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(accessed January 22, 2012). Ultimately, of course, we can only guess. Maybe shecouldn’t say no to her bosses; maybe she believed that they’d take full responsibilityChapter 2 Business Ethics and Social Responsibility54
for her accounting “adjustments.” Possibly she was afraid of losing her job. Perhapsshe didn’t fully understand the ramifications of what she was doing. What wedoknow is that she disgraced herself and headed for jail.“World-Class Scandal atWorldCom,”CBSNews.com, June 26, 2002,06/26/national/main513473.shtml(accessed January 22, 2012).Chapter 2 Business Ethics and Social Responsibility55
2.1 Misgoverning Corporations: An OverviewLEARNING OBJECTIVES1.Define business ethics and explain what it means to act ethically inbusiness.2.Explain how you can recognize an ethical organization.The WorldCom situation is not an isolated incident. The boom years of the 1990swere followed by revelations of massive corporate corruption, including criminalschemes at companies such as Enron, Adelphia, and Tyco. In fall 2001, executives atEnron, an energy supplier, admitted to accounting practices concocted to overstatethe company’s income over a period of four years. In the wake of the company’scollapse, stock prices plummeted from $90 to $1 a share, inflicting massive financiallosses on the investment community. Thousands of employees lost not only theirjobs but their retirement funds, as well.Daniel Kadlec, “Enron: Who’s Accountable?”Time, January 21, 2002, 31. Before the Enron story was off the front pages, officialsat Adelphia, the nation’s sixth-largest cable company, disclosed that founder andCEO John Rigas had treated the publicly owned firm as a personal piggy bank,siphoning off billions of dollars to support his family’s extravagant lifestyle andbankrupting the company in the process.David Lieberman, “Prosecutors Wrap Up$3.2B Adelphia Case,”USA Today, June 25, 2004,industries/telecom/2004-06-25-adelphia_x.htm(accessed January 22, 2012).Likewise, CEO Dennis Koslowzki of conglomerate Tyco International was apparentlyconfused about what was his and what belonged to the company. Besides treatinghimself to a $30 million estate in Florida and a $7 million Park Avenue apartment,Koslowzki indulged in a taste for expensive office accessories—such as a $15,000umbrella stand, a $17,000 traveling toilette box, and a $2,200 wastebasket—thateventually drained $600 million from company coffers.“Tyco Wants Its MoneyBack,”CNNMoney, September 17, 2002,companies/tyco/index.htm(accessed January 22, 2012).As crooked as these CEOs were, Bernie Madoff, founder of Bernard L. MadoffInvestment Securities and former chairman of the NASDAQ stock exchange, makesthem seem like dime-store shoplifters.“Top 10 Crooked CEOs,” Time Specials,Time.com,0,28804,1903155_1903156_1903160,00.html(accessed July 25, 2011). Madoff isalleged to have run a giant Ponzi schemeFred Langan, “The $50-billion BMISDebacle: How a Ponzi Scheme Works,”CBSNews, December 15, 2008,