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2. Agenda. Overview of WorldComNature of accounting fraudImpact of the fraudHow it happenedWhy
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1. 1 The Rise and Fall of WorldCom The World’s Largest Accounting Fraud
By John P. Meyer, 2-23-07 Good Morning,
First, I must point out that my comments this morning are my own and not the view of Sprint Nextel.
I will attempt to clarify actual facts from my personal opinions and observations during the course of the presentation.
My goal is to use the WorldCom accounting fraud as a real world case study of what can go wrong when the system of checks and balances fails. To do this we need to have an open and candid dialog and share our views.
I prefer to make our time together informal so please feel free to ask questions during the course of my presentation. Said another way, I really do not want to lecture the whole time. In fact, I intend for my prepared remarks to only cover about half of the time. Now , this does not mean if there are no questions you get to leave early. If you do not have any questions. I have plenty to ask you.
Bottom line, I believe the most value I can bring to the next hour or so is to create a discussion and dialog. I am glad to provide my views and insights along the way but want to make sure you share your views and ask questions along the way as well.
Likewise, I ask everyone to respect the views of others and treat this discussion with confidence and not attach any views to anyone outside the class room. We want a open and safe environment to have candid and lively discussion.
If everyone is ok with this approach, I will get started.
Good Morning,
First, I must point out that my comments this morning are my own and not the view of Sprint Nextel.
I will attempt to clarify actual facts from my personal opinions and observations during the course of the presentation.
My goal is to use the WorldCom accounting fraud as a real world case study of what can go wrong when the system of checks and balances fails. To do this we need to have an open and candid dialog and share our views.
I prefer to make our time together informal so please feel free to ask questions during the course of my presentation. Said another way, I really do not want to lecture the whole time. In fact, I intend for my prepared remarks to only cover about half of the time. Now , this does not mean if there are no questions you get to leave early. If you do not have any questions. I have plenty to ask you.
Bottom line, I believe the most value I can bring to the next hour or so is to create a discussion and dialog. I am glad to provide my views and insights along the way but want to make sure you share your views and ask questions along the way as well.
Likewise, I ask everyone to respect the views of others and treat this discussion with confidence and not attach any views to anyone outside the class room. We want a open and safe environment to have candid and lively discussion.
If everyone is ok with this approach, I will get started.
2. 2 First, let me ask you a few questions to get a sense of general understanding of the WorldCom case, Accounting and Financial Reporting, the Bankruptcy Process and Securities Law Class Actions.
How many are Accounting Majors?
Is everyone Juniors and Seniors?
How many are familiar with the WorldCom Accounting Fraud?
General awareness from newspapers?
Not familiar?
General understanding of financial statements and GAAP?
SEC Regulations?
SOX Regulations?First, let me ask you a few questions to get a sense of general understanding of the WorldCom case, Accounting and Financial Reporting, the Bankruptcy Process and Securities Law Class Actions.
How many are Accounting Majors?
Is everyone Juniors and Seniors?
How many are familiar with the WorldCom Accounting Fraud?
General awareness from newspapers?
Not familiar?
General understanding of financial statements and GAAP?
SEC Regulations?
SOX Regulations?
3. 3 Overview of WorldCom WorldCom was the darling of Wall Street and the Telecom Industry of the 90’s
Grew rapidly through acquisitions and from increased demand for telecom services
High stock price was a powerful currency to make acquisitions
WorldCom was a casualty of the Dotcom Bubble Burst of 2000
Resorted to accounting fraud to meet financial targets
Went bankrupt The Roaring 90’s
WorldCom was organized in 1983 (Long Distance Discount Services, Inc – LDDS)
Became a Public Company in 1989
During 1991 and 1993 purchased about 10 companies for aggregate of about $1.2B, by end of 1993 4th largest long distance carrier in US with annual sales of $1.5B.
Became know as WorldCom in 1995.
Continued aggressive acquisition strategy - MFS for $12.6B in 1996 which owned UUNET – Internet Backbone – making it a major player in the Dotcom data boom. Then purchased MCI in 1998 for $40+B (MCI had $19.7B of rev compared to WorldCom’s $7.4B – 2.6X larger)
Stock price grew from around $8 a share in 1994 to as high of nearly $48 a share (on a split adjusted basis) in Sept. 1999 – substantially out performing major competitors ATT and Sprint.
