Ethical dilemmas easier with personal morals
Everyone faces moral dilemmas at some time, and the solution to these conflicts is based on a decision to do right long before the situation arises, Cynthia Cooper, a former Time Magazine Person of the Year, said Thursday to a roomful of accountants.
Cooper, along with Coleen Rowley and Sherron Watkins, was named Person of the Year in 2002 after blowing the whistle and disclosing information about dishonest and illegal activities.
“I think that the biggest takeaway from what she says is that ethics is a choice,” Jesse Jensen, a USU master’s student, said. Jensen was in the audience at Cooper’s lecture. “Every day, each of us makes choices that do pertain to our ethics. The fraud she talked about started as one small choice. These choices, we may not think, have a lot of consequences. Everyone will be faced with these challenges, but what’s going to make the difference is how we react — and that’s our choice.”
The activities Cooper said she uncovered were referred to as the WorldCom scandal, one of the biggest accounting frauds in history, in which perpetrators fixed books on nearly $11 billion in falsified account information.
Cooper was the keynote speaker at the 35th annual Jon M. Huntsman School of Business Intermountain Accounting Conference, part of the business college’s year-long Partners in Business seminar series.
Despite knowing the consequences of shedding light on the telecommunications corporation’s shady dealings, Cooper said there was never an alternative in her mind.
She said she compared this to the two accountants Betty Vinson and Troy Normand, who were told by CFO Bernard Ebbers to misrepresent $3.8 billion in WorldCom’s quarterly earnings statement, the first of the fraudulent reports.
Vinson and Normand both wrote letters of resignation that night, she said, but neither ever turned a resignation in, and both eventually were convicted during the scandal’s fallout.
As manager of WorldCom’s internal auditing, Cooper said she never considered turning a blind eye to the situation or even quietly leaving the company.
“I didn’t think about any other ways,” she said. “The path was clear to me — leaving the company would not have solved the problem.”
“I can’t tell you I was this pillar of strength in the process,” she said, “I wasn’t. There were times where I was scared to death.”
She said most people are never going to have to face a decision like uncovering a fraud like that of WorldCom, but she told the audience she never expected it, either.
She said she could responsibly handle the situation, because she lived her life morally before she was ever faced with such a conflict.
“We all face ethical dilemmas every day,” she said. “Our character is very much built decision by decision. The foundation of our character is built brick by brick. We all have the power of choice, we need to live our lives in an intentional way. We need to think about our actions every day and recognize the consequences of our actions.”
Cooper said she was only able to make the right decision because of her religious faith and her family.
“For most of us, our values are instilled very early in life,” she said, from our faith, our parents and our teachers.
While not everybody shares her same faith, she said, morality is well defined in the world today.
She discussed the difference in her moral code with that of the executives at WorldCom. Ebbers and CFO Scott Sullivan were both highly successful in their respective roles at the time. However, they had what she said was “an appetite for risk.”
Taking risks isn’t necessarily a bad thing, Cooper said, but greed made it so that these people couldn’t handle seeing profits struggle.
When WorldCom’s stocks started falling, she said, Ebbers took out $400 million in loans, which was the largest corporate loan in history. While this was technically a legal loan, Cooper said, Ebbers likely had some idea that he was never going to pull the company out of debt.
“Just because something is legal doesn’t make it ethical,” Cooper said. “WorldCom probably should have gone into bankruptcy long before it did.
She said this loan, as well as the accounting cover up, was a misguided attempt to save the company. Cooper said Ebbers originally thought something must have been miscalculated when he heard the financial figures, so he had Vinson and Normand re-evaluate the spending and earnings of the company.
However, she said, they found no errors, so Ebbers had them fabricate the numbers. No error was ever found, but the numbers continued to be fabricated.
“A lot of these executives were used to seeing their companies praised on Wall Street, and they didn’t want them to fall on their watch,” she said.
Even while Ebbers claimed the real miscalculation was being searched for, she said she felt confident the executives knew that what they were doing was wrong.
Cooper said some of the executives experienced suicidal tendencies during the scandal.
“Even when we’re not found out,” Cooper said, “when we do things against our values, our lives implode.”
In the end, Ebbers was sentenced to 25 years in prison, Sullivan received five years after being a key witness against Ebbers, Vinson was given six months, and Normand was put on probation.
Cooper said there were many measures taken to keep fraud like this from happening again. All public companies are now required to have a fraud hotline to which all employees can report potential misdeeds.
Large corporations have also started incorporating training programs to teach employees ethics and how to face ethical dilemmas, she added.
She also cited the strengthening of the U.S. Securities and Exchange Commission as an example of how scandals like this are less likely today.
Douglas Anderson, dean of the business college, said Cooper’s speech fit well with the Huntsman School of Business, because one of its four pillars is ethical leadership, which he said Cooper exemplifies.
– bracken_allen@yahoo.com