Sunday School teacher emerged from the oolapse of WorldCom not only broke but wi

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Sunday School teacher emerged from the oolapse of WorldCom not only broke but with a personal net woth as a negaáve nine-digit umbor No paboe in a gated community, no stable of racchores or muki-millon dollar yacht so show for the telecommunications giant be created Only debts and red ink-results some consider inevitable given his unflagging entusiasm an entrepreneurial flair. There is no question that he did some pretty bad stuff, but he realy wasn like the coeporate villans of his day Andy Faslow of Enmon, Dennis Koslow i of Tyco, or Gary Winnick of Global Crossing Personally, Bernie is a hard guy mot to like. In 1998 when Bemie was in the midst of acquiring the telecommunicatioes firm MCL Reverend Jesse Jackson, speaking at an all-black collepe near WorldCien's Misasspi beadquarers, asked how Ebbers could afbrd S35 b lian fr MCI bul hadst donaled funds to local black stadents. Businessmn LcRoy Walker J was in the audience at Jackson's speech, and aferwards set him stight. Ebbers had given over S1 milioe plus loads to that black colkpe. Benie Ebbers Walker xpotedly told Jackson, "is my mentor."d Rev, Jackson was won over, but who wouldnt be by this erstwhile milluman and bar bouncer who serves mcals to the homeless at Fmnl's Famous Biscuits in downlown Jackson, Mississippi, and wears jeans, cowboy boots, and a funky turquoise wakh to work was 1983 in a coffee shop Hattiesburg, Missssppi thanMr Ebbers first helped create business concept that would become WorldCom. Who could have thoughe that a small business in ity bitty Mississippi would one day rival AT&T;?"asked an edisorial in Jackson, Mississipps Clarion-Ledgernewspaper. Bermie's fall-and the company's-was abrupt. In June 1999 with WorldCom's shares tading at $64, he was a billionaire. and WorldCom was the darling of the New Economy. By eadly May of 2002, Ebbers resigned his post as CEO, declaring that he was .1 ,000 percent convinced in my heart th this is a tempo ary thing Two months later. in ne of Bernie's unflagging optimism, WorldCom declared itselfthe largest bankrupky in American history This case describes three major issues in the fall of WorldCom: the copoae stanegy of growth through acquisition, the use of loans to senior executives, and threas to corpotale governance created by chumminess and lack of arms-length dealing. The case concludes with a bric description of the heo ofthe case-whisale blower Cynthia Cooper The Grewth Through Acquisitien Merry CeReand From its humble beginnings as an obscure long distance telephonc company WorldCom, though the exccution of an ageressive acquisition stralegy, evolved into the socond-lagest long distance telephone company in the United States and one of the larpest companics handing worlduide Internet data traffic ! According k·thc WorldCom Web site, at its high poin the company around the world Carried more intemational voice traffic than any other Carried a significant amount ofthe worlds Intemct traffic company

Explanation / Answer

The ethical issues involved while deciding to give loans to executives to cover margin calls on purchase of shares of company stock include manipulating the value of the stock,bribery,fudging financial statements and inside transactions were questionable.higher management used to pressurise the employees to manipulate accounts and reward the ones who would agree and threaten the others. The reason was that if they loan money to executives, they can keep stockholders and public from realizing the problem. The company made a massive bid to acquire MCI which later became hard to manage by the company. This was an aggressive acquisition strategy.

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