Worldcom - Cynthia Cooper Article

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- Act only on maxims which you can will to be universal laws of nature.

- Always treat the humanity in a person as an end, and ever as a means merely.

- So act as if you were a member of ideal kingdom of ends in which you were both subject and sovereign at the same time. (Donaldson, T., & Werhane, P. H. (1979). Ethical Issues in Business: A Philosophical Approach. Englewood Cliffs, NJ: Prentice-Hall; page 57)

Kent believed that we as human beings could apply this formula to any maxim because we as people have “free will.” “Free will” allows us to be rational and moral; thereby, providing people the obligation to be duty bounded rather than consequential like utilitarianism. Although deontology ethical reasoning and utilitarianism moral reasoning are different, we can still apply both in the whistleblowing case of “Cynthia Cooper and WorldCom” in our text Ethical Issues in Business: A Philosophical Approach.

Founded in 1983 as LDDS Communications, WorldCom became the nation’s second-largest long-distance company and the largest handler of Internet data as it grew rapidly through its acquisitions in the late 1980’s well through the 1990’s with increasing revenues to more than $30 billion. With WorldCom combined financial strength and its increasing resources through acquisitions in a growing communication era, Cynthia Cooper was excited to be leading WorldCom’s internal audit division. Determined to succeed in this “male dominant industry,” Cooper provided to be unfazed because of her drive and motivation for success. However, “the responsibilities of her department included setting budget standards, increasing efficiency, and evaluating performance; the department did not have complete oversight of the company’s finances”(Donaldson, T., & Werhane, P. H. (1979). Ethical Issues in Business: A Philosophical Approach. Englewood Cliffs, NJ: Prentice-Hall; page 104). The oversight of WorldCom’s financials was reserved for the few executive team members: CEO Bernie Ebbers, CFO Scott D. Sullivan, WorldCom Controller David Myers, and the Direct of General Accounting of WorldCom and CPA Buford Yates. All of whom were later convicted in their role for WorldCom’s accounting scandal that created billions in illusory earnings and “kickbacks.”

The WorldCom scandal was discovered by its company’s Vice President Internal Audit Controller Cynthia Cooper. She found some suspicious entries in the company’s books and uncovered $3.8 billion in fraudulent discrepancies. Although Cooper advised former WorldCom CFO Sullivan of her findings, Sullivan and WorldCom’s former CEO Bernie Ebbers ignored her findings and advised her to “stop snooping and complete the annual audit report and close the books”(http://www.foxnews.com/story/2002/06/26/worldcom-discloses-38-billion-accounting-scandal-global-markets-reel.html). Cooper had an important decision to make. Cooper was caught in a morally ethical dilemma. Former Vice President of Internal Audit Control, Cynthia Cooper, decided to become one of the world's most famous whistleblowers with the WorldCom scandal in history. However, was Cynthia Cooper based on the utilitarian ethical method of reasoning or the deontological ethical method of reasoning? I believe we can analyze Cynthia Cooper “whistleblowing” decision as both utilitarian and deontological method of thinking.

Our text asserts that “whistleblowing is a new label generated by increased awareness of ethical conflicts encountered at work” (Donaldson, T., & Werhane, P. H. (1979). Ethical Issues in Business: A Philosophical Approach. Englewood Cliffs, NJ: Prentice-Hall; page 128). However, with the aftermath of our Global Economic Recession in early 2000, the Enron scandal, and in the WorldCom scandal; I believe whistleblowing has become a more acceptable practice in our society. Thus, I turn to the case of study of “Cynthia Cooper and WorldCom”. Cooper felt duty bound and acting in a deontological method of reasoning. As the Vice President of Internal Audit Control, Cooper was responsible for the internal compliance of WorldCom to report any potential violations or possible illegal acts. As previously discussed, a deontological method of reasoning is found in the principle to be duty bound to an established set of rules and regulations regardless of consequence. Cooper had a responsibility to adhere to both federal and state guidelines of GAAP. Although I have clearly demonstrated Cynthia Cooper’s “whistleblowing” as being a deontological method form of reasoning, Cooper’s actions also show a utilitarian process of thinking as well.

As I discussed prior, a utilitarian method of thinking is a principle based on consequential actions; what action will produce the greatest amount of happiness and the least harm? In the case of the WorldCom, Cynthia Cooper took the necessary utilitarian steps to provide the “greatest happiness.” I believe Cooper had three options:

- Say nothing: Causing the fraudulent behavior to continue and if discovered would damage her reputation and the costs to WorldCom.

- Report the matter to the immediate supervisor: Resulting in praise for both the Cooper and Sullivan and causing the possible dismissal of the employees committing the fraud.

- Reporting the fraud outside of the WorldCom: Resulting in bad publicity for WorldCom and financial loss.

(http://www.workplaceethicsadvice.com/2013/05/-is-whistleblowing-an-ethical-practice.html).

From a Utilitarian perspective, Cynthia Cooper first advised WorldCom CFO Sullivan of the discrepancies she and her auditing team discovered. Sullivan directed Cooper’s audit team to cover up the fraudulent accounting by drawing from WorldCom’s reserves so that everything will be aligned with the expectations of external audits and Wall Street analyst. Sullivan also told Cooper, “‘if you want to leave the company, you can leave…No one’s going to prison. If anyone were going to prison, it would be me. You’re just following orders.’”( http://www.foxnews.com/story/2002/06/26/worldcom-discloses-38-billion-accounting-scandal-global-markets-reel.html). Under the utilitarian view, Cooper had no choice but to go externally.

I believe in the case study of “Cynthia Cooper and WorldCom,” Cynthia Cooper acted ethically under the principles of utilitarianism and deontology ethic reasoning. She attempted to act in the greatest good for the less amount of harm and was forced to be duty bound. Unfortunately, the ethics of “whistleblowing” is a tricky matter.

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