Business Ethics Essay

1804 words - 8 pages

Who is WorldCom? The company began as Long Distance Discount Services, Inc. (LDDS) in 1983, based in Hattiesburg, Mississippi. In 1985, LDDS selected Bernard Ebbers to be its CEO. The company went public in 1989 through a merger with Advantage Companies Inc. The company name was changed to LDDS WorldCom in 1995, and later just WorldCom.

The company’s growth under WorldCom was fueled primarily through acquisitions during the 1990s and reached its apex with the acquisition of MCI in 1998. Among the companies that were bought or merged with WorldCom were Advanced Communications Corp. (1992), Metromedia Communication Corp.(1993), Resurgens Communications Group(1993), IDB Communications Group, ...view middle of the document...

So let’s take a look at this case from deontologist point of view. What’s deontology you ask? Well, it is Immanuel Kant’s Moral Philosophy that moral requirements are based on a standard of rationality he dubbed the “Categorical Imperative” (CI). He believed that ethics are based on reason and freedom. That we have the mental capacity to make moral decisions and so we hold individuals accountable for their actions in ways that children or animals are not. Deontologists believe we have a duty and obligation to do what is right regardless of the consequences. In the case of WorldCom for me, Mr. Ebbers just like any other CEO had the duty and obligation to make money for his investors, employees and himself but to what end.

Let’s examine the strategy of making huge acquisitions to further the success and growth of WorldCom. Was Mr. Ebbers doing this out of a duty or obligation to his stockbrokers? Or was this just for personal gain? I can’t speak for him but I feel that after reading about how he positioned his company to be able to acquire huge and small companies without regard, there isn’t any good will that I can find in his behavior. Here is a man is who as loved by the community and feared by other companies for his aggressive nature of business. What do acquisitions really say about a businessperson? For most, it is the acquiring of something solely for personal gain. That is what he was doing. Acquiring companies and making promises on future incomes for the sole growth of his company and his wealth. This would have worked because WorldCom had become the second largest telecommunications company but he forgot the business end of the deal and that there were others (investors, employees and customers) that had to be considered. Mr. Ebbers’ enthusiasm to succeed outweighed his greed because he felt in his mind what he was doing was right and just. It was his duty to grow the company regardless of the consequences. Nowhere was this more proven than in their accounting practices and his close relationship with investment analyst Jack Grubman at Salomon Smith Barney. WorldCom’s blatant disregard for finance accountability and governing practices aided in their successful ability to hide fraudulent accounting records dating back 5 years. According to a document entitled “Report of Investigation” dated March 31, 2003 the report described the accounting shenanigans as follows: “ As enormous as the fraud was, it was accomplished in a relatively mundane way: more than $9 billion in false or unsupported accounting entries were made in WorldCom’s financial systems in order to achieve desired reported financial results…” Is this moral? Where is the good will or duty in this? What is Bernard’s thought process when he fully knew that the profits they were forecasting were incorrect. Not to mention the business practices that they took part in once companies were acquired. Management didn’t have a clue as to what had to be done in order to succeed as...

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