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Friday, 5 July, 2002, 14:42 GMT 15:42 UK
Tough bosses reap what they sowed
WorldCom headquarters in Clinton, Missouri
Bernie Ebbers was removed from the chief executive post in April


The founder of WorldCom, Bernie Ebbers, had so much praise heaped on him in the 1990s that, even now, many just can't believe that his company perpetrated the biggest fraud in history.

Mr Ebbers successfully cultivated the image of a "popular hero" who brought jobs and wealth to the poorest state in America.


"I thought Bernie Ebbers was very arrogant and pompous"

Lynne Jeter, Mississippi Business Journal
It was the classic "rags to riches tale" of a basketball coach who started his business career by setting up a small chain of hotels, then formed a regional phone operator and finally put together the most feared of global telecoms giants.

And yet, according to one journalist in Mississippi who followed WorldCom from its inception, the seeds of the disaster at WorldCom were sown from the start by the aggressive autocratic management style of Mr Ebbers.

"Arrogant and pompous"

Lynne Jeter of the Mississippi Business Journal met Bernie Ebbers on many occasions and didn't think much of him.

"I thought Bernie Ebbers was very arrogant and pompous....I was very put off by that," Ms Jeter told the BBC.

Bernie Ebbers, former WorldCom chief executive
Ebbers: started his business career with a chain of hotels

"He was very dismissive of everyone - very dismissive of the press, very dismissive of critics."

Ms Jeter says that while there is still surprisingly little open criticism of Mr Ebbers in WorldCom's home town of Jackson, stories are now emerging of his aggressive management style, with some rumours that senior managers had been fired simply for selling some of their WorldCom shares.

She says people have told her that Mr Ebbers would get print outs to monitor which managers may have reduced their holdings in WorldCom stock.

Diversified portfolio

Such an atmosphere of fear - where employees don't have the confidence to challenge their boss - is bound to lead to mistakes in the end.

The fact that so many employees had not just their job tied up in WorldCom, but also most of their savings, also meant they were less likely to "rock the boat" a little bit, for fear of what the consequences might be.

The stock watcher, Axxell Knutson, of Trading Weapon.com in New York, agrees the practice of forcing employees in a firm to have most of their shares in their firm is "ridiculous".

"You have to be diversified in your portfolio and realise that a blimp could crash into the headquarters building of any investment that you have and wipe the entire company out," he said.

"If indeed something like that were to happen you have to ask the question well what kind of damage does that do to my portfolio and the answer has to be, well not much."

Bullying tactics

But many critics say the tone for the aggressive business culture of the 1990s was set by the fact that Microsoft was allowed to get away with illegal bullying tactics and yet has still to be handed any punishment.

Larry Ellison, Chairman of Oracle
Ellison: believes Bill Gates calculated benefits would outweigh possible penalties

Larry Ellison, the head of the Oracle software firm, told the BBC that Bill Gates of Microsoft had calculated that the possible penalties from its aggressive illegal behaviour would be dwarfed by the gains from putting its competitor in internet browsers, Netscape, out of business.

"Microsoft now has a monopoly on browsers," Mr Ellison said.

"We know it's of huge benefit, huge value to Microsoft - will there be a corresponding offsetting penalty? Who knows?

"It's like robbing the bank, getting $50bn or $100bn out of the bank and then they fine you $10,000 for having robbed the bank.

"If you have a very small penalty for a very huge robbery, then from Microsoft's standpoint breaking the law turned out to work quite well."

Many people leapt to Microsoft's defence when it was found guilty of illegal practices, arguing that the company's status as a great US success story justified leniency.

Indeed, the incoming Bush administration took the pressure off the Microsoft by abandoning the efforts made by President Clinton's officials to break up the Bill Gates empire.

But in making that decision, President Bush may have left himself open to charges that he was indicating a willingness to tolerate an arrogant and bullying business culture that appears to have played a key role in the shocking financial scandals that have emerged in the past year.

 WATCH/LISTEN
 ON THIS STORY
World Business Review - part one
"Bernie Ebbers... is currently the man everyone wants answers from"
World Business Review - part two
"Apparently, the company [WorldCom] mixed up two different types of costs"
World Business Review - part three
"Isn't the whole culture of a firm determined by who's at the top?"
WorldCom

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04 Jul 02 | Business
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