Thursday, February 28, 2019
Bernie Ebbers and Scott Sullivan
What power bases did Bernie Ebbers and Scott Sullivan rely on to get absent with account fraud? The power bases are legitimate power, reward power, ir amenable power, expert power, referent power. Case Study Bernie Ebbers built WorldCom Inc into one of the largest telecommunication firms. Yet he and CFO Scott Sullivan have become better know for creating a massive corporate accouting fraud that led to the largest bankruptcy in US history. Two investigative reports and subsequent court cases concluded that WorldCom executoves were responsible for billions in fraudulent or unsupported accouting entries.How did this mammoth accouting scandal egest without anyone raising the alarm? Evidence suggests that Ebbers and Sullivan help considerable power and modulate that pr as yetted accouting staff from complaining, or even knowing, about the fraud. Ebbers inner circle held mischievous control over the flow of all financial information. The geographically outspread accouting groups were discouraged from sharing information. Ebbers group also restricted distribution of beau monde level financial reports and prevented sensitive reports from being prepared at all.Accountants didnt even have access to the computer files in which some of the largest fraudulent entries were mde. As a result, employees had to rely on Ebbers executive team to justify the accounting entries that were requested. An opposite reason why employeees complied with contestable accoutong practices was that CFO Scott Sullivan wielded immense person-to-person power. He was considered a "whiz kid" with impeccable integrity who had won the prestigious "CFO Excellence Award. quot Thus, when Sullivans office asked staff to make motionable entries, some accountants assumed Sullivan had found an innovative and legal accouunting loophole. If Sullivans influence didnt work, other executives took a more coercive approach. Employees cited incidents where they were publicly berated for questio ning headquarters decisions and frighten if they asked for more information. When one employer at a branch refused to alter an accouting intromission , WorldComs contoller threatened to fly in from WorldComs Mississippi headquarters to make the intensify himself.The employ changed the entry. Ebbers has similar influence over WorldComs board of directors. Sources indicate that his personalized charisma and intolerance of dissention produced a passive board that rubber-stamped most of his recommendations. As one report concluded The Board of Directord appears to have embraced suggestions by Mr. Ebbers without question or dissent, even under circumstances where its members now readily remark they had significant misgivings regarding his recommendedd couse of action.