Ethics Cynthia Cooper and WorldCom — Transcript

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1. 0:03good evening professor and uh sorry for
2. 0:05not being able to make class yesterday
3. 0:07um I know the team probably told you
4. 0:09already but I had prior uh work
5. 0:11engagements unfortunately it kept me a
6. 0:13little longer than I hoped for um but
7. 0:16today we'll be talking about ethics um
8. 0:19and Cynthia Cooper and the world Comm
9. 0:21issue and we'll also correlate it um to
10. 0:25a couple of great um ethical
11. 0:28reviewers um um so let's go ahead and
12. 0:31start um Emanuel k um his review on
13. 0:36being truthful he said without truth
14. 0:39anything we tell is otherwise valueless
15. 0:42uh so essentially stating truth is what
16. 0:44creates value to
17. 0:47society um so if there is no truth then
18. 0:50of course there's no
19. 0:52Society
20. 0:56um uh truth must be a guided principle
21. 1:00um and then he he he narrows it down to
22. 1:03reserve to being reserved where uh
23. 1:06reservation of one's faults for example
24. 1:08truth can be uh basically brought down
25. 1:11into two categories reservation where
26. 1:14one just you know doesn't talk about uh
27. 1:16things that they're reserved about it
28. 1:18could be Health it could be monetary um
29. 1:21and then there's secrets and secrets is
30. 1:23information that's shared by a second
31. 1:24party and they don't want it to be
32. 1:26shared by a third party very important
33. 1:29there
34. 1:30um and then based on those two concepts
35. 1:32he then talks about false statements and
36. 1:34he states that false cha statements is
37. 1:37when a truth becomes a lie when
38. 1:40expressively and willingly acquainted to
39. 1:43persons without thought um and false
40. 1:46statements he then sub categorizes them
41. 1:49into um any false statement which is
42. 1:53fism and media media Sy which is a lie
43. 1:59and um then he goes go on to say that
44. 2:00every lie is objectionable and contemp
45. 2:05contemple um he then goes on to state
46. 2:08that men are malicious giving rise to
47. 2:11the concept of a white
48. 2:13lie um so if we I'll go ahead and
49. 2:16evaluate Manuel K later on with um in
50. 2:19regards to the Cynthia Cooper
51. 2:22case talk about George uh brinkert um he
52. 2:28evaluates Trust has an intrinsic value
53. 2:32um stating that there's three types of
54. 2:34trust there's basic trust which is
55. 2:36impersonal and systematic form of trust
56. 2:38and it allows for society and Order and
57. 2:41consistency of that is required um so a
58. 2:44great example I think that uh what's
59. 2:46provided is uh for example if you go to
60. 2:49the grocery store and you give them $20
61. 2:52and your bills $10 you're expecting you
62. 2:55know you have that basic trust that
63. 2:56they'll give you those $10 back so it
64. 3:00what George you know um elaborates on is
65. 3:02if we don't have that basic trust we
66. 3:05there's no there's
67. 3:12no
68. 3:14Society um so then we'll go go ahead and
69. 3:17talk about guarden trust and guarded
70. 3:19trust is trust used to maintain
71. 3:20relationships this could be uh between a
72. 3:23spous no not even CU that's extended
73. 3:25sorry so this is between like a company
74. 3:27and individuals and usually comes with
75. 3:30agreements so this could be a contract a
76. 3:32leasing contract for example between you
77. 3:35and uh the
78. 3:37leasee then uh he talks about extended
79. 3:39trust and and extended trust requires
80. 3:42trust trusting firms or an individual
81. 3:44and contracts and monitoring are not in
82. 3:47place uh so this requires you to expose
83. 3:50your vulnerabilities um this is the type
84. 3:52of uh trust you have with your partners
85. 3:55with your family um where you trust each
86. 3:58other but um once again it
87. 4:02is exposing your
88. 4:05vulnerabilities um so next we talk about
89. 4:08three preceding conditions of extended
90. 4:10trust there has to be common motives
91. 4:12meaning that you're both trying to reach
92. 4:15common objectives there should be
93. 4:17consistency of
94. 4:18behaviors and there should be
95. 4:20acknowledge of Competency who uh we read
96. 4:24a short article on her and her concept
97. 4:26of whistleblowing so um she states that
98. 4:29whistleblowing is a new label generated
99. 4:31by our increased awareness of ethical
100. 4:33conflicts encountered at work I think
101. 4:36prior to the
102. 4:381920s or the 1900s um whistleblowing
103. 4:42kind of was something that was not for
104. 4:45wasn't
105. 4:46seen um so she states that
106. 4:49whistleblowing has very high stakes um
107. 4:52it causes moral conflicts so she states
108. 4:55that the person that's doing the
109. 4:56whistleblowing must identify if sorry
110. 5:00typo there if speaking out is of public
111. 5:03interest and then you have to ask
112. 5:05yourself three questions who is
113. 5:07responsible how great is a threat how
114. 5:10will speaking out allow for change for
115. 5:13the better um and will correlate this
116. 5:16whistleblowing
117. 5:17to Cynthia where I
118. 5:20believe you know she did feel
