The Adelphia Communications Scandal John Rigas started Adelphia Communcations in 1952 with the

800 WordsApr 23, 20194 Pages
The Adelphia Communications Scandal John Rigas started Adelphia Communcations in 1952 with the help of two partners, but soon bought it out. The company was taken public in 1986 and as a result would have to abide by the regulations of the SEC. By the early 2000s, Adelphia was one of the top cable companies in the United States. This was the peak of a corporation that would begin a downward spiral over the first half of 2002 as a result of fraudulent use of the company’s assets at its’ shareholders expense. Members of the Rigas family drove the company to bankruptcy through rampant spending of company funds on personal expenditures (Barlaup, 2009). These expenditures included the likes of gross misuse of the company’s aircraft for…show more content…
This first ethical issue actually shares a commonplace with the second, misleading and disguise. Ethical Problem Two Similarly to how the Rigas family hid their transactions in the cash management system, they also manipulated company metrics and numbers in an effort to hide the actual current state of the company to the shareholders. Barlaup states that according to James Brown, former VP of finance at Adelphia, “it became a part of the corporate culture of Adelphia to conceal information that might be disadvantageous for the company” (2009). The purpose of doing all of this manipulation was to hide the fact that the company was in an enormous amount of debt. They hid the debt from the shareholders as a cause and effect result that would undoubtedly happen. If the shareholders knew that the company was in debt then the company’s numbers in the market would start to slide, thus making getting out of debt even harder. The ethical problem for the Rigas family at that point had become: Do we hide the debt in hopes of making more money in the market, or are we honest about the state of the company and risk a big financial loss as a result? Deontological Ethics and Kant’s Categorical Imperative There are multiple forms of ethical ideas that can be used to analyze the issues presented in the Adelphia scandal. Deontological ethics will play the major role in looking at these two examples

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