EBBERS ALSO THE INDUSTRY SCAPEGOAT
It is good to see such widespread discussion on the sentencing of the former WorldCom boss, Bernie Ebbers.
It is also quite appropriate for it to happen now, as the industry begins to recover and the first large-scale new investments are arriving in the market once more (as I reported from Europe a few weeks ago).
The Ebbers case hopefully provides closure on a few very black years in our industry.
While I have very little sympathy for corporate crooks one has to wonder how many other corporate highfliers have, at one time or another, teetered on the brink of corporate misconduct. I am sure quite a few have crossed, and are still crossing, that line.
Most people fully understood that in the early 00s we were dealing with a bubble – yet a very large number of investors and shareholders gave in to greed and went along with it, actually cheering people like Ebbers on. He even appeared as Man of the Year on the cover of Time Magazine at one point.
At the time I regularly commented on the many ridiculous forecasts that my colleagues were producing regarding various growth aspects of the market, mainly concerning e-commerce and mobile. But nobody wanted to hear what I was saying. The majority preferred the fanciful forecasts from the well-respected research firms.
And these companies did very well out of it, as most telcos loved their foolish predictions and paid big dollars for them. So my sector of the industry also played a role in the maintaining the bubble. I do believe, however, that the worst culprits were some of the financial analysts and accountants who devised some very clever scams around the hype.
True, several people have been punished, but the majority got off with a scare, a slap on the wrist or a request to maintain a low profile for a while.
It is Bernie Ebbers’ misfortune that he has now been punished for the combined ‘sins’ of our industry. I know, from talking to many people about this, that his sentencing is reverberating throughout our industry, and beyond that in many other corporate boardrooms. In this respect I do feel a bit sorry for Ebbers, but a severe sentence was necessary to make everyone sit up and take notice.
Will the combined industry – and, indeed, the combined corporate world – learn from this? I doubt it. If another bubble should arrive at some time in the future, most of those who were involved in the crash of the 00s will have moved on and a new breed of executives will be in charge. Greed will once more hold sway and a few scapegoats will again be punished for the sins of the many.
However, I do believe that for the next few decades at least we will be pretty safe. The Ebbers shock will remain with us for some time. The punishment is appropriate, but I do feel slightly sorry for Ebbers, who has to pay the price for the transgressions of a hell of a lot of others.
Paul Budde
See also:
Global – Analysis – Markets and Forecasts
Global – Analysis – Telecommunications Industry
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