Comments

Hi Tom,

I am very keen to know your views on the role of international agencies such as the Worl dBank in the new world order that we so often discuss.... I really look forward to hearing on this and may be if you could start a string on it that would be great!!!!

Posted by Gauri at July 14, 2005 11:43 AM

Hi Tom -- Where did you see Mike Armstrong make the above comment? While he has made somewhat similar comments in the past about the effect Worldcom has had on his strategic actions at AT&T, I can't find anything from him yesterday on the Ebbers news.

Thanks.

P.

Posted by Paul K. at July 14, 2005 11:55 AM

I think Mike Armstrong's comments are very thought provoking. As a person who was involved in significant Operation builds at AT&T, I know that my 18 hour days were devoted to producing revenue to keep the numbers competitive with World Com's projections and, of course, there weren't enough hours in the day to compete with World Com ... it was so unrealistic..I hold Bernie responsible for the breakup of AT&T... we couldn't compete because it was all fabricated on World Com's side.. What a shame!!!In Dan Pink's A Whole New Mind - In the conceptual age, we are all going to have to be responsible for our humanity - here is one case where a man's greed far outweighed his humanity. 25 years isn't enough...He should have to visit all the families who lost their savings and pension plans and see how they have to struggle and work for the rest of their lives because of his greed - he should have to visit the suffering and sadness of every family he affected so that he truly feels the pain...I hope that birthday party he threw for his wife was worth the next 25 years of his life.

Posted by Suzanne G at July 14, 2005 12:09 PM

When people in the sports world look at youngsters and ask if they're ready for a starting place in the team, the saying goes: "If you're good enough, you're old enough." I think the same principle applies here: if you did the crime, you get the punishment - irrespective of age and background.

We have another saying in the UK: if you can't do the time, don't do the crime.

Posted by Mark JF at July 14, 2005 12:53 PM

When greed was enthroned as a business virtue, when self-centeredness reigned as pragmatic realism, when take the money and run and lie about how much you've got became the inside joke that was serious...

...America wondered why it was despised.

Our media, corporations, stars, celebrities define us to the rest of the world. Now we need metaphysics to get us out of this jam.

The world is sick of our arrogance and our political parties.

With criminally insane corporate crooks, who, like serial killers, destroy peoples lives, are strung up justly, it thrills the soul.

Posted by Steven Streight aka Vaspers the Grate at July 14, 2005 2:10 PM

I've read that Bernie Ebbers "is responsible for the most far-reaching change in U.S. securities laws since the Great Depression. That law (Sarbanes Oxley), in turn, has changed the face of international securities markets and greatly increased the regulation of auditors around the world ... One provision of the bill was directly inspired by Ebbers: a ban on corporate lending to executives."

What do you think about the unprecedented increase in government regulation?

Posted by Noel Guinane at July 14, 2005 2:51 PM

Paul, not sure. I think USA Today, though I also read the Wall Street Journal, Investor's Business Daily and the New York Times and Boston Globe.

Posted by tom peters at July 14, 2005 4:52 PM

Unfortunately, justice has a funny way of being ineffective when it comes to the privileged. Either his sentence will be shortened or he will maintain his ill-gotten wealth and pass it on to his family or alliances. Interestingly, we (as a society) won't be overly bothered when he is released in 5 years...the scandal will be a vague memory for all except those directly affected by his actions; and they, even at the top of their lungs, won't be heard nor heeded.

You can't legislate against immorality, as it does not adhere to laws. That said, consequences are necessary to control deviant behaviour. I just wonder what more we can do for our children to prevent it from occuring in the first place? Where do the roots of greed lay, and what is the best pesticide?

Posted by Tom O'Leary at July 14, 2005 8:47 PM

Obviously no one can predict the future (except marketing gurus ;-) but according to the July 14 Detroit Free Press Ebbers forked over about $42 million of his wealth, leaving his wife with just about $50K.

Posted by Mike at July 15, 2005 6:03 AM

Tom, I'll side with Mike in this instance. Bernie's gonna be broke and the wife gets $50K. Of course you can't legislate morality, but this penalty is so far "out of the box" by past white-collar crime standards that I think it'll change behaviors--and, frankly, that's what I want. I don't much care if people shape up for "moral reasons" or because they're "scared shhitless" of the consequences ... so long as the BEHAVIOR changes!

Posted by tom peters at July 15, 2005 7:50 AM

Interesting comments here. Some might be interested to see what the excellent UK Guardian daily business leader (opinion) column said:

"Jeepers. Twenty five years. If the crime was bank robbery or a double homicide, no one would blink. But Bernie Ebbers, the man who built WorldCom, was convicted of cooking the books and hoodwinking investors. It can be argued that he was essentially a con man who parted fools from their money - albeit one who operated on a biblical scale. Twenty five years is a shocking sentence for any non-violent act.

