Experts in corporate ethics see less risk of another WorldCom in the future.
Last week’s sentencing of former WorldCom boss Bernard Ebbers to 25 years in prison closes the legal book on the network industry’s most notorious and damaging case of accounting fraud, pending the inevitable appeals.
Ebbers was convicted in March on nine fraud-related counts. Tens of thousands of employees lost their jobs, and thousands lost their life savings. Although more than 150 people sent letters to Judge Barbara Jones asking for leniency, the more striking comments came from those who directly suffered losses.
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Bernie Ebbers cries for himself and cries alone
Justice is served – for Ebbers and all of us
Since the verdict was announced, discussion has focused primarily on the question of whether justice was served. However, the question of greater importance to those who depend on this industry for their livelihoods and to run their businesses may well be this: Has enough been done to prevent the next WorldCom?
One law professor says recent moves by prosecutors to go after corporate criminals, as well as legislation such as Sarbanes-Oxley, designed to keep public companies’ accounting books in order, are deterrents to white-collar crime.
“In general, the overall increase of prosecution and legislation of white-collar crime is definitely having an effect,”says Ellen S. Podgor, professor of law at Georgia State University’s College of Law.
However, she calls Ebbers’ 25-year sentence “ridiculously long and inappropriate. … John Walker Lindh got 20 years for aiding the Taliban; Bernie Ebbers got 25 years?”
The prosecution had recommended Ebbers receive 85 years behind bars . Of the 25-year sentence, Jones said, “A sentence of anything less would not reflect the seriousness of this crime.”
Until a few years ago, it was generally believed that sentences for white-collar crime were too lenient, says Douglas Berman, professor of law at Ohio State’s Mortiz College of Law. “That has flipped; of late we’re seeing more and more long sentences in white-collar cases, even for first offenders.”
The idea is that when a CFO or CEO is faced with the choice of cooking the books or facing Wall Street with an honest showing of numbers, he’ll think about the sentences former executives received.
Cases involving Enron, WorldCom and Tyco have increased awareness of corporate governance and business ethics among companies, says David Balderson, director of Corporate Learning Services , a division of New York University’s School of Continuing and Professional Studies. Balderson’s group developed MCI’s ethics training in 2003, which all employees are required to complete. Since then, Balderson says the number of companies that seek such training has grown exponentially.
In fact, NYU says it just got an RFP from a Fortune 100 company with more than 20,000 employees to create an ethics-training program.
Ebbers is scheduled to report to federal prison Oct. 12.