DotCom Bubble Burst
It all came to a crashing end in 2000. The bottom fell out of the DotCom bull market. The Telcom Industry was especially impacted. Excess capacity and investment coupled with slow down in data traffic caused Telecom stock prices to drop significantly. By October 2000 WorldCom stock had dropped to just under $20 a share.
By 2002, WorldCom was teetering on bankruptcy (credit crunch, declining revenues and too much debt).The Roaring 90’s
WorldCom was organized in 1983 (Long Distance Discount Services, Inc – LDDS)
Became a Public Company in 1989
During 1991 and 1993 purchased about 10 companies for aggregate of about $1.2B, by end of 1993 4th largest long distance carrier in US with annual sales of $1.5B.
Became know as WorldCom in 1995.
Continued aggressive acquisition strategy - MFS for $12.6B in 1996 which owned UUNET – Internet Backbone – making it a major player in the Dotcom data boom. Then purchased MCI in 1998 for $40+B (MCI had $19.7B of rev compared to WorldCom’s $7.4B – 2.6X larger)
Stock price grew from around $8 a share in 1994 to as high of nearly $48 a share (on a split adjusted basis) in Sept. 1999 – substantially out performing major competitors ATT and Sprint.
DotCom Bubble Burst
It all came to a crashing end in 2000. The bottom fell out of the DotCom bull market. The Telcom Industry was especially impacted. Excess capacity and investment coupled with slow down in data traffic caused Telecom stock prices to drop significantly. By October 2000 WorldCom stock had dropped to just under $20 a share.
By 2002, WorldCom was teetering on bankruptcy (credit crunch, declining revenues and too much debt).
4. 4 Overview of WorldCom Key Events
1996: Acquired MFS (including internet backbone)
1998: Acquired MCI (more than twice it’s size)
2000: Failed merger with Sprint (would have been the largest merger in history)
2000: Dotcom Bubble Burst (rapid decline in telecom stock values)
2000-02: WorldCom loans $400M to CEO (Ebbers)
2002: Accounting Fraud uncovered
2002: Filed for Bankruptcy Protection
2004: Emerged from Bankruptcy as MCI
2005: Verizon agrees to acquire the company for $6.75B (plus assumption of $6B of Debt)
5. 5 Overview of WorldCom Overview
This slide shows the dramatic rise and fall of WorldCom over 10 year period from 1994 through 2004.
Revenues peaking in 1999 (unadjusted) at $37B and then declined by $16.4B (or 44%) by end of 2004.
Assets peaking in 2001(unadjusted) at over $100B and had declined by $86.8B by end of 2004.
Employees peaking in 1999 at nearly 100K and had declined by 57K (or 59%) by end of 2004.
Market Cap. peaking in 1999 at $180B (the $150B above in 4th quarter average of high and low price for quarter) and had declined by a staggering $170 plus B) by end of 2004.
Debt peaking in 2000 at $30B and declined by $24B by end of 2004.Overview
This slide shows the dramatic rise and fall of WorldCom over 10 year period from 1994 through 2004.
Revenues peaking in 1999 (unadjusted) at $37B and then declined by $16.4B (or 44%) by end of 2004.
Assets peaking in 2001(unadjusted) at over $100B and had declined by $86.8B by end of 2004.
Employees peaking in 1999 at nearly 100K and had declined by 57K (or 59%) by end of 2004.
Market Cap. peaking in 1999 at $180B (the $150B above in 4th quarter average of high and low price for quarter) and had declined by a staggering $170 plus B) by end of 2004.
Debt peaking in 2000 at $30B and declined by $24B by end of 2004.
6. 6 Nature of Accounting Fraud Nature of Fraud
Responded to declining revenues and margin pressure by committing the largest accounting fraud in history.
Understatement of Expenses
Improper release of accruals of $3.3B in 1999 and 2000. Involved line operations and line finance personnel in addition to CFO and Controller. 1) released without any support. 2) “rainy day” excess accruals used as needed. 3) reduced unrelated accruals. 4) changing accounting polices.
Adjustments were made after month end, many times as “top side” entries and often despite the disagreement with line or staff personnel.
Capitalization of Line Costs – once all accruals were exhausted and Sprint merger fell through, resorted to blatant capitalization of period operating expenses. Required involvement of General Accounting, Property Accounting and Capital Reporting groups.
No basis of support for capitalizing network unused capacity costs.
