When the federal government announced the forced divestiture of AT&T in 1982, many small companies leapt at the chance to enter the growing telecommunications industry. Ebbers had absolutely no experience in the long distance business, but jumped in on a small scale in 1983 when he and three friends borrowed $500,000 and bought a struggling phone company and named it Long Distance Discount Service (LDDS).

In the early 1990s, Ebbers engineered the acquisition of several companies that would set the stage for the company's leap to national prominence. From 1992 to 1995, LDDS (renamed WorldCom in May 1995) bought corporations that expanded its service capabilities.

Ebbers and WorldCom orchestrated three multi-billion dollar deals in 1998. The largest of these was a proposed merger with MCI Communications in 1997 for approximately $40 billion, at the time the largest merger in business history.

Beginning in 1999 and continuing through May 2002, WorldCom (under the direction of Scott Sullivan (CFO), David Myers (Controller) and Buford Yates (Director of General Accounting)) used shady accounting methods to mask its declining financial condition by falsely professing financial growth and profitability to increase the price of WorldCom's stock.

The fraud was accomplished in two main ways. First, WorldCom's accounting department underreported 'line costs' (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them. Second, the company inflated revenues with bogus accounting entries from 'corporate unallocated revenue accounts'.

On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection, the largest such filing in United States history. The company emerged from Chapter 11 bankruptcy in 2004 with about $5.7 billion in debt.

Born in Edmonton, Alberta, Canada in 1941, Bernie Ebbers comes from a working-class family. An intensely private man, little is known about his past. After high school, he got a job as a milkman.

He escaped the cold weather by accepting a basketball scholarship at Mississippi College, a tiny Southern Baptist school in Clinton, Mississippi. He graduated in 1967 with a bachelor's degree in physical education.

After college, Ebbers held a number of jobs. He was a high school physical education teacher and basketball coach, then managed a garment warehouse. At one point, he was even a bouncer. Things began looking up in 1974, when he bought a motel in Colonel, Mississippi.

On March 15, 2005 Bernard Ebbers was found guilty of all charges and convicted on fraud, conspiracy and filing false documents with regulators. He was sentenced to 25 years in prison.

Business executive, accountant. Born Scott D. Sullivan in 1963 in New York. Scott Sullivan attended Bethlehem Central High School in Delmar, New York, and received his B.S. in Accounting from the State University of New York at Oswego in 1983. He is an American Certified Public Accountant and the former Chief Financial Officer, Treasurer, and Secretary of WorldCom.

In 2002, Sullivan was convicted on several counts of accounting fraud relating to his role in WorldCom's $11 billion financial collapse, the largest scandal of its kind in U.S. history. Sullivan, who is considered the mastermind behind the WorldCom accounting scheme, pleaded guilty to the charges and was sentenced to five years in prison as part of a plea agreement. In exchange, he testified against former WorldCom CEO Bernard Ebbers, who received a 25-year sentence.

Scott Sullivan was released from jail in August, 2009, after serving four years of his sentence. He will be on "home confinement" for another year.

1. Managers might be motivated or tempted to act on behalf of his/her self-gain and not in the best interest of the organization and it’s stakeholders.

- The deontological principle in ethics states that decision makers must take into account a person’s duty to act responsibly and respectfully toward all individuals in the situation. In the given case, Bernie Ebbers used company money which was lent to him not only to finance his other businesses, but to also to manipulate the stock at WorldCom to decieve investors of profitability.

2. The negative or harmful effects of hostile takeovers might be neglected.

- Loss of jobs in the company, decrease in company profability and stock price. These are just some of the harmful effects of a hostile takeover. With it’s rapid growth, WorldCom amassed 65 companies in it’s wake. Some of these businesses are large like MCI and MFS, but Bernie Ebbers also took in or absorbed small scale companies. The principle of Justice in ethics states that justice is served when all persons have equal opportunities and advantages. With Ebbers “strong arming” every organization he sees as either a threat or an expansion means there was no equality.

3. Integration of all stakeholders at the end of a hostile takeover might be overlooked.

- It is the managers responsibility to ensure that the acquired organization be integrated smoothly into the operations and management policies of it’s now parent company to ensure satisfaction of all parties involved. The principle of Utilitarianism holds that a decision maker must consider not only the individual’s but also the collective’s interests. In the case, Bernie Ebbers did a poor job in integrateing all of the companies he amassed during the 1990’s resulting to the dissatisfaction of their consumers.

Thinking of the Utilitarian principle in ethics, I believe that the loaning of money of a company to it’s key executives is a reasonable business decision which depends on a situation. I say this because I believe that should the Board decide to lend money to an executive, it is what they believe is good for the interest of all parties involved. I say situation since there must be good grounds in lending, especially lending large sums of money to a single individual. There must be basis and facts to support the Boards decision to do this action with costs and benefits thoroughly measured.

WorldCom improperly booked $3.8 billion as capital expenditures, boosting cash flow and profit over the past 5 quarters. In simple terms WorldCom did not account for expenses when it incurred them, but hid the expenses by pushing them into the future, giving the appearance of spending less and therefore making more money. This apparent profitability pleased investors who pushed the stock up to a high of $64.51 in June 1999.

The “cooking” of books in WorldCom was apparently a directive from CFO Sullivan and co-conspired by CEO Ebbers to hide losses and show company profability. This shows that both men, who were executives and decision makers, enacted in the interest of their own (self and organizations)welfare. This is another illustration of how these executive violated the Utilitarianism principle in Ethics. Another is the fact that cheated millions of people, customers and investors alike, for gain. This shows lack of responsibility and respect which is against the principle of Universalism.