Whistleblower speaks on ethics at USD

A whistleblower who exposed the largest corporate fraud in history encouraged members of a Vermillion audience Tuesday to put themselves in the shoes of WorldCom employees who became complicit in the wrongdoing — what would they have done differently?

Having the strength to confront and expose wrongdoing in a corporate setting is not something that happens overnight, according to Cynthia Cooper.

"I'm convinced that character is not forged at the crossroads of some major decision we make in our lives," she said. "I very much believe that character is built decision by decision. The foundation of our character is laid brick by brick."

Cooper was one of Time Magazine's Persons of the Year in 2002 for her role in exposing the $3.8 billion fraud that took place at WorldCom. She has since gone on to write a book about her experiences as a corporate executive, has given motivational speeches about business ethics and is CEO of The CooperGroup, LLC, a firm that provides professional services that include fraud prevention and detection.

Cooper delivered the 2010 Arthur A. Volk Accounting Syposium/Ethics Lecture at the University of South Dakota's Wayne S. Knutson Theatre. Her speech was entitled "Ethical Leadership for the 21st Century,"

Individuals should write down a code of ethics, so they are prepared for the decisions life may demand of them.

"You need to know what you stand for. That's number one," Cooper said. "Ask yourself if it's legal. If the answer is, 'no' you can easily stop there."

However, what is legal and what is ethical are not always the same, she warned.

Another important factor is having the courage to do what is right.

"I can't sit here and tell you that I was always a pillar of strength throughout this process," Cooper said. "I wasn't. There were times when I was literally scared to death. My hands were shaking. My heart was pounding."

Two accountants who colluded in the fraud at WorldCom had gone so far as to write resignation letters because of their discomfort with what they were being asked to do by their bosses. However, they never turned them in, Cooper said. In court, one of the accountants said he was the sole provider for his family and was afraid of losing his job. He had to serve jail time despite reassurances from his boss that he wouldn't get in trouble because he was just following orders.

From a young age, Cooper said her mother told her to think about the consequences of actions and to never be intimidated into doing something that is not right.

"As much as anything, I think it has really helped me at times when I was really scared," Cooper said.

Cooper and a handful of colleagues unearthed accounting tricks that showed billions of dollars in illusory earnings for WorldCom, which filed for bankruptcy in 2002. As their findings were shared with superiors who were aware of the fraud, Cooper said they faced intimidation. They also had to watch as the company they worked for collapsed as a result of the fraud, with tens of thousands of employees being laid off.

Cooper said there were times when she suffered from depression, and there were long periods when she could not even get out of bed.

"It was all so completely overwhelming to me," she said. "I cried many a tear. I lost a tremendous amount of weight.

"Everybody wanted to help me, but this was a path I had to walk," she added. "For me, it was my Christian faith, my family and my friends that really helped me navigate the storm and come out on the other side."

The type of accounting fraud committed by WorldCom executives was difficult to detect because the fudging occurred after the books were "closed." The rules in place for external auditors were not enough to uncover the discrepancies, and executives simply lied to them.

One executive said that once the first fake entries were made, it was hard to stop. Cooper called the case of WorldCom and the many other corporate fraud cases that have been uncovered in the last decade tragic stories about people and choices.

"I think pride, more than greed, really came into play with a lot of these big companies," she said. "The executives at the top of the companies were used to winning and being praised by Wall Street. They didn't want to see their companies fail."

Cooper said that legislation aimed at enhancing accounting standards such as the Sarbanes–Oxley Act of 2002 are mostly good. However, regulators are still making adjustments to find the right balance between holding companies accountable and not stifling business.

Cooper said she hopes members of the audience will remember her words when faced with their own crossroads in the future.

"It's been a privilege for me to be able to share (my story) and feel like, hopefully, it will make a difference," she said.

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