It is tempting to suggest that the sentencing of those deemed responsible for inflating the Millennium Bubble has itself become a new bubble in the US, with the judiciary there competing among themselves to impose the most terrible retribution on those who made money unfairly during the boom.

But there's more to it. Unlike much of Europe, the health of the corporate system genuinely matters to many ordinary Americans. Corporate crime is more palpable in a nation whose modern foundations rest so squarely on the stockholder system. If you threaten it, as Ebbers did, American society will demand they are protected from you.

More specifically, Ebbers was in effect found guilty of treating his accusers - and the US judicial system - with contempt. His "aw shucks" defence clearly contributed to the length of his sentence.

Will it now cause other executives, tempted to break the law in their pursuit of wealth, to think twice? You bet.

Raids by the securities and exchange commission and Eliot Spitzer have already changed behaviour - and cost Wall Street a lot of money. But change to date has been a reluctant, foot-dragging affair, accompanied by squeals about excessive regulation and mounting costs.

In US boardrooms the prospect now of executives spending the rest of their lives behind bars if they overstep the mark promises to be galvanic."

Posted by Michael from UK at July 15, 2005 8:46 AM

But Tom, in what ways will that behavior change? All to the good? For the sake of holding onto their jobs, any publicly quoted company's top management team's time, energy and focus now has to be concerned with complying with unprecedented and expensive additional bureaucratic regulations rather than on improving or expanding their business.

A heyday maybe for government bureaucrats and regulators with their eye on political office, but hardly the end of corporate fraud or the beginning of a new and beneficial partnership between government and business.

Posted by Noel Guinane at July 15, 2005 1:28 PM

Tom O Leary - great point. I think the roots of greed lie in the capitalistic system and the way it changes human behavior to survive in it. Thats probably why development economics is not mixed with 'mainstream' economics. A CEO with a wonderful family and a solar panel operated house would probably make a decision to invest in a $100 million project that causes severe damage to the environment. If he doesn't, somebody else would. A deal is a deal and it adds up to make him look impressive.

Paul Hawken (The Ecology of Commerce) is an exception to the rule.

Posted by fullymubbed at July 15, 2005 2:34 PM

The perpetuance of the term "white collar crime" suggests that there is a differentiation made in our society between a criminal who wears a suit and a criminal who doesn't. Are jewlery thieves, cat burglars and confidence men considered "white collar criminals"? They often dress to impress. And is "blue collar crime" the antithesis of white collar crime?

There are intelligent people in the world who choose criminal behaviour as a means to make a quick buck, and it shouldn't surprise us that such a sentence was imposed, even if historically our justice system has acted sympathetically to educated criminals from good neighbourhoods.

I still maintain that the cash reserves of the Ebbers family and associates will be well in excess of the reported 50k after the financial penalties are imposed. I'd love to be wrong and see Mrs. Ebbers driving around in a 1985 Fiat Punto. But somehow, I imagine that she won't stray too far from a privileged life. That said, if she wasn't privy to her husband's actions, I suppose we should feel bad for her. The good thing is that she can bank on a book deal and make a small fortune herself. Here's a title she might consider: "Mr Ebbers, Between the 1200 Thread Count Egyptian Sheets"

Posted by Tom O'Leary at July 15, 2005 2:37 PM

Tom O'Leary - I had my first big belly laugh of the night....great comments. I agree with everything you said. Have a great evening...

Posted by Suzanne G. at July 15, 2005 8:38 PM

AT&T is not alone in claiming that it had to make stupid decisions in order to compete with another company. Warren Buffet calls this the "institutional imperative", which is another way of saying "herd mentality." Steer clear of incompetent CEOs who are to afraid to stick to their business plan because of what someone else is doing.

Posted by Brian Wood at July 15, 2005 8:57 PM

http://photos1.blogger.com/img/152/4218/640/Commercialized%20Baby.jpg

Posted by Anon at July 16, 2005 12:19 AM

I am kinda with Noel on this. There is a huge downside here. If the compliance burden becomes too much a couple of things happen 1) becoming public becomes less attractive 2) companies will slowely migrate to exchanges with less overhead.

Taking this argument to the extreme (I don't know the numbers) the average impact on people's pensions might be greater than a few companies commiting fraud.

I have worked in public and private companies. Public companies are becoming Toxic to WOW (and therefore talent). It's reached the point where managers are scared to tell their own people news. "Hey Boss how we doing?" "I am afraid I can't tell you that". How inspiring is that.

I have always felt that European auditing based on principles rather than rules is a far stronger system "Does this audit reflect the health of the company?"

