I loved this quote in this morning’s Wall Street Journal about former WorldCom CEO Bernie Ebbers’ taking the stand in his own defense. “I know what I don’t know,” Ebbers said. “I focused on the area that I thought I could handle.” It’s the epitome of decentralized management, isn’t it? No CEO can understand all the nuts and bolts of his company, so why try to understand any of it?
If we are to believe Mr. Ebbers’ testimony, he was just a simple hick who got lucky enough to run a company that somehow, using only his skills as a “coach,” (and he was a basketball coach for a high school in Canada), grew to become one of the most sucessful telecom companies ever. Then, of course, it morphed into Ground Zero for the largest fraud and then the largest corporate bankruptcy ever.
I’ve met Bernie a few times. I know he didn’t ever use email and regularly passed specific financial questions to his CFO, Scott Sullivan, the self-confessed mastermind of the fraud. But I gotta wonder, if he was really that dumb, what the heck did he have to speak to Sullivan about every day for hours over the course of a decade? Did they discuss the mild Mississippi weather? The Mets (no baseball team in Mississippi)?
In the end, Bernie’s legacy is set, whether or not he’s convicted. It’s that because of him and the Sarbanes-Oxley act that followed the collapse of WorldCom an others in 2001 and 2002, CEOs now must personally take responsibility for the numbers put out under their company’s name.
Ding Dong, the dummy defense is dead.