119. 5:22responsible because her audit Department
120. 5:25was overseeing the social respon not the
121. 5:29social but the the auditing of the
122. 5:30financial records um and she did
123. 5:33evaluate the threat very well we'll
124. 5:34review that and how uh speaking out for
125. 5:38the change you know was actually better
126. 5:39for them and for the company and for
127. 5:41everybody as a
128. 5:43whole
129. 5:45um Cecilia also states that uh
130. 5:48whistleblowing causes opposition um and
131. 5:50there's a breach of loyalty and
132. 5:52acquisition um as we saw uh as we'll
133. 5:56State later on with Cynthia Cooper she
134. 5:58did face much of this and um you must
135. 6:02seek as much advice regarding the choice
136. 6:04part of going public um which we did see
137. 6:07her
138. 6:08do so um because
139. 6:14of Enron and Worldcom u s Oxley act um
140. 6:20known as the socks act or you can hear
141. 6:22people often say socks compliance came
142. 6:24about um and the social respon or the
143. 6:28responsibility in this act lies on top
144. 6:31management the board of directors and
145. 6:32independent Auditors where they must
146. 6:34individually certify the accuracy of
147. 6:36financial documents um and this is this
148. 6:38is a very good act because it creates a
149. 6:41consistency check uh on financial
150. 6:43records uh it was signed into law in
151. 6:462002 and the names are after Senator uh
152. 6:49pale
153. 6:50sbin um and Michael
154. 6:53Oxley um I put two pictures up here of
155. 6:56them um created and this was the once
156. 6:59again the was created as a reaction to
157. 7:01Enron and the world comp Scandal um it's
158. 7:04regulated by the SEC the Securities and
159. 7:06Exchange committee and it enfor it's
160. 7:08enforced to all publicly traded company
161. 7:10final
162. 7:12institutions uh so thanks Enron and
163. 7:14Worldcom for allowing for this act to be
164. 7:16created um this act actually creates a
165. 7:20check and balance for financial
166. 7:24institutions so Cynthia Cooper um and
167. 7:27the world come Scandal Cynthia Cooper uh
168. 7:29found um improper entries on the books
169. 7:33and identified that they were being
170. 7:34cooked um as we learned with emanel k um
171. 7:39truthfulness is something that allows
172. 7:41for society to function um and she kind
173. 7:46of realized that you know the department
174. 7:48or that her company was not being
175. 7:50truthful um she also noted that
176. 7:53operating expenses were being reported
177. 7:55as assets um so she she her her company
178. 8:00and auditing information that was
179. 8:02present um she presented it to the audit
180. 8:05committee and was later confronted to
181. 8:07not interfer by the by her boss um who
182. 8:10was the board of D or the audit
183. 8:12committee's
184. 8:14um head uh Max bobit um so others were
185. 8:19fired for questioning capital
186. 8:21expenditure um which occurred with um I
187. 8:26believe oh God what was his name sorry I
188. 8:28didn't write it down but you know the
189. 8:30fact that she was able to question and
190. 8:32make sure like uh Cecilia said uh we
191. 8:35must question uh and we must know what
192. 8:39our risk are so she knew that you know
193. 8:41at fault was going to she she she had
194. 8:43her job on the line and her team was
195. 8:45able to find 3.8 billion in fraud she
196. 8:49then later confronted the source uh
197. 8:52after reviewing with several teams and
198. 8:54he to admitted to conducting an etical
199. 8:57practices um so the reason for it was
200. 9:00because her team had no direct Financial
201. 9:02access to information they were just
202. 9:04auditing um the books um so with Cynthia
203. 9:07Cooper I think she took a very good
204. 9:09stance she was able to evaluate the
205. 9:11situation in question um she did
206. 9:13question and and conduct Audits and uh
207. 9:16was able to get under the underlying
208. 9:18Factor um so through her we learned you
209. 9:21know that trustworthiness and being
210. 9:23trustworthy you know did hinder this
211. 9:24company because they were reporting
212. 9:26false statements and um interestingly
213. 9:29enough they were flagged by the SEC
214. 9:31prior to this you know unfolding because
215. 9:35you know during that time
216. 9:38telecommunications companies were doing
217. 9:40bad and they were the only ones that did
218. 9:41well um so Cynthia Cooper did a great
219. 9:44job of being able to analyze the
220. 9:46situation she did analyze her risks um
221. 9:49and in turn you know did unfold
222. 9:51something that was very very um very
223. 9:54nerve-wracking and and did um
224. 9:57fortunately help the the business in the
225. 10:00long run um and
226. 10:04put those that
227. 10:06were at those that caused the issues at
228. 10:10um Behind
229. 10:12Bars um so that's all
230. 10:17um so what was at hand her credibility
231. 10:20and losing her job she was able to
232. 10:22outweigh the right and wrong decisions
233. 10:24and in turn make the proper decision of
234. 10:27you know going ahead and public Ally
235. 10:29letting everybody know that her company
236. 10:32was cooking the