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Out of Our Minds
Tuesday, March 15, 2005 2:57 PM
Bye Bye Bernie
Kevin Salwen on Business

I'm not a super-emotional guy but I pumped my fist when ex-WorldCom CEO Bernie Ebbers was convicted by a jury of all eight counts in his fraud trial. The big news here is that what I've started to call the Schultz defense isn't working; it's named after Sergeant Schultz in 'Hogan's Heroes,' in which he would look the other way and pronounce, 'I know nothing, nothing!'

For years, Ebbers has blamed underlings for cooking the books to overdeliver earnings. And he claimed he never knew of the chicanery. Let's put aside for a second the question of whether anyone would ever want a CEO who was that ridiculously hands-off. More to the point, is it credible? Obviously the jury in this case thought not.

The failure of the 'Schultz' defense has to strike fear into Enron's Ken Lay and HealthSouth's Richard Scrushy, both of whom are using the same strategy. I'll be here knitting shrouds if anyone needs me.


Jeff - 3/16/2005 2:34:27 PM
Ethics is taught at home. Ebbers apparently missed the lesson or was never given one. So now we teach ethics in the courts. Thankfully there are some who still see what Ebbers did was wrong. I'm sure he has weasled away plenty of our money (investors) that his wife will live comfortably from here on out.
David - 3/15/2005 7:54:40 PM
Is it some kind of addiction? Yes, I think it is. It's fed throughout the business world by underlings who give CEOs exactly what they think the big cheeses (TBC) want. Eventually, several layers down, aspiring climbers ask 'WWTBC do?' The fantasy answer may or may not reflect TBC's wishes and ethical standards or the lack thereof.
Kent - 3/15/2005 4:45:36 PM
Shareholders everywhere can celebrate the failure of the 'Shultz' defense.

But any joy I felt over Ebbers' conviction was wiped out when I saw the anguished look on Ebbers' wife face following the verdict. Her guy may be spending the rest of his life in prison. Why are CEOs like Ebbers so greedy and stupid? Why do they put their families at risk just to squeeze a few more millions out of their companies? Is it some kind of addiction?


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