Archive for Wednesday, March 16, 2005

KU expert sees verdict as move toward reform

March 16, 2005

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The conviction of Bernard Ebbers for orchestrating an $11 billion accounting fraud will go a long way toward cleaning up illegal, unethical behavior in American business -- all the way from the boardroom to the mailroom, a Kansas University ethics expert said Tuesday.

A New York jury didn't buy Ebbers' "I-didn't-know" defense when it convicted the former WorldCom chief executive Tuesday of nine criminal counts, including securities fraud, conspiracy and making false filings with regulators.

And the justice system's steadfast resolve allowed Joe Reitz to exhale.

"This is a huge conviction, because if he had not been convicted that would have been a defense that every other CEO would have tried: 'I didn't know anything,'" said Reitz, a KU professor and co-director of KU's International Center for Ethics in Business.

The conviction communicates to anyone who works for a company -- as a board member, accountant or on the production line -- that acting illegally or unethically just isn't worth it, Reitz said.

WorldCom executives justified their own misdeeds by citing Ebbers' drive to "hit our numbers" when it came to meeting Wall Street expectations for corporate earnings, but those justifications didn't protect the underlings -- or Ebbers -- in court.

"That kind of naivete needs to go away, and this (conviction) is a big step," Reitz said. "People will finally get the message that cheating on behalf of the company is no guarantee that the company is going to stand behind you. As a matter of fact, they're going to make you a scapegoat.

"If you're the one with the dirty hands, they're going to point their fingers at you. The company lawyers won't let them do anything else."

The message sent by the jury is clear, Reitz said, and couldn't be more welcome in today's ever-competitive and too-often-filled-with-controversy business world.

"If you're pressured to do something that you believe is wrong or illegal, then don't do it -- because you're going to be left holding the bag, and the company will not protect you," Reitz said. "Now the problem is that the people who get to those high places (in a company) are very smart, very powerful and very charismatic. They're very capable of convincing people to do something on their behalf that they ought not to be doing. They're very influential people; that's how they got where they are in the first place.

"This isn't going to stop people from being persuaded to act illegally or unethically on behalf of the larger interests, but it'll help."

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