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Worldcom. Inc Case Study

Autor:   •  November 8, 2018  •  1,398 Words (6 Pages)  •  38 Views

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According to the chief executive at the time of the investigation, John Sidgmore, not only was Ebbers responsible but he put the blame on “the company’s former chief financial officer, Scott Sullivan, and the former controller, David Myers” (The Guardian). Fortunate enough for WorldCom these two men were fired for claiming $3.8 billion in regular expenses incorrectly (The Guardian). This helped to save the corporation as a whole from going down with its chief executives. Just like Ebbers, Sullivan and Myers were arrested for FRAUD. Scott Sullivan and David Myers were charged with securities fraud, conspiracy and many other charges and were facing 65 year in prison (The Guardian). At the time they were arrested in July of 2002 Bernard Ebbers stated that he was “unaware of the accounting problems, and had not been charged” which later was proven to be untrue (The Guardian). All three of these men were said to have withheld information from the company’s accountants, like Arthur Anderson, who also was involved in other corporate accounting scandals like Tyco, Global Crossing and Adelphia.

The stockholders of WorldCom Inc. were especially worried that WorldCom would go bankrupt and have to PIERCE THE CORPORATE VEIL. That means what when they filed for bankruptcy they had the right to hold the share-holders responsible for debt that the company found themselves in through corrupt business practices. The courts are more likely to pierce the corporate veil if there is evidence that a shareholder used corporate assets to pay personal debts. In this case Barnard Ebbers used WorldCom as a personal loans bank and did just as described. His actions would have put all the shareholder in danger of coving the debts of WorldCom if WorldCom would not have come together and keep the company afloat after filling Chapter 11.

The newly appointed board members to take Sullivans and Ebbers places said that they would rather MERGE with another company than to sell off the company’s ASSETS to another company breaking WorldCom down into pieces. This would leave most if not all the 60,000 employees of WorldCom worldwide without jobs. Nicholas deB. Katzenbach, and Dennis R. Beresford, the new board members, said they do not want this to happen and they would do whatever it took to keep WorldCom Inc. as a whole company. This mean laying off 17,000 employees and investigating other high powered executives.

The new board has done other things to ensure that WorldCom now renamed as MCI WorldCom. This change was done after WorldCom Inc. filled for bankruptcy. WorldCom in attempts to keep from going under and losing everything merged with MCI Communications in 2003. Then in the first part of 2006 Verizon Enterprise Solutions bought out MCI WorldCom and made it into what we know today. This buy out was important to keep WorldCom from going completely under. If WorldCom Inc. officers would have followed correct accounting protocols none of this would have happened and WorldCom Inc. by itself probably would have been the largest telecommunication provider in the United States today.


Romero, Simon, and Riva D. Atlas. "WorldCom's Collapse: The Overview." The New York Times. The New York Times, 15 Mar. 2005. Web. 11 Feb. 2017.

"Chronology of Events at WorldCom." The New York Times. The New York Times, 15 Mar. 2005. Web. 11 Feb. 2017.

"WorldCom files largest bankruptcy ever." CNNMoney. Cable News Network, 22 July 2002. Web. 11 Feb. 2017.

Tran, Mark. "WorldCom accounting scandal." The Guardian. Guardian News and Media, 09 Aug. 2002. Web. 11 Feb. 2017.

"WorldCom Company Timeline." The Washington Post. WP Company, 15 Mar. 2005. Web. 11 Feb. 2017.


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