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Blame the Sprint board, not Esrey and LeMay

Feb 17, 20033 mins

You might remember my column a few months back excoriating the handful of unethical individuals at the helm of WorldCom for tarnishing the reputations of the many talented, hardworking and honest folks in their ranks.

Now it looks as though Sprint employees are living the same nightmare. Sprint CEO William Esrey and President Ronald LeMay are being asked to step down amidst charges they used questionable tax shelters to protect their personal incomes, according to published reports.

Déjà vu? Not quite. Although it seems superficially similar, Sprint’s case is nothing like what happened at WorldCom.

A year ago I almost went on record predicting that Sprint’s management never would be guilty of unethical behavior. Now I wish I had, and not because I enjoy looking foolish in public or that I’m 100% certain that neither man made a mistake. Why? It’s not Sprint’s management that’s primarily at fault here. It’s the company’s board of directors that’s at fault.

Here’s what reportedly happened. Consulting organizations such as Ernst & Young and KPMG charged Sprint and the executives millions of dollars for tax advice, which turned out to be questionable in the eyes of the IRS. Years ago, Sprint’s board signed off on the use of these consultants, both for corporate auditing and for Esrey’s and LeMay’s private use.

But here’s the kicker: Sprint’s board did more than sign off. It required Esrey and LeMay to use these consulting firms for their personal finances, according to published reports.

Are you with me? The board reportedly set up the whole thing, forced management to go along – and then fired them as scapegoats.

If the published reports are accurate, there’s only one word for behavior like this: craven. Corporate boards are supposed to provide dispassionate oversight and guidance. They’re not supposed to essentially force their own management teams to break rules, then toss the managers overboard when they do.

Sure, Esrey and LeMay might not be blameless. But the worst thing you can say about them is that they considered the facts, alerted the higher-ups, and ended up making the wrong judgment call. The higher-ups, on the other hand, completely botched their handling of the event. I think responsibility accrues to authority. The higher you are in the food chain, the more responsible you are – and the board is at the very top.

For Sprint employees, shareholders and customers, this all might appear somewhat moot. However, the net effect of this corporate turmoil is plummeting stock prices and perhaps lowered customer service – regardless of who’s at fault.

But the truth matters. Sprint shareholders and employees should hold the board accountable for its boneheaded decisions. These people are clearly buffoons who can’t, and shouldn’t, be trusted at the helm of a large corporation. Write to them and say so.

It’s not going to happen, but I’d like to see the board provide a formal apology to Esrey and LeMay – and to Sprint’s employees and shareholders, too, while they’re at it.