Ellington

It was our own hometown David and Goliath story. Bernie Ebbers and WorldCom were the symbol of what Mississippi could be. WorldCom was the lone Fortune 500 company in the state, and Ebbers its ebullient, charismatic, down-to-earth hero. Everyone—from employees to stockholders to Wall Street—were charmed. Believers invested everything, buoyed by the company's phenomenal growth.

Then, nearly overnight it seemed, everything fell apart. The telecom bubble burst in the wake of Wall Street's "irrational exuberance." In April 2002, WorldCom announced its first layoffs and Ebbers' resignation. As the stock price fell precipitously—ultimately going from its 1999 high of $97 to $0.09 per share before the NASDAQ halted trading—rumors of fraud began circulating. Profits were inflated, the media said, to the tune of $3.9 billion, later rising to $11 billion.

In June, Controller David Myers resigned, and the board fired CFO Scott Sullivan. The Justice Department investigated, and the SEC filed civil fraud charges. The story unfolded in record- breaking numbers: the most shares traded in one day, 670 million; 17,000 layoffs; 25 banks filed lawsuits; the WorldCom board had loaned Ebbers $400 million. Then, on July 21, WorldCom filed the largest bankruptcy in U.S. history, listing $41 billion in debt.

Six people are doing time for the fraud, with everyone except Ebbers pleading guilty. In March 2005, a jury found him guilty on all charges; Ebbers is serving a 25-year sentence in Louisiana without the possibility of parole.

Brandon resident Cynthia Cooper was a WorldCom vice president in 2002, in charge of its internal audit department. She and her team discovered the fraudulent bookkeeping entries designed to cover up the company's ever-increasing losses. For her courage in exposing the fraud, Time magazine named her a Person of the Year in 2002, along with two other corporate whistleblowers. Her book "Extraordinary Circumstances," (John Wiley & Sons, Inc., $27.95), chronicles the WorldCom story, effortlessly carrying readers with compelling present-tense, first-person prose. Her purpose, she says, is to keep the story accessible for everyone, ultimately focusing on everyday ethical dilemmas brought into sharp focus through the scandal.

Cooper is using the advance from the book as seed money to incorporate ethics education at high schools and universities, and she speaks extensively on the subject nationwide. "Character is not forged at the crossroads," she says. "It's built decision by decision, brick by brick, throughout our lives."

At what point was there no longer any doubt in your mind that fraud was going on?
For me, I think it was really a process. It started with curiosity. … We identified these entries, and no one would give us a straight answer. We kept having these roadblocks put in front of us—people acting out of character; some people became hostile. Some of this was ‘trust your instincts'—that's what I tell young people—trust your instincts. If something doesn't feel quite right, it may not be. … If there was one point, it was when I was in David Myers' office, and we confronted him about these issues, and he was very honest with us, and he said, "Look, there's no support for these entries. There are no accounting rules supporting what we have done. We probably should have never done that, but once we made the entry the first time, it was difficult to stop." That would be the point where I would say my heart sank, and I knew. Up until that point, I still was hoping. No one expects that their boss would perpetrate a fraud. You expect that there will be a logical explanation. Even the external audit partner and the audit committee chairman believed up until the very end that Scott (Sullivan) would come back with a good explanation for these entries, and actually gave him the weekend to write a white paper supporting his position.

Your heart had to sink.
It did. For me, it was really a heartbreaking experience. … These people weren't numbers to us; these were people (who) we had worked with for many years (who) we trusted and respected. Many of us knew their husbands and wives and children; these were people in our communities. Buddy Yates goes to church with me, and his son went out with my daughter. It's very different reading about something in the newspaper where you don't know the people. Right here at home, when you know the families, it's a heartbreaking experience. Think about the shareholders who lost everything, especially in Mississippi where (WorldCom) was the only Fortune 500 company, and so many in Mississippi invested all of their retirement in the company. And then—you saw it—watching workers walk out in wave after wave of layoffs, carrying out their belongings in brown cardboard boxes. It's heartbreaking to live through that and watch all the suffering.

