One of the biggest scandals to hit the telecom industry involves WorldCom, Inc. They revealed a $3.9 billion financial discrepancy leaving the entire telecommunication industry reeling. It is one of the largest scandals in the United States. WorldCom was an international carrier. It recruited more than 70 companies included major telecom and phone companies.
By 1997 WorldCom merged with Brooks Fiber making WorldCom the second largest long distance carrier within the United States. But in 2002 WorldCom filed for bankruptcy. WorldCom said they inflated profits by $3.8 billion when in fact; profits were inflated by $11 billion. Making it the largest accounting fraud in history.
The ethical issues that have arisen are that many strong companies have lots thousands and thousands of dollars, and most employees lost their jobs. All formal officials were sent to court and were charged with criminal penalties, some sentenced to prison.
However, what is interesting about this matter is that it was an internal audit that noticed the illegal behavior. They then notified the board of directors who acted swiftly by firing and trying anybody involved.
This shows that some members at WorldCom take ethics to heart. Instead of being shutdown WorldCom attempted to rectify the hazard it created. This article highlights that even if there are some bad people within the company, once you admit to fraud you can move on and expand. To prove this in April 2004, WorldCom emerged from its $5.7 billion in debt and changed its name to MCI and in 2005 Verizon acquired it, making it a large industry once again.
Cite: http://www.associatedcontent.com/article/162656/worldcom_scandal_a_look_back_at_one.html?cat=3
This is a very interesting article. This whole scandal about lying of a great deal of money in order to protect the company’s name is a very usual case. It is incredible to see the immorality of some people. Selfishness among all of these sometimes leads to fraud, just like this case. However some people prefer to stick to the truth always. As this case shows companies involved in all industries care for their appearance upon the public. I believe WorldCom lied about the issue in order to stay “clean” upon the public rather than to just save some money, considering it was a lot of money. This brings the whole idea about ethics in a company. This example also proves how realistic thinkers are the ones who provide the best income towards the company considering they think as a whole rather than as one. Even though the WorldCom suffered from bankruptcy it achieved to straighten up one more time, this time with the help of another company. This obviously had an impact in the telecommunications industry given that such an important company in the market suffered this kind of issue. Also, considering it was one of the “leader” companies in the industry, its fall probably affected the prices in the industry but probably also offered the chance to other companies to outstand. I believe this sets an example for future companies not only in this industry but also in simple markets considering their morality fell down to the floor. This time the company could one more time settle, however it will not be the case for many.
ReplyDelete