Go Directly To Jail
The Harford Courant
Editorial
June 27, 2002
Prison should be the next stop for the corporate criminals at companies such as Enron, Arthur Andersen and now WorldCom Inc. who seek to bamboozle Wall Street and the investing public with phony financial reports.
WorldCom, the nation's second largest telecommunications company, admitted on Tuesday that it had substantially inflated profits for more than a year by mislabeling expenses totaling $4 billion as capital expenditures - thus protecting the bottom line. The company falsely claimed that it was operating in the black when it was actually losing massive amounts of money.
WorldCom used the same external auditor, Arthur Andersen, that provided a false financial front for Enron, the now-bankrupt energy trader. Andersen was recently replaced by KPMG. But the mischief at WorldCom apparently was the handiwork of internal accountants.
Chief Financial Officer Scott D. Sullivan has been fired and Controller David Myers has resigned. The two and any others involved in the deception, including top dogs in the corner offices, should be subjects of a criminal investigation.
Let mendacious, greedy executives do time in prison, and dispense with wimpy fines and regulatory slaps on the wrist. WorldCom's board of directors should resign in shame - for ignoring or failing to understand that the books were being cooked. They must have known the company was losing money.
If the directors were complicit, they, too, should be charged as felons.
WorldCom's legerdemain could dwarf Enron's lies. The company faces bankruptcy, the biggest in U.S. history. It already announced that 17,000 employees will be laid off. WorldCom's deceitful business practices could rob the savings of millions of people who invested in the company.
Corporate duplicity has spooked markets for months. WorldCom is yet another lying corporate giant that has duped investors. Retirement planning has been thrown into chaos and once-secure pensioners are vulnerable, in large part because of an epidemic of criminality and unethical behavior in the business world.
Where is the outrage? What's happened to the self-appointed guardians of morality, such as William Bennett and the various reverends who sounded off justifiably and incessantly during the Clinton years? They have been largely silent on the issue of corporate fraud and should begin to speak out.
Those responsible for such fraud should be held personally accountable, said President Bush. He pledged investigations by the Securities and Exchange Commission and the Justice Department. Good for him. It is time for zero tolerance of criminal behavior in corporate executive offices.
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