Overstatement of Revenues
Between 1999 and third quarter 2001 booked “top side” adjustments to revenues to hit revenue growth targets and to help hit the E/R targets.
Involved Revenue Accounting, General Accounting and Business Operations groups.
Not all the adjustments hit bottom line -- some were made to inflate revenue and understate miscellaneous income.
Although the revenue adjustments were small relative to total revenues. They were critical to maintaining double-digit revenue growth. Without these adjustments, would have missed double-digit growth in 6 of 12 quarters between 1999 and 2001.
(Source of comments: Report of Investigation by the Special Investigative Committee of Board of Directors of WorldCom, Inc.)
Nature of Fraud
Responded to declining revenues and margin pressure by committing the largest accounting fraud in history.
Understatement of Expenses
Improper release of accruals of $3.3B in 1999 and 2000. Involved line operations and line finance personnel in addition to CFO and Controller. 1) released without any support. 2) “rainy day” excess accruals used as needed. 3) reduced unrelated accruals. 4) changing accounting polices.
Adjustments were made after month end, many times as “top side” entries and often despite the disagreement with line or staff personnel.
Capitalization of Line Costs – once all accruals were exhausted and Sprint merger fell through, resorted to blatant capitalization of period operating expenses. Required involvement of General Accounting, Property Accounting and Capital Reporting groups.
No basis of support for capitalizing network unused capacity costs.
Overstatement of Revenues
Between 1999 and third quarter 2001 booked “top side” adjustments to revenues to hit revenue growth targets and to help hit the E/R targets.
Involved Revenue Accounting, General Accounting and Business Operations groups.
Not all the adjustments hit bottom line -- some were made to inflate revenue and understate miscellaneous income.
Although the revenue adjustments were small relative to total revenues. They were critical to maintaining double-digit revenue growth. Without these adjustments, would have missed double-digit growth in 6 of 12 quarters between 1999 and 2001.
(Source of comments: Report of Investigation by the Special Investigative Committee of Board of Directors of WorldCom, Inc.)
7. 7 Impact of the Fraud Shareholders
$180B of shareholder value lost (based on peak stock price)
Debt & Preferred Stock holders
$37.5B of debt and preferred stock holder value lost
Company
$750M settlement paid to SEC
Employees
57,000 employees lost jobs
All current and former employees lost most of their retirement savings (invested in WorldCom stock)
Shareholders
53K WorldCom Tracker and 36K MCI Tracker shareholders.
Portion of shareholder equity loss is due to the decline in value of Telecom Stocks post Dotcom Bubble Burst in 2000 and beyond.
Employees
Some of job loss is due to down turn in the Telecom Industry. Industry in total took out over ˝ million employees post Dotcom bubble burst.
Shareholders
53K WorldCom Tracker and 36K MCI Tracker shareholders.
Portion of shareholder equity loss is due to the decline in value of Telecom Stocks post Dotcom Bubble Burst in 2000 and beyond.
Employees
Some of job loss is due to down turn in the Telecom Industry. Industry in total took out over ˝ million employees post Dotcom bubble burst.
8. 8 Impact of the Fraud Executives and Accounting Staff
6 individuals convicted of fraud / conspiracy / false filings
Ebbers – CEO 25 years in prison
Sullivan – CFO 5 years in prison
Myers – Controller 1 year in prison
Yates – Dir of Acctg 1 year in prison
Vinson – Acctg Dept 5 months in prison
Manager 5 months house arrest
Normand –Acctg Dept 3 years probation
Manager
Above 6 individuals agreed to pay a total of $24-34M to settle securities class action case Executives and Accounting Staff
In addition to prison sentences, these individuals face personal financial ruin. At market peak Ebbers was worth hundreds of millions and it is all gone.
Sullivan was also worth 10’s if not 100’s of millions and was building a $10M plus home in Florida – which is all gone. He leaves a chronically ill wife and small child poor and fatherless while serving prison term.Executives and Accounting Staff
In addition to prison sentences, these individuals face personal financial ruin. At market peak Ebbers was worth hundreds of millions and it is all gone.
Sullivan was also worth 10’s if not 100’s of millions and was building a $10M plus home in Florida – which is all gone. He leaves a chronically ill wife and small child poor and fatherless while serving prison term.