What do you think gave you the courage to see this thing through?
For one thing, I was surrounded by a team of very courageous auditors. Each team member played a very important role; it was very much a team effort. For most, the values are likely instilled in childhood — by parents, by religion, by teachers and mentors. I talk in the book about my mother. I can remember that she was always trying to teach lessons. She would tell my brother and me, "Always think about the consequences of your actions," and she'd also say, "Don't ever allow yourself to be intimidated." As much as anything, those words were really ingrained in me from a very young age. Those words helped me to dig down and find my courage sometimes, throughout my life, when I needed it the most.

I talk about how I wish I could say it was this sort of straight process, but there were times when I was literally scared to death, when my hands were shaking and my heart was pounding, I had to find a way to find my courage. I write about a man who sent me a letter, and said, "My wife and I teach our children that courage is not without fear, but courage is acting in the face of fear." And that's the challenge. It's more than just knowing right from wrong. A lot of the people who participated in the fraud at WorldCom and other frauds knew that what they were doing was wrong. Sometimes it can be easy to give in to that pressure from their superiors. Good people can give in to pressure and go down that slippery slope.

Sullivan and the others could have chosen to stop it. Why do you believe they continued to perpetrate the fraud?
For different people there were different reasons. For example, some of the mid-level managers who became complicit with the fraud — like Troy Normand — I think they felt pressured by their superiors. I talk about the story of the aircraft carrier, how (Sullivan) said, "Hey, just help me get the company over the hump. Think of this as an aircraft carrier. We have planes out. Let's get all of the planes in safely. Once all of the planes are landed safely, then if you want to leave, you can leave." (Sullivan) appealed to their loyalty. They felt pressured. Fear came into play. They were afraid they'd lose their jobs and have no way to support their families. In the Jackson job market, it wouldn't be easy to replace those jobs with those salaries. (Normand and Betty Vinson) … had actually both written resignation letters. … I think initially, that first quarter, it (was), "Well, we'll just do it this one time"—that slippery slope. I think, for the executives at the top of WorldCom, and for these other companies as well, I think pride came into play. Those guys were used to winning, used to being praised by Wall Street, and didn't want to see the company fail on their watch. I think misguided loyalty; I think some of the executives felt a sense of loyalty to their superiors. And that's what I tell students, I say, "Look, above loyalty to your superiors, you need to be loyal to your integrity. Just because your superior says something is OK, doesn't mean that it is." … So I would say fear, pride, greed certainly came into play. A lot of the executives in the '90s, with all of these companies, had a tremendous amount of wealth tied up in stock.

The reason I've written this book is primarily to share the story with young people, with high school and college students, with the next generation. I've written from the perspective of the parent of a daughter (who's) 18 and about to go to college and one that's 6. I wrote it in present tense because I wanted these young people to be able to read it and think about what choices they may have made on the way. I wanted anybody to be able to pick this book up and read it, not just a business person, someone from any walk of life. That's why I devoted the epilogue also to: "What are some things we can teach our children?" We'll want to recognize an ethical dilemma, step back and think it through. Otherwise, people say this is just an intriguing story. It has a lot of suspense and fascination, but what does it really mean? What can we take from it and apply to our own lives, and to our children and grandchildren?

How much do you think is enough, in terms of power and money?
I think you're hitting on an important point there. If you don't have your priorities in the right order—and our priorities inform our decisions—you end up with this insatiable appetite that's never filled for some people. That quest for success that's never satisfied, and it can never be enough. I think that's why it's so important to make sure your moral compass is pointing in the right direction, to come up with (the answers to): "How do you want to live your life?" "What values do you want to live by?" What are your priorities in life: Are your priorities going to be to move up the corporate ladder and gain as much material wealth as you can at any cost; or are your priorities going to be your faith, your family, friends, relationships? Nobody comes to the end of their life saying, "I wish I'd spent more time in the office." That's not the way it works. So I think it comes back to priorities and values. As parents, I think we need to do the best we can to be there for those teachable moments with our children. And I think we need to incorporate ethics at an early level in school, and we really need to make a hard push to do that and take it to another level in this country. I think it will make a big difference for the next generation.