Essay --

Lost insurance benefits as well as retirement benefits tied to WorldCom stock. Shareholders, which included many pension funds, lost billions of dollars. The California public-employee’s retirement system, the largest state pension fund in the country, sued in an attempt to regain some of the $580 million it lost in the WorldCom debacle (Ripley 6). The telecommunications industry suffered as well. Industry companies were competing against WorldCom under false pretenses. WorldCom was fraudulently stating its financials and its competition could not possibly be aware of WorldCom’s true expenses. As a result, competing companies were forced to make decisions to keep in line with WorldCom’s reported growth. AT&T fired tens of thousands of employees, who otherwise may have never been fired, in an attempt to match WorldCom’s low costs. Although it was not WorldCom’s fault, Qwest committed accounting fraud and Global Crossing declared bankruptcy while also being under investigation themselves. Qwest and Global Crossing succumbed to industry pressure that may not have existed or felt as greatly in WorldCom was accurately reporting its financials. (Colvin 2) After WorldCom declared bankruptcy suppliers stopped getting paid. Local carriers were not being paid to complete WorldCom calls, but it was illegal for those carriers not to complete them (Colvin 2). Other vendors and suppliers that counted on WorldCom for business suffered and were forced to fire employees. As these companies suffered, so did their shareholders. In 2001, WorldCom was able to secure a $2.65 billion loan through a credit agreement with several banks. The entire loan was used up about six weeks before the accounting fraud was disclosed. â€Å"The banks con... ...ng fraud from occurring. WorldCom may hit a bump in the road in the short run but very well could still been operating today. At the time Michael Capellas took over as CEO, he had the right idea even though he may not have had much of a choice. Capellas established an ethics office, hired a Chief Ethics Officer and required all employees undergo annual ethics training. Capellas also traveled around the country listening to the comments and the opinions of his employees (Scharff 117). This was in contrast to Ebbers and Sullivan’s autocratic management style. Capellas established clear, guiding principles for his employees that were posted on cubicle walls throughout the company. Unfortunately for WorldCom, Capellas’ efforts where a matter of being too little, too late. Had Bernie Ebbers taken these steps as CEO, the fraud may have stopped at an early stage. Essay -- Lost insurance benefits as well as retirement benefits tied to WorldCom stock. Shareholders, which included many pension funds, lost billions of dollars. The California public-employee’s retirement system, the largest state pension fund in the country, sued in an attempt to regain some of the $580 million it lost in the WorldCom debacle (Ripley 6). The telecommunications industry suffered as well. Industry companies were competing against WorldCom under false pretenses. WorldCom was fraudulently stating its financials and its competition could not possibly be aware of WorldCom’s true expenses. As a result, competing companies were forced to make decisions to keep in line with WorldCom’s reported growth. AT&T fired tens of thousands of employees, who otherwise may have never been fired, in an attempt to match WorldCom’s low costs. Although it was not WorldCom’s fault, Qwest committed accounting fraud and Global Crossing declared bankruptcy while also being under investigation themselves. Qwest and Global Crossing succumbed to industry pressure that may not have existed or felt as greatly in WorldCom was accurately reporting its financials. (Colvin 2) After WorldCom declared bankruptcy suppliers stopped getting paid. Local carriers were not being paid to complete WorldCom calls, but it was illegal for those carriers not to complete them (Colvin 2). Other vendors and suppliers that counted on WorldCom for business suffered and were forced to fire employees. As these companies suffered, so did their shareholders. In 2001, WorldCom was able to secure a $2.65 billion loan through a credit agreement with several banks. The entire loan was used up about six weeks before the accounting fraud was disclosed. â€Å"The banks con... ...ng fraud from occurring. WorldCom may hit a bump in the road in the short run but very well could still been operating today. At the time Michael Capellas took over as CEO, he had the right idea even though he may not have had much of a choice. Capellas established an ethics office, hired a Chief Ethics Officer and required all employees undergo annual ethics training. Capellas also traveled around the country listening to the comments and the opinions of his employees (Scharff 117). This was in contrast to Ebbers and Sullivan’s autocratic management style. Capellas established clear, guiding principles for his employees that were posted on cubicle walls throughout the company. Unfortunately for WorldCom, Capellas’ efforts where a matter of being too little, too late. Had Bernie Ebbers taken these steps as CEO, the fraud may have stopped at an early stage.