Former WorldCom VP Cynthia Cooper spoke at the CRO Spring Conference of ethical choices, loyalty and recovery after company collapse

By Dennis Schaal

Cynthia Cooper said she was having her hair done at a salon one morning in 2002 near her home in Mississippi when WorldCom Chief Financial Officer Scott Sullivan called her up and “chastised” her for informing the company’s auditor, Arthur Andersen, about improper accounting entries and transfers for line costs that had no support or foundation.

The dressing down from Sullivan was only the beginning of the rough treatment and periods of duress for Cooper, then WorldCom’s Vice President of Internal Audit. What followed included unwarranted allegations that her whistle-blowing activities stemmed from her being a scorned lover, visits from the FBI, subpoenas, reporters canvassing her neighborhood, and ultimately bouts of weight loss and depression.

“For me, this has been the most difficult thing I have gone through in my lifetime,” Cooper told some 250-300 attendees during her keynote address at The CRO’s Spring Conference at the Union League Club in New York March 27.

“There were times when I was scared to death,” Cooper told the audience, adding that she had to dig down to find her courage and push forward.

That push helped bring about the collapse of WorldCom in what was then the largest fraud in corporate history. It culminated in one-time CEO Bernie Ebbers getting a sentence of 25 years in prison, five employees copping pleas to securities fraud, and Cooper being named one of Time’s Persons of the Year in 2002.

Cooper’s speech kicked off the one-day event and took conference attendees through the highlights of the collapse of the telecom giant and related the scandal to all of the ethical choices that people have to make every day in corporate America and in their non-work lives, as well.

“It’s really a story about people and choices,” Cooper said of the WorldCom fraud. “We all have the power. No one can take it away from us.”

Cooper recounted part of the WorldCom story through the perspective of Betty Vinson, the ex-director of management reporting who was sentenced to five years in prison, and Troy Normand, the former director of legal entity accounting, who got probation.

Both caved into pressure from superiors at WorldCom to fudge the financials to help the over-extended company meet Wall Street analysts’ expectations.

Cooper noted that WorldCom was the only Fortune 500 company in Mississippi and that both Vinson and Normand wrote resignation letters out of concern about the fraud, but never submitted them out of fear of losing their jobs.

Sullivan had appealed to their loyalties and assured the duo that if anyone got into trouble for the accounting irregularities, it would be him, Cooper said.

“If anyone tells you that, don’t believe them,” Cooper said.

She added that Vinson and Normand were just average citizens “who made very bad decisions.”

Cooper said that she too had to deal with the loyalty issue. She said she had respect before the fraud was uncovered for CFO Sullivan and Max Bobbitt, who chaired the board’s audit committee, and then had to watch as WorldCom collapsed and thousands of her neighbors and coworkers lost their jobs and their life savings.

Fear, false pride and greed all came into play at WorldCom, Cooper said, just as they do every day in people’s lives.

The lessons of WorldCom, showing that people need to be strong and exercise their power to make ethical choices, can be applied in everyone’s lives, Cooper said.