9. 9 Impact of the Fraud Board of Directors
12 Directors agreed to pay (out of pocket) a total of $25M to settle securities class action case
Investment Bankers
Settlement of securities class action case with banks:
Citi Group $2.6B
JP Morgan 2.0B
B of A .5B
Other .9B
SEC Action:
Grubman an Soloman Brothers Securities Analyst fined $15M and banned for life from practice. Unprecedented settlement payments by Board Members and Bankers.
Unprecedented settlement payments by Board Members and Bankers.
10. 10 Impact of the Fraud
Independent Auditor
Arthur Andersen agreed to pay $65M to settle securities class action case
Insurance Companies
Agreed to pay $36M to settle claims against WorldCom directors and officers Independent Auditors
Coupled with Enron, AA went out of business displacing 10’s of thousands of employees and clients.Independent Auditors
Coupled with Enron, AA went out of business displacing 10’s of thousands of employees and clients.
11. 11 How It Happened WorldCom Environment
Substantial Problems with the Company’s Internal Controls
WorldCom was dominated by Ebbers and Sullivan, with virtually no checks and constraints placed on their actions
Significant pressure to “meet the numbers”
Lack of courage of employees to communicate the fraudulent activates – believed it would have cost them their jobs
A financial system in which controls were extremely deficient
The BOD and Audit Committee did not appear to have had an adequate understanding of the company and culture
Inadequate audits by independent auditors
___________
Source: Report of Investigation by the Special Investigative Committee of the Board of Directors of WorldCom, Inc.
WorldCom Environment
Grew too fast.
Too much control concentrated at top of organization
Lack of proper “Tone from the Top” - hit the targets at all costs mentality.
WorldCom Environment
Grew too fast.
Too much control concentrated at top of organization
Lack of proper “Tone from the Top” - hit the targets at all costs mentality.
12. 12 How It Happened Macro Business Environment
The 90’s has been labeled by many as the “Perfect Storm”
The whole system of checks and balances failed
Public Companies Accounting Profession
- Management & Boards -Standard Setters
Investment Banks -Independent Auditors
- Bankers and Analysts Legal Profession
- Institutional Investors
- Individual Investors
Resulted in a number of high profile business failures and wrongdoings
WorldCom Enron HealthSouth
Qwest Tyco Adelphia
Global Crossing Boeing ImClone
Macro Environment
10 Year Bull Market. Took eye off of fundamentals.
Thought market could only go up and not go down.Macro Environment
10 Year Bull Market. Took eye off of fundamentals.
Thought market could only go up and not go down.
13. 13 Why ‘good’ managers make bad ethical choices (Source: HBS 1986 – Saul W. Gellerman) Four Rationalizations To Justify Questionable Conduct
Believe that the activity is not “really” illegal
Believe that it is in the individual’s or corporation’s best interest
Believe that it will never be found out
Believe that the company will condone actions that are taken in its interest and will even protect the managers responsible 1. Believe that the activity is not “really illegal”
Top execs. seldom ask their subordinates to do things that both of them know are against the law or imprudent. But company leaders sometimes leave things unsaid or give the impression that there are things they don’t want to know about….often lure ambitious lower level managers by implying rich rewards await those who can produce certain results.
WorldCom – top exec. Comp and benefits were extremely generous. (First Interim Report page 63). Large subjective cash bonuses were paid. Sullivan made personal payments to staff out of large bonus he was paid (Second Interim Report page 150).
2. That it is in the individual’s or corporation’s best interest.
Need to value the “how” results are achieved not just the “results” itself. If not, individuals will assume that borderline actions will be overlooked or at least interpreted charitably if noticed.
WorldCom – employees feared loss of job over blowing the whistle.
3. That it will never be found out.
A major factor in the WorldCom fraud. Hoped that Sprint deal would close so they could re-fuel reserves. Then hoped demand would pick up to use up excess capacity and could bleed off overcapitalization against future growth. Then hoped that could take a restructuring charge – and blame it on overall market conditions.
4. Believe that the company will condone actions that are taken in its interest and will even protect the managers responsible.
Classic case of this in WorldCom. When accounting staff began to bulk at making improper entries. Sullivan and Myers assured them that it was ok and not to abandon the ship during the storm.
Need an environment of transparency that – do not shoot the messenger – that people are not afraid to speak up – that do not hid things or problems.
1. Believe that the activity is not “really illegal”
Top execs. seldom ask their subordinates to do things that both of them know are against the law or imprudent. But company leaders sometimes leave things unsaid or give the impression that there are things they don’t want to know about….often lure ambitious lower level managers by implying rich rewards await those who can produce certain results.
