A Rose is Still a Rose

Published: August 31, 2005, By Yolanda Simonsis Associate Publisher/Editor

Editorial

This past July while I was trying to relax on vacation, the evening news brought word of WorldCom’s former CEO, Bernie Ebbers, receiving his sentence. It made me so angry, I pulled out my laptop and started writing this column.

Ebbers imposed such pressure on himself to reach the bar set by investors that he failed to realize—or ignored—the illegality of the method by which he set about to attain it. Call it a tragic flaw, or call it greed, a rose by any other name is still a rose. I’m getting really tired of hearing about these “white-collar” crimes. I hope the next perpetrator never sees the light of day.

Judge Barbara Jones sentenced Ebbers to an unprecedented 25-year imprisonment, intending to send a message to corporate America—a la Martha Stewart. The trial of Ebbers’ CFO, Scott Sullivan, who admitted to dreaming up the fraud, resulted in a much lighter sentence of five years, apparently the reward for being a “model cooperator” in providing testimony that convicted Ebbers. I know the justice system is set up and applied in a manner that will produce the best results for conviction, but it seems Sullivan should have received a harsher sentence, even if he ultimately did “fess up.” After all, we’re talking about billions of dollars here.

Back in the ’80s, virtual hand slaps were meted out as symbolic punishment. Sullivan’s sentence seems to come from the same cloth. With the progression of years, the immense impact white-collar criminals have made on so many everyday lives and a change in prevailing thought have encouraged judges and juries to ascribe more severe punishments. Perhaps if harsher sentences had been meted out in the beginning, we could have averted this mess, or I’d like to think so.

The WorldCom debacle was no ordinary fraud. It involved the loss of money on the part of thousands of investors, not to mention those WorldCom employees who lost their entire retirement futures. We’d all like to think Ebbers’ and Sullivan’s act did not diminish the hard-earned and honest efforts put forth by the vast majority of CEOs here in America. To most executives, the rules are clear, and they probably would agree the rules should be enforced consistently across the boardroom. Whether you’re a CEO or CFO, no matter who follows or who leads, playing by any other standard only makes room for more violations. The message our justice system should send must ring loudly and clearly: Beware! All those intentionally feigning blindness to the rules will lose big.

While “fairness” is a concept we should have learned in the sandbox, Ebbers (at the ripe age of 63) and his partner in crime Sullivan (at the old-enough-to-know-better age of 43) obviously never mastered the art. At their ages, certainly something should have reminded them they have a serious responsibility to play by the rules, particularly when people’s futures are at stake. Maybe people on Ebbers’ and Sullivan’s levels really think they’re only playing Monopoly.

What’s happened to us? And how can we fix ourselves? The feeling of trust certainly means something between a child and parent, between a husband and wife. Shouldn’t it be equally important between CEOs and the investors to whom they report? While investors may want to profit on their investments, are they entitled to or can they expect a guarantee? I think what they should be guaranteed is for the leaders of the companies in which they invest to arrive at any profit in a fair and legal manner. Maybe seven-figure executive paychecks for delivering what some may consider stellar investor performance should be withheld until an annual audit proves the job was performed ethically and legally. Or maybe executives should sign an oath of ethics that clearly spells out the ramifications of noncompliance.

In reality, probably a fraction of violators are ever brought to court. And the burden of prosecution on our justice system—as well as the cost—is overwhelming. So what’s wrong with protecting ourselves? Investors have a right to be assured that leaders of the companies in which they invest believe in and promise to deliver platinum-quality leadership.

So much for relaxing. Maybe I should sip on piña coladas and skip the news next time I go on vacation.

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