The Story of the Telecom Giant WorldCom Came to a Sad

question 18

Essay

The story of the telecom giant WorldCom came to a sad turn in 2002 as the firm filed for bankruptcy, with some of the managers facing criminal charges for fraud. In 2000 a severe slump in the telecom business led to pressures within WorldCom to reduce expenses and improve the financial statements to meet investor expectations. On orders from top managers, accountants within the firm created fraudulent financial statements, ultimately resulting in an $11 billion fraud. The fraud was detected as a result of an inquiry by the SEC, which led an internal auditor within WorldCom to start an investigation that uncovered the fraud in 2002. The successor firm, MCI (which had previously merged with WorldCom and is, since 2006, a part of Verizon), under the leadership of new top management, formed the office of chief ethics officer who had the responsibility for MCI's policy of training all MCI's U.S.-based employees, an ethics hotline, an ethics pledge signed by the firm's top 100 executives, and a company code of ethics, among other responsibilities.
Required:
What should be the role of an ethics officer? To whom should the ethics officer report within the organization? Do you think MCI had a good plan for ensuring ethical behavior within the firm? How would you change the MCI ethics policy, if at all?

---

Definitions:

Conventional

Adhering to accepted standards or practices; typical or expected behavior or way of doing things.

Kohlberg

Refers to Lawrence Kohlberg, an American psychologist best known for his theory of stages of moral development.

Stealing Behavior

The act of taking someone else’s property without permission or legal right and without intending to return it, recognized as a violation of social norms and laws.

Gilligan's Approach

An ethical theory and approach to moral development emphasizing the importance of relationships, care, and empathy, developed by Carol Gilligan.