Bernie Ebbers, the former gym-teacher-turned-telecom-Dr. Frankenstein who breathed life into the patched-together WorldCom and, in the process, became one of the biggest personalities of the Internet frenzy, this week was convicted for the massive fraud that bankrupted the company, put thousands of employees out of work, slammed investors and helped crater the telecom industry.
The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.Alan Greenspan
Dear Vorticians,
A little mental detour this week, simply because I’d be remiss not to acknowledge the end of an era.
Bernie Ebbers, the former gym-teacher-turned-telecom-Dr. Frankenstein who breathed life into the patched-together WorldCom and, in the process, became one of the biggest personalities of the Internet frenzy, this week was convicted for the massive fraud that bankrupted the company, put thousands of employees out of work, slammed investors and helped crater the telecom industry.
In the days after Ebbers stood before the jury to learn of his fate, Qwest stepped up its battle with Verizon to acquire MCI, the former WorldCom, and J.P. Morgan Chase agreed to pay investors $2 billion to settle claims that it didn’t adequately investigate WorldCom’s financial situation before marketing the company’s bonds during the heyday. Once a telecom giant valued at some $180 billion, WorldCom is but a shell of itself that will soon disappear into the bowels of one of the regional Bell holding companies. An ignominious end, indeed.
I read that Ebbers faces up to 85 years for his crimes, a sentence that means the 63-year-old former CEO could end his life behind bars.
That sounds grim, until you consider the vast consequences of the WorldCom fraud, which the federal jury clearly believed Ebbers had actively engineered. Jurors didn’t believe that a CEO who tracked how much coffee workers were drinking could be ignorant of the gargantuan crime occurring on his watch. They didn’t buy what one analyst described as his legal team’s “aw shucks” defense.
The manipulation and deceit practiced by the WorldCom management team left an entire industry in chaos. Only now is that industry beginning to move beyond its ruinous last half decade. Millions of people, from all walks of life, were damaged by the decisions and public statements made by WorldCom executives and the company’s external ‘advisors’ and confidantes. Careers were short-circuited, life savings were lost, dreams and aspirations smashed. Every corporation will shell out millions of dollars, every year, to comply with onerous regulations imposed in the wake of the WorldCom, Tyco, and Enron frauds.
One man’s life behind bars is pitiful recompense.
Consider this: Martha Stewart spent five months in prison for a case that involved a $51,000 gain on an insider stock trade. By that math, Ebbers’ $11 billion fraud ought to net him 1,078,431 months in the can, or 89,869 years. Sadly, that’s a sentence you only read about in certain, shall we say, less progressive states for a defendant found with 20-ounces of marijuana in the glove box. Scott Sullivan, the turncoat ex-CFO whose testimony helped cook Ebbers, has yet to be sentenced, but it’s expected that the feds will cut him some slack and he’ll likely face less time than his former mentor. That, my friends, is a rock-solid shame.
There’s nothing uplifting in this story. Ebbers and gang took us all to the cleaners. In the late 1990s, I prepared an article on Ebbers and his rags-to-riches rise to prominence in telecom for Network World’s annual Power Issue. I couldn’t help but be taken by the story. How could you resist the American-dream quality of the stuff? We all bought into the illusion Ebbers created, both literally and figuratively.
Can some good come out of it? You tell me because I have my doubts. We could hope that Ebbers will now stand as some monument of greed and a warning to business leaders- everyone – out there. His absolute power corrupted absolutely. His was a slap-in-the-face reminder that no layers of regulation, no rules and no filings can take the place of personal integrity.
But, sadly, greed is part of human nature. There’s a reason it’s one of the seven deadly sins. So, goodbye Bernie. Goodbye Worldcom/MCI. Let’s hope the lessons you taught last at least through the end of our lifetimes.
And goodbye to you all for this week. As always, let me know what you think about this and any other topic by writing to mailto:jgallant@vortex.net.
Thanks.
