long partition telecom and web access. Today, it is perhaps best known for a bookkeeping embarrassment that stimulated the association shred for insolvency security in 2002. WorldCom overseers effectively exaggerated the association 's bookkeeping numbers, enlargement the association 's preferences by around $12 billion dollars. The snappy insolvency that took after incited colossal hardships for theorists. WorldCom part 11 was the greatest liquidation in U.S. history and this was as a standout amongst the most exceedingly terrible wrongdoing in corporate world in U.S. history. Between July 2002 when WorldCom chose non-portion and April 2004 when it rose up out of part 11 as MCI, association forces worked intensely restate the financials and overhaul the association. This part of insolvency impact on customers who was using long division organization. The WorldCom recording recorded more than $107 billion in resources, far surpassing those of Enron, which asked for liquidation last December. The WorldCom recording had been expected after the association uncovered in late June that it had shamefully identified with more than $3.8 billion of costs.

WorldCom started in 1983 as a company as small company name Long Distance Discount Services proving long distance services to both business and residential customers. Over the years they grew to become one of the largest long distance provider and telecommunications company in the United States. It was consisted of over 85,000 employees at the strongest peak of business. The company was base in United States with branches in over 60 countries worldwide. In 1985, the company first went public and with its acquisition of numerous small and merger with MCI in 1997, WorldCom grew into a $30 billion enterprise and became one of the largest established telecommunication companies. WorldCom was admired by many as a company that was strong in growth and stability. As time went was it came to pass that the company was not as strong as others have thought and was a mere perception.