Adelphia Case 1 Essay

Decent Essays
Case Summary
The Allegations: Prosecutors say members of the cable company's founding family and two former executives looted the firm "on a massive scale," spending company funds on personal expenses, such as a $12.8 million golf course. The firm has been accused of hiding business relationships between Adelphia and entities tied to the founders and for inflating its financial results.
Who's Who:
• John J. Rigas, Adelphia's founder
• Timothy Rigas, former CFO
• Michael Rigas, former executive VP
• James R. Brown, former vice president
• Michael C. Mulcahey, former vice president and assistant treasurer
What's happened: All were indicted on federal fraud charges. The SEC filed civil charges, and Adelphia sued the
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Integrity and Ethic: Concerns of whether the company had a proper ethic policies and procedures in place, and if management was enforcing it. Also, concerns about the commitment of the managers, proper transparency and corporation and input by the Audit committee. Also, concerns a centralized structure and authority, where even decisions are centered within a few persons.

5) What concerns should have been raised in the following areas of risk assessment in Adelphia strategy: changes in operating environment, new people and systems, growth technology, new business, restructurings, and foreign operations?
In regards to the operating environment, there should be transparency and control not centralized on those from the Riga’s family. Opportunities should have been given independent individuals new in the company, to be able to bring in new ideas. In regards to restructuring and foreign operations, management would have thought of restructuring the whole company, where full reliance is not placed on just those from the Riga’s family.

6) What is your opinion on the importance of independence in corporate governance? What are the most recent rules on corporate governance for public firms?

Independence in corporate governance fosters good management with no conflict of interest. A company board made-up of independent directors enables those
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