WorldCom – top exec. Comp and benefits were extremely generous. (First Interim Report page 63). Large subjective cash bonuses were paid. Sullivan made personal payments to staff out of large bonus he was paid (Second Interim Report page 150).
2. That it is in the individual’s or corporation’s best interest.
Need to value the “how” results are achieved not just the “results” itself. If not, individuals will assume that borderline actions will be overlooked or at least interpreted charitably if noticed.
WorldCom – employees feared loss of job over blowing the whistle.
3. That it will never be found out.
A major factor in the WorldCom fraud. Hoped that Sprint deal would close so they could re-fuel reserves. Then hoped demand would pick up to use up excess capacity and could bleed off overcapitalization against future growth. Then hoped that could take a restructuring charge – and blame it on overall market conditions.
4. Believe that the company will condone actions that are taken in its interest and will even protect the managers responsible.
Classic case of this in WorldCom. When accounting staff began to bulk at making improper entries. Sullivan and Myers assured them that it was ok and not to abandon the ship during the storm.
Need an environment of transparency that – do not shoot the messenger – that people are not afraid to speak up – that do not hid things or problems.
14. 14 Why ‘good’ managers make bad ethical choices (HBS 1986 – Saul W. Gellerman) Conclusion
A good way to avoid management oversights is to subject the control mechanisms themselves to periodic surprise audits…
The point is to make sure that internal audits and controls are functioning as planned
It is a case of inspecting the inspectors and taking the necessary steps to keep the controls working efficiently
It is up to Top Management to send a clear & pragmatic message to all employees that good ethics is still the foundation of good business First and foremost need a proper “Tone from the Top” – without it no system of controls will be effective.
Need an environment where controls matter and doing business in accordance with the law and ethically is said and practiced.
Need to have healthy level of skepticism
A great quote from Bankruptcy Court Report on Corporate Governance For The Future of MCI, Inc.
“Power tends to corrupt, and absolute power corrupts absolutely” Lord Action 1887
First and foremost need a proper “Tone from the Top” – without it no system of controls will be effective.
Need an environment where controls matter and doing business in accordance with the law and ethically is said and practiced.
Need to have healthy level of skepticism
A great quote from Bankruptcy Court Report on Corporate Governance For The Future of MCI, Inc.
“Power tends to corrupt, and absolute power corrupts absolutely” Lord Action 1887
15. 15 Key Take Aways History repeats itself
Be aware of your environment
If it seems too good to be true, it probably is
No job is worth breaking the law or committing unethical acts for
Your personal integrity is your most important asset – you own it and control it History Repeats It’s Self
The goal is to learn from our past mistakes.
A great quote from Bankruptcy Court Report on Corporate Governance For The Future of MCI, Inc.
“Those who cannot remember the past are condemned to repeat it.” George Samtayama – The Life of Reason, I
Unfortunately, we seem to repeat our selves – business goes in cycles.
Securities Act of 1934
Great Depression and Stock Market Crash of the 30’s
Foreign Corrupt Practices Act of 1977
In response to questionable or illegal payments to foreign government officials, politicians and political parties by US Companies (estimated to exceed $300M)
Savings and Loan Failure of mid-80’s
Financial Institutions Reform, Recovery and Enforcement Act of 1989 and Resolution Trust Corporation closed over ˝ of S&Ls with total assets of over $500B. Problem started back in the late 70’s and early 80’s volatile interest rates.
The Committee of Sponsoring Organizations of the Treadway Commission
Formed in 1985 by National Commission on Fraudulent Financial Reporting in response to several high profile fraud cases.
HBS Article 1986
Mansville Corporation - asbestos case
Continental Illinois Bank – poor controls over loans (oil and gas) in mid 70’s
EF Hutton – mail and wire fraud – money laundering.
Be Aware of Your Environment
If not careful can be in middle of an ethical dilemma before you know it.
See next slide for rest of notes on Key Take Away
History Repeats It’s Self
The goal is to learn from our past mistakes.
A great quote from Bankruptcy Court Report on Corporate Governance For The Future of MCI, Inc.
“Those who cannot remember the past are condemned to repeat it.” George Samtayama – The Life of Reason, I
Unfortunately, we seem to repeat our selves – business goes in cycles.
