jail © Mirko Vitali _44633908
© Mirko Vitali

The Financial Times writes:

Before Bernie Ebbers was a convicted felon, and when he was only halfway to becoming a telecoms billionaire, he sounded like a management guru.

In 1997, the former WorldCom chief executive and onetime basketball coach, who died last week, compared himself to a cheerleader, with a hands-off managerial style of the sort now encouraged everywhere. “When you come to the table with a physical education degree like I do, you don’t know a lot about the technical stuff,” he quipped to The Guardian.

He tried a similar know-nothing line at his trial in 2005, when he argued “I don’t know technology, and I don’t know finance and accounting”. It was spectacularly unsuccessful. He received the stiffest sentence of any of the scandal-hit chief executives of the time: 25 years, of which he had served 13 when released on grounds of ill health last December, a shadow of the cigar-toting dealmaker, in cowboy hat and boots, who had once kept a yacht called Aquasition.

Ebbers was easy to fit to the template of greedy corporate villain. WorldCom served as his personal bank, loaning him some $400m. His obsession with cutting costs and hitting revenue targets encouraged a comparatively simple accounting fraud that ultimately brought him down, even as he declared his innocence.

Still, Ebbers may have been the exception, not the rule. Fewer than 10 per cent of white-collar criminals are driven by greed, according to Will Harvey of University of Exeter Business School and Navdeep Arora, a former McKinsey partner.

More troubling is their conclusion that individuals “sleepwalk over ethical lines” and that it can happen to anyone. Indeed, Mr Arora told me, “the factors that made them successful in the first place are the very factors that come together and cause this type of behaviour”.

Mr Arora had exceptional access to the 70 offenders he studied for a yet-to-be-published paper: he was serving a two-year sentence for fraud alongside them in a US federal open prison. Even taking into account that the guilty men may be trying to justify their actions with hindsight, the findings are powerful. Some of the triggers are familiar: hubris, for instance, and self-interest. Mr Arora admits that determination to please his client — which led him to approve an unethical side contract that turned fraudulent — was driven in part by his desire to make senior partner.

But these lawbreakers also talked about fear of failure, desire to protect their staff (“They counted on me — as the founder,” explains one), lack of resources, and pressure to perform, sometimes fuelled by low self-worth, stress or personal problems, from grief, to gambling, to alcoholism. 

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