A Look Inside The WorldCom Scandal Essay

Decent Essays

WorldCom was the ultimate success story among telecommunications companies. Bernard Ebbers took the reigns as CEO in 1985 and turned the company into a highly profitable one, at least on the outside. In 2002, Ebbers resigned, WorldCom admitted fraud and the company declared bankruptcy (Noe, Hollenbeck, Gerhart, &Wright 2007). The company was at the heart of one of the biggest accounting frauds seen in the United States. The demise of this telecommunications monster can be accredited to many factors including their aggressive-defensive organizational culture based on power and the bullying tactics that they employed. However, this fiasco could have been prevented if WorldCom had designed a system of checks and balances that would have …show more content…

The CFO Scott Sullivan forced his henchman, David Myers to see to it that accruals were released from various business units including UUNET. When Myers ordered the accrual release from UUNET’s CFO, David Schneeman, he met resistance. Myers got angry with Schneeman and ultimately found another person to complete the accrual release in order to appease Sullivan, who worked for Ebbers (Kaplan & Kiron, 2007). Bullying was another tactic of this company. Workplace bullies typically target independent employees who refuse to be subservient (Weidmer, 2011). For instance, when Cynthia Cooper, an internal auditor, was made aware of a questionable transfer, she brought it up at an audit committee meeting. After the meeting, Sullivan screamed at her and told her to stay away from that account (Kaplan & Kiron, 2007). Additionally, victims of workplace bullying may experience various symptoms such as weight loss and difficulty sleeping (Namie, 2003). This is exactly what happened to accounting manager Betty Vinson. Sullivan bullied Vinson into releasing accruals. Vinson was eager to maintain her status and did as requested, more than once. Vinson began to lose weight and sleep due to the bullying she experienced and the guilt she carried (Kaplan & Kiron, 2007).
Preventative measures could have been instituted to avoid the WorldCom corporate fraud. First, WorldCom should have had an external Board of Governors comprised of businessmen

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