Critical Analysis of Ethical Problems of WorldCom using Deontological Ethics

Critical Analysis of Ethical Problems of WorldCom using Deontological Ethics

Introduction

The MCI WorldCom was a prominent name and strong competitor in the telecommunication industry of United States. But the past decade has outlined various narratives about the fraudulent accounting practices and unethical corporate practices prevailing in WorldCom. The WorldCom scandals reveal another case of accounting irregularities, failed entrepreneurial governance and absolute greed. The ethical problems of WorldCom were brought to the public scrutiny in the framework of ethical codes as a result of the critical investigation carried out by Cynthia Cooper that triggered the downfall of WorldCom((Moberg & Romar, 2003). With the bankruptcy protection filed by the WorldCom in July 2002, their corporate flaws and mistakes became the focus of national and international debates in terms of the unethical decisions and actions taken by WorldCom leading to the downfall of this darling of telecommunication arena (Moberg & Romar, 2003).

Ethical Problems Raised in the WorldCom Case

There are three major ethical issues raised in the WorldCom case that are the WorldCom's strategy of expansion through acquisition, the use of massive loans to senior executives, and threats to business governance posed by chumminess and lack of arm's-length dealing(Moberg & Romar, 2003).

The Growth through Acquisition

WorldCom became a crucial corporate entity by successfully completing 65 acquisitions

and expend around $60 billion in the acquirement of many companies, mounting up $41 billion in debt((Moberg & Romar, 2003). The massive acquisitions gave rise to subsequent financial issues and irregularities. The deceptive accounting practices of WorldCom's ex controllers David Myers and Sullivan were aimed at misinterpreting their accounting information to the external auditor of WorldCom Arthur Anderson to seek favorable investment advice from the Citigroup's analyst Jack Grubman (Moberg & Romar, 2003). The financial statements underwent a severe manipulation to pretend that company was in awesome financial condition and profit maximization.

The insufficient attention paid to the proper integration of acquisitions resulted mainly in the deterioration of customer service because the WorldCom was just focusing on expanding its operations by purchasing competitors rather than enhancing the genuine internal efforts to elevate the business by creating a supportive mindset throughout the WorldCom. The WorldCom figured out the other means to fix the diminishing stakeholder value rather than rectifying the problems between technologies, services and corporate practices.

Unethical Leadership

The leadership of Ebbers and Sullivan was guided by the drives of gaining individual financial success instead of determining a course of actions on the basis of right and wrong (Moberg & Romar, 2003). Their decision and actions have failed to stand out as legal and moral because they were determined to promote their self-interests without considering their implications on the future of company. The Board of WorldCom had been intensely inert and reliant on Ebbers and Sullivan. The practices of Board to authorize wealthy loans at questionable low rates to a senior executive like Ebbers are highly unethical because they typify conflict of

interests and violation of fiduciary duties.

Unethical Relations with Analysts

The close relationships between WorldCom ...