Securities Act of 1934
Great Depression and Stock Market Crash of the 30’s
Foreign Corrupt Practices Act of 1977
In response to questionable or illegal payments to foreign government officials, politicians and political parties by US Companies (estimated to exceed $300M)
Savings and Loan Failure of mid-80’s
Financial Institutions Reform, Recovery and Enforcement Act of 1989 and Resolution Trust Corporation closed over ˝ of S&Ls with total assets of over $500B. Problem started back in the late 70’s and early 80’s volatile interest rates.
The Committee of Sponsoring Organizations of the Treadway Commission
Formed in 1985 by National Commission on Fraudulent Financial Reporting in response to several high profile fraud cases.
HBS Article 1986
Mansville Corporation - asbestos case
Continental Illinois Bank – poor controls over loans (oil and gas) in mid 70’s
EF Hutton – mail and wire fraud – money laundering.
Be Aware of Your Environment
If not careful can be in middle of an ethical dilemma before you know it.
See next slide for rest of notes on Key Take Away
16. 16 References First Interim Report of Dick Thornburgh, Bankruptcy Court Examiner – United States Bankruptcy Court Southern District of New York – re. WorldCom, Inc. (November 4, 2002)
Report of Investigation by the Special Investigative Committee of the Board of Directors of WorldCom, Inc. (March 31, 2003)
Second Interim Report of Dick Thornburg, Bankruptcy Court Examiner (June 9, 2003
Why ‘good’ managers make bad ethical choices by Saul W. Gellerman– Harvard Business Review (July – August 1986)
Order to Commit Fraud, A Staffer Balked, Then Caved by Susan Pulliam – Wall Street Journal (June 23, 2003)
Ebbers Is Convicted in Massive Fraud by Almar Latour, Shawn Young and Li Yuan – WSJ (March 16, 2005)
At Center of Fraud, WorldCom Official Sees Life Unravel by Susan Pulliam – WSJ (March 24, 2005)
WorldCom’s Myers Gets One-Year Prison Term by Shawn Young – WSJ (August 10, 2005)
WorldCom’s Sullivan Gets Five Years in Jail by Dionne Searcey and Shawn Young – WSJ (August 11,2005)
Settlements – WorldCom Securities Litigation – www.worldcomlitigation.com
Continuation of Take Away
If it Seems to Good to be True – It probably is
How could start-up WorldCom outperform all its competitors?
No job is worth breaking the law for or committing unethical acts for
Obvious with hindsight but difficult to see when under pressure.
Your personal integrity is your most important asset – you own it and control it
WSJ Article 8-11-05
During the sentencing, Mr. Sullivan, who was once lauded as the most brilliant and successful chief financial officer in corporate America, stared straight ahead. He said he was “ashamed and embarrassed” of his actions at WorldCom. “I made horrible decisions,” he said. “I chose the wrong road.”
WSJ Article – 8-10-05
Mr. Myers told the judge he would regret his actions for the rest of his life. “At the single most critical character-defining moment of my life, I failed.” he said.
WSJ Article – 08-09-05
Mr. Yates, 49 years old, told Judge Barbara S. Jones that he deeply regretted going along with his bosses in a scheme to falsify WorldCom’s books. “Faced with a decision that required strong moral courage, I took the easy way out…There are no words to describe my shame.” Mr. Yates said.
Continuation of Take Away
If it Seems to Good to be True – It probably is
How could start-up WorldCom outperform all its competitors?
No job is worth breaking the law for or committing unethical acts for
Obvious with hindsight but difficult to see when under pressure.
Your personal integrity is your most important asset – you own it and control it
WSJ Article 8-11-05
During the sentencing, Mr. Sullivan, who was once lauded as the most brilliant and successful chief financial officer in corporate America, stared straight ahead. He said he was “ashamed and embarrassed” of his actions at WorldCom. “I made horrible decisions,” he said. “I chose the wrong road.”
WSJ Article – 8-10-05
Mr. Myers told the judge he would regret his actions for the rest of his life. “At the single most critical character-defining moment of my life, I failed.” he said.
WSJ Article – 08-09-05
Mr. Yates, 49 years old, told Judge Barbara S. Jones that he deeply regretted going along with his bosses in a scheme to falsify WorldCom’s books. “Faced with a decision that required strong moral courage, I took the easy way out…There are no words to describe my shame.” Mr. Yates said.