Cynthia Cooper just wanted to live a quiet life working for the pride of Mississippi - WorldCom. But as Vice President of Internal Audit she discovered some suspicious entries in the company's books. Her tenacious investigations uncovered the largest fraud in corporate history. Cynthia knows a thing or two about being caught up in workplace ethical dilemmas. In 2002, she was the key whistle blower in her company’s $3.8 billion accounting fraud case, which eventually added up to $9 billion and the imprisonment of five executives, including CEO Bernie Ebbers.
"Don't ever allow yourself to be intimidated," Patsy Ferrell would say to her young daughter, Cynthia, after a grade-school bullying incident. Cynthia remembered that exhortation years later when she discovered fraud of huge proportions at WorldCom. Faced with the decision of vigorously investigating suspicious transactions or looking away, she did the honourable thing and pursued the crimes to the end - but not without months of trepidation, a queasy stomach, and shaking hands.
Her story unfolded in a time when WorldCom’s stock value and earnings were on the decline, putting pressure on the firm to deliver better results for investors. In 2000, two of the company’s mid-level managers, Betty Vinson and Troy Normand, encountered a significant ethical dilemma. They were five days away from having to release earnings to the public, and there was an error in the books they couldn't resolve: The line costs expense had jumped up dramatically and was completely out of line with the company’s revenues. The expenses had been moved from the income statement to the balance sheet, cutting it as an asset to make the company seem more profitable. Troubled and feeling the pressure of the approaching deadline, the two managers confronted Former WorldCom CFO Scott D. Sullivan. Instead of providing direct answers, he instructed Vinson and Normand to cover up the mistake by drawing on excess reserves. That way, everything would seemingly be aligned with the expectations of external auditors and Wall Street analysts, and they could be given time for the error to “reveal itself in future quarters.” Fearful of losing their jobs and financial security for their families, Vinson and Normand followed the orders of their superior, changing the numbers on the balance sheet and hiding the truth from the public. Like many companies that made lots of acquisitions, WorldCom was required by a new accounting rule to write down the "impairment" of the assets it had acquired. WorldCom's write-down would have been huge – more than $20 billion. Sullivan planned to take it in the second quarter. Also, in the second quarter he planned to write down all those improperly capitalized expenses. There aren't many times when a $3.9 billion write-down would look small, but this was one of them. The problem would have been gone as of July. But, Cynthia caught it in June. Sullivan therefore needed Cynthia to delay her Internal Audit. Growing suspicious of her superior’s increasing persistence, she withstood the pressure to play along. Once Sullivan realized the auditor would not back down, he decided to come clean, justifying his poor decisions by telling her “it was difficult to stop” cooking the books after the first time he manipulated the numbers.
Cynthia didn't buy it, and with the help of her internal auditing team, she sniffed out the discrepancies. She and her team of auditors worked together and often at night and in secret to investigate and unearth the fraud at WorldCom. As soon as she had something concrete to show, she immediately went over her boss’ head and called the chairman of the board’s audit committee. He arranged to meet with her and the company’s new auditor, KPMG. Two weeks later WorldCom announced it would restate earnings by $3.9 billion – the largest restatement ever. The importance of Cooper's refusal to postpone her audit, as Sullivan had asked, is even greater than it may appear. Facts uncovered by the company, combined with the memo Sullivan wrote to the board in a last-ditch attempt to defend himself, show that if she had been ‘a good soldier’, the whole incredible mess might have been concealed forever. She went on to become one of the world’s most famous whistle blowers. Vinson and Sullivan received prison sentences of six months and five years, respectively, and Normand received three years of probation. WorldCom CEO Bernard Ebbers is still serving a 25-year term for his role in the fraud.
The decision to come forward did not come easily to Cynthia, as she contemplated the potential repercussions of her actions. Despite some high-profile exceptions — such as the IRS’ record $104 million award to UBS whistle blower Bradley Birkenfeld — corporate truth-tellers don’t always come out on top. Most whistle blowers end up leaving their companies (voluntarily or involuntarily) within a year of speaking up, and many others suffer through hardships such as long-term unemployment, financial instability, anxiety, alcoholism, social isolation, and marital problems. Cynthia herself remained a VP and never got promoted. Moreover, she never received any gratitude for her relentless work and instead had to face resentment from employees and fellow workers. She experienced depression and major weight loss throughout the ordeal, which she described as “by far the most difficult thing I've ever been through.” “It was literally all I could do but get out of bed and put one foot in front of another,” she said. “I realized I had a choice to make. I could either let this ruin my life or I could try and find a way through it and do something completely new.” Most whistle-blowers say they would not do it again. But Cynthia maintains that she would do it all over again because she firmly believes that it was the right thing to do. She found herself at a crossroads where there was only one right path to take.
As a WorldCom employee, Cooper had never intended to go public (a member of Congress had released her Internal Audit memos to the press), and the drama she was watching from the inside was the downfall of a home town company she loved. She still feels empathy for the managers, board members, auditors, and other employees who were working at WorldCom at the time — even those who were involved in the scandal. “The people who were complicit with the fraud were not just numbers to us—they were people who we had worked with for many years,” Cooper said. “Nobody wakes up and says, ‘I want to become a criminal today.’ It’s a slippery slope, and people go down that slope one step at a time.” “We all have the power of choice,” she added. “You can give it away, but you all have the power of choice, so prepare yourselves.”
On personal front, Cynthia earned her Bachelor of Science in Accounting from Mississippi State University and a Master of Science in Accountancy from the University of Alabama. She is a Certified Public Accountant (CPA) in Georgia, Certified Information Systems Auditor (CISA) and a Certified Fraud Examiner (CFE). She married Lance Cooper in 1993 with whom she has two children, Stephanie and Anna Katherine. Before joining WorldCom, she previously worked for the Atlanta offices of public accounting firms PricewaterhouseCoopers and Deloitte & Touche. In 1994, Cynthia landed a job in internal audit at WorldCom - then known as LDDS - in Jackson, Mississippi. When the company moved to her hometown of Clinton, Mississippi, she thought she would settle into a comfortable niche, surrounded by her husband, children, extended family, and lifelong friends. But then her nightmare started.
She stayed for two years until MCI (that had merged with WorldCom) had emerged from bankruptcy. She knew that if she left, many of her staff would lose their jobs. So she stayed until most had found other employment. After leaving MCI, she started her own consulting firm. In addition, she speaks to professionals as well as high school and college students about workplace ethics and shares her experiences and lessons learned. Her book about her life and the WorldCom fraud, “Extraordinary Circumstances: The Journey of a Corporate Whistleblower”, was published in 2008. She wanted to share the story because she believed there were valuable lessons that can be gleaned and shared with the next generation. She also hoped that it might encourage others who find themselves going through one of life's storms or faced with tough choices. Profits from the book were given to universities for ethics education. She was named one of three "People of the Year" by Time magazine in 2002. In addition, she was featured as one of the 25 most influential working mothers in Working Mother Magazine. She now maintains an office in Brandon, Mississippi.
Her story speaks of the importance of living a life of integrity and making decisions we can look back on without regret. It illuminates the value of developing strong boundaries, keeping our paths straight, and guarding against the temptations and trappings of material success.
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