Case Study

fWorldCom1

By Dennis Moberg (Santa Clara University) and Edward Romar (University of MassachusettsBoston)

An update for this case is available.

2002 saw an unprecedented number of corporate scandals: Enron, Tyco, Global Crossing. In many ways,

WorldCom is just another case of failed corporate governance, accounting abuses, and outright greed. But

none of these other companies had senior executives as colorful and likable as Bernie Ebbers. A Canadian by

birth, the 6 foot, 3 inch former basketball coach and Sunday School teacher emerged from the collapse of

WorldCom not only broke but with a personal net worth as a negative nine-digit number.2 No palace in a

gated community, no stable of racehorses or multi-million dollar yacht to show for the telecommunications

giant he created. Only debts and red ink--results some consider inevitable given his unflagging enthusiasm

and entrepreneurial flair. There is no question that he did some pretty bad stuff, but he really wasn't like the

corporate villains of his day: Andy Fastow of Enron, Dennis Koslowski of Tyco, or Gary Winnick of Global

Crossing.3

Personally, Bernie is a hard guy not to like. In 1998 when Bernie was in the midst of acquiring the

telecommunications firm MCI, Reverend Jesse Jackson, speaking at an all-black college near WorldCom's

Mississippi headquarters, asked how Ebbers could afford $35 billion for MCI but hadn't donated funds to

local black students. Businessman LeRoy Walker Jr., was in the audience at Jackson's speech, and

afterwards set him straight. Ebbers had given over $1 million plus loads of information technology to that

black college. "Bernie Ebbers," Walker reportedly told Jackson, "is my mentor."4 Rev. Jackson was won over,

but who wouldn't be by this erstwhile milkman and bar bouncer who serves meals to the homeless at

Frank's Famous Biscuits in downtown Jackson, Mississippi, and wears jeans, cowboy boots, and a funky

turquoise watch to work.

It was 1983 in a coffee shop in Hattiesburg,...