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Calling WorldCom to Account


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Editor's Rating: star rating

Whistleblower Cynthia Cooper gives a nuanced account of how a staff of decent folks went so far astray

Extraordinary Circumstances:

The Journey of a Corporate Whistleblower

By Cynthia Cooper

Wiley; 402pp; $27.95

Early in her story of the WorldCom implosion, whistleblower Cynthia Cooper offers a graphic description of events as they developed. With billions of dollars in shareholder value at stake, accountants at the once-soaring telecom giant were asked to cover up huge losses. "To meet earnings expectations, they'd have to make adjustments in the hundreds of millions of dollars with no support and only the hope that the problem would correct itself," Cooper explains. The accountants agonized over ethics and criminal liability, withdrew emotionally from their families, and composed resignation letters. Ultimately, fearful of losing not-easily-replaced jobs, they succumbed, cooking the books with made-up profits. "I just really pulled some [accounts] out of the air," one of them said.

Such blow-by-blow detail is what makes Cooper's Extraordinary Circumstances: The Journey of a Corporate Whistleblower well worth reading. Of course, the tale of WorldCom and its Southern wheeler-dealer CEO Bernie Ebbers is well-known. Starting in 2000, company executives resorted to criminal deeds in a desperate effort to maintain their success of the late 1990s. In mid-2002, WorldCom's internal audit vice-president, Cooper, and her team discovered the deception and informed the board. Cooper earned accolades for taking a stand, while Ebbers was sentenced to 25 years in federal prison. As this book hits stores, Cooper will no doubt get further kudos for her virtue. But what really bears saluting here is her nuanced account of how a staff of decent human beings could go so far astray. Compelling, too, are the author's memories of her own highly emotional WorldCom experiences, even though her prose style is no better than workmanlike.

Shady activity can be easy to rationalize, Cooper reminds us. One accountant, Troy Normand, said he gave in because he had become the family's sole earner after his wife had a miscarriage. Another observed that the misdeeds were far removed from her daily job and the good people she enjoyed working with.

Some of the background in Cooper's own narrative seems unnecessary. But in time, we learn just why it's important to know that Cooper is not only a CPA but also a certified fraud examiner and information-systems auditor. Finding out that she is a mother of two and her family's chief breadwinner helps us appreciate her struggle over whether to proceed with her sleuthing against management's wishes. Of less interest are long sections on the author's high school graduation and a move to Atlanta.

As the book unfolds, Cooper's fly-on-the-wall account of her investigation is engrossing. In May, 2002, as the company's stock plummeted and after Ebbers was fired, Cooper read a newspaper article in which a former WorldCom analyst alleged capital-spending abuses at the company. This prompted her to initiate a capital-expenditure audit. Expecting to find nothing, she soon discovered a discrepancy under an accounting entry called "prepaid capacity." When no one was able to explain what the term meant, Cooper decided to probe deeper.

Attempts by WorldCom's accountants to stonewall the audit only fueled her suspicion. Using special software, one of her tech experts clandestinely sifted through accounting records and discovered a maze of "nonsensical" entries pointing to large dollar amounts being moved from WorldCom's income statement to the balance sheet—bookings that effectively increased the company's profit.

Cooper's willingness to reveal her innermost thoughts as she dug makes for gripping reading. As she was pressured by accounting executives and even the board's audit-committee chair to postpone the hunt, she persevered, although she knew it could cost her her job. She tells her thoughts while marching down a long hallway on her way to interrogate a series of managers: "I'm nervous. As I hold up my hand, my fingers are shaking. My heart is pumping wildly."

The book ends with an unnecessarily long recap of the Ebbers trial, with which many readers will already be familiar. And Cooper's parting thoughts are a list of sometimes vague and hardly original ethical rules to live by. But they don't detract from her perceptive and candid story.


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