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February 11, 2005

Chief Ethical Officers?
Former Tyco Internatonal CEO L. Dennis Kozlowski stands between toga-clad women in a frame copied from the videotapes shown to jurors at his trial in New York, October 28, 2003.

Former Tyco Internatonal CEO L. Dennis Kozlowski stands between toga-clad women in a frame copied from the videotapes shown to jurors at his trial in New York, October 28, 2003. The tape was made at the birthday party Kozlowski held for his wife in Sardinia that cost $2 million.(AP Photo/HO/New York district attorney)

Three former stars in the corporate world were on trial this week in three separate cases -- raising many questions about corporate ethics, individual responsibility and the role these cases may play as cautionary tales.

The defendants are:

Dennis Kozlowski, the former boss of Tyco, charged with first degree grand larceny and securities fraud for allegedly looting about $600 million from his company.

Richard Scrushy, the former chief executive of Health South, charged with conspiracy, money laundering, obstruction of justice, fraud, and perjury in connection with a $2.6 billion accounting fraud at his company.

Bernie Ebbers, the former head of WorldCom, charged with fraud, conspiracy, and false accounting for his role in driving the company $11 billion into debt and leading it into collapse.

All three men face long prison terms if they are found guilty -- sentences that were made tougher in the public uproar over corporate scandals. Is this good for American business and for the country?

Joining the panel regulars are Melanie Kirkpatrick, associate editor of the editorial page, and Holman Jenkins, columnist and member of the editorial board.
Paul Gigot
Paul Gigot
"It's pretty unusual to have three high-profile cases like this with CEOs on trial, and Ken Lay of Enron coming soon to a courtroom near you. Do these cases tell us anything about the state of the business ethics and culture nowadays?"
Melanie Kirkpatrick
Melanie Kirkpatrick
"Let me quote Peter Drucker, the management guru and a frequent contributor to our pages. He's now 95 years old and when he was asked this question a couple of years ago his answer was that he had lived through four periods of financial scandals since the 1920s, and he thinks the worst is yet probably to come."
Daniel Henninger
Daniel Henninger
"I think the headline over this story should be, 'CEOs Gone Wild,' just like those late-night videos, 'Co-eds Gone Wild.' The fact is, most co-eds don't run around with their tops off, and most CEOs aren't crooks. I think these really are stories about individual failure and weakness, not a systemic collapse of American business ethics."
Holman Jenkins
Holman Jenkins
"But still, you have to think that just the example of Kozlowski or Scrushy going to trial has to put the fear of God in a lot of CEOs who are going to say, 'I don't want to be like him; I'm going to be extra careful and be extra scrupulous about how I keep the books.' I think that's a good effect. That's the best way to change the behavior of the other people who are out there."

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ARCHIVE: WSJ - Paul Gigot Commentary


ARCHIVE: WSJ - Daniel Henninger Commentary


ARCHIVE: WSJ - Holman W. Jenkins Jr.