Tui Eth501 Module 1

Trident University International

Module 1

ETH501 Business Ethics

Dr. Bonnie Adams

April 13, 2014

In the early 2000’s, Enron, Tyco, and other major corporations were going bankrupt, top executives were being charged with fraud, insider trading and a slew of other charges, and the tech bubble had burst. (Gongloff, 2002, p.1) It seemed that not only had federal laws been broken, but also business ethics, specifically deontological ethics had been thrown out the window. Company executives were using their businesses for personal gain through unethical acts when they should have been focusing on doing the right thing and increasing revenue through legal means. This paper is going to focus on the Adelphia Communications Corporation and identify two key ethical problems raised by accounting scandal of Adelphia Communications Corporation. Additionally, we will focus on how deontological ethics and Kant’s categorical imperative apply to these key ethical problems.

The Scandal

In 2002, Adelphia was the sixth largest provider of cable services in the United States (CNN, 2002, p. 4) Top executives of Adelphia, including the founding member of the company were charged with wire fraud, tax evasion, and fraudulent financial reporting. The executives were using funds from the publicly traded company as “the Rigas Family’s personal piggy bank.” (Liebermann & Farrell, 2002, p. 14) The top executives created false financial reports to hide the fact that they had borrowed 2.3 billion in loans to family owned entities against the company. These loans were used to support their lavish lifestyle, acquire property, meet margin calls on personally held stock, and to build a lavish golf course. Liebermann & Farrell, 2002, p. 15) Because the executives had withheld this large amount of debt, when auditors looked at the financial statements they did not see that the company was actually over valued. The executives had been stealing from the company and the...