The following editorial appeared in the San Jose Mercury News on Thursday.
Corporate criminals are getting hard time.
Bernard Ebbers, former CEO of WorldCom, was sentenced to 25 years Wednesday. The $11 billion accounting fraud at WorldCom, once the nation’s No. 2 long-distance company, resulted in the largest bankruptcy in U.S. history.
Three weeks ago, John Rigas, the founder of Adelphia Communications, and his son, Timothy, the ex-finance chief, got 15 and 20 years for looting hundreds of millions of dollars from the company.
Serious crimes deserve serious time.
These crimes did more than disappoint stockholders who saw an investment evaporate, though the $2.2 billion loss WorldCom shareholders suffered is plenty bad. They cost people their jobs and their retirement savings. WorldCom used fraudulently inflated earnings to acquire other companies. Frauds on this scale shake investors’ faith, which is necessary for the stock market to function.
As other corporate executives go to trial – some from Enron are waiting – they might look at what’s been happening to those who get convicted and consider a plea bargain.
Ebbers, 63, took the stand and offered that most unsatisfying of CEO excuses: He didn’t know what was going on in the company under him. He must have been one crackerjack CEO.
More persuasive was his apparent attempt to atone. He has donated about $96 million to charity and given up almost all his remaining assets, about $40 million, to settle a civil suit.
But the damage goes far beyond what Ebbers can ever repay in money. And that’s why Ebbers and the Rigases, along with criminals who hurt people in other ways, must pay by losing their freedom.
Local journalism is essential.
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