Posted by PaulH at July 16, 2005 2:30 AM

Well Tom,

I think we're going to have to work a little harder if we're going to compete with China on this one.

http://www2.chinadaily.com.cn/english/doc/2004-09/15/content_374453.htm

Posted by Jason Kerr at July 16, 2005 12:03 PM

where to buy real viagra without prescription

Resorting to unethical transgressions to gain the competitive edge is not reserved for big business. In sports, going for the gold (as in medals and coinage) can lead elite athletes to design and execute the same sociopathic practices that land big business leaders in jail.

Corking the bat, dousing yourself in steroids that can threaten your life, and spearheading acts of aggression designed to threaten your opponent's career or life (a la Tonya Harding who sent her goons to bash Nancy Kerrigan in the knee) - these are some of the strategies that athletes utilize to get the competitive edge.

From my perspective, our culture encourages these behaviors. For as long as we reward bottom-line results - game scores and financial score cards - attained at any cost, we will continue to spawn frontrunners (in business, sport, politics) who will resort to unethical actions to get it done.

Posted by Pam Brill at July 17, 2005 8:40 AM

Jason...thanks for the link...talk about zero tolerance!

I suppose Islamic Sharia Law, to include eye gougings and decapitations would be the middle ground between the soft and extreme approaches used throughout the world for such criminal acts. Steal something, lose a hand.

Pam - excellent observations regarding the lengths that people will go to in order to be the best at what they do. I suppose that there is a delicate balance between a natural and healthy drive to contribute (to family, community, society) and an obsession with personal performance and results. Self actualized people do not have a need to be recognized as "the best", and perhaps many obsessively driven competitors are still striving to fulfill their ego needs (according to Maslow's hierarchy of needs).

Posted by Tom O'Leary at July 17, 2005 3:32 PM

Like all things I see this simply.

Whilst I can see why the intake for business ethics courses will be up as a result of all this I remain convinced that the best regulator of ethics is from the person you see when you look in the mirror.

The people at the top of organisations who have ‘run off with the company profits’ would not have benefited from having expensive teaching on ethics.

Ethics are things you either have or you don't have - end of story.

Posted by Trevor Gay at July 17, 2005 6:03 PM

Trevor, I agree that the ethical makeup of an individual won't alter after attending a one week ethics training programme. That said, all behaviours, philosophical dispostions, etiquette, etc. are learned by us, over time through examples set by our principle role models and peers; by our personal experiences with our families and in our communities and by the information that we are presented with over time (in school, books, etc.) People don't instinctively adopt deviant behaviours, they learn them and decide to incorporate them into their lives. Both bad and good behaviour is learned. Unfortunately, as the spiritual presence fades from our families, communities, and society; the moral and ethical lines will continue to shift backwards.

I don't believe that incarcerating someone actually rehabilitates them however. In my view, incarceration is useful only as a deterrent to those who fear it. The precedent set in this case will scare some people who have recently considered doing something similar; but it won't change anyone's ethical makeup. Only time, experiences and education will do that. We must enable the young in our society to change the future and continue to use deterrents to control behaviour until there is a cultural shift in our society.

canadian pharmacy generic viagra

Posted by Tom O'Leary at July 17, 2005 7:02 PM

Tom - I agree with you that incarcerating someone does not actually rehabilitate them - that is why at the beginning of this dialogue - I suggested that Bernie Ebbers be in touch with all the families in America that he robbed with his greedy behavior...When Sharon Tate was murdered by Charlie Manson - it took her mother 10 years to get over the grief and when she did - she started a program in prison where the victims of a crime were put together with the perpetrator so that the perpetrator could develop empathy and understand that his/her actions caused great pain. Most of the abusers have no feelings having shut down as children - her program became very successful - murderers began to see the dominoe effect of pain caused by them to families.And they began to develop feelings. Just as people in London expressed feelings of disbelief that having taken the bus the day before with a man that sat beside those hardworking people and thought to himself - tomorrow I am going to kill you...so did Bernie Ebbers doctor the books and steel the money thinking those poor suckers out there - I am taking your pension and 401k's and throwing a million dollar birthday party for my wife...it takes a special kind of human being who has total disregard for consequential thinking and inflicts pain anyway he can for his own purposes...Mr. Ebbers was a small man to begin with and just got lucky in the Telcom boom to be in the right place at the right time, took his money, forgot his ethics and rode the rail right into prison. Today multinational corporations are giving all new employees "Emotional Intelligence" tests. At last they are beginning to realize that emotional intelligence is as important as your IQ..

Posted by suzanne g. at July 18, 2005 8:41 AM

Nice point, Suzanne. We're going slightly off-subject here, but I've always thought prison has 4 purposes: 1) to protect the public; 2) to deter others from offending; 3) to punish the offender; and 4) to rehabilitate the offender. Either we get into a viscious cycle of offend - imprison - re-offend or we give offenders the opportunity to redeem themselves.

Posted by Mark JF at July 18, 2005 10:47 AM