WorldCom: Background and Business Trajectory

WorldCom: Background and Business Trajectory
In 1983, two American entrepreneurs, Murray Waldron and William Rector chalked out a new business venture in the field of telecommunication. The proposed business venture was named Long Distance Discount Services (LDDS) as it dealt with long-distance calls; this became operational in 1984 under the administration of Bernard Ebbers. Under the able leadership and management of Bernard Ebbers, the company began to grow via mergers and deals with other telecommunication companies (ICMR, 2020). The first noticeable merger occurred in 1989 when LDDS acquired Advantages Company, which dealt with long-distance telecommunication. This merger triggered a series of mergers throughout the 1990s, and another significant one occurred in 1992 when the LDDS acquired Advanced Telecommunications Corp. (ICMR, 2020). Between the period from 1991 to 1997, the company acquired approximately 65 companies with the expense of sixty billion dollars; during the process of successive mergers, the company also accumulated debt worth 41 billion dollars. However, the largest and most significant merger was in 1998, when the company acquired MCI Communications Inc. (Francis, 2015).
After continuous expansion and success, the company changed its name to WorldCom in 1995. Because of its business policies based on acquisitions and mergers, the company grew into a telecommunication giant in the 1990s and became the second largest telecommunication company in America (Santa Clara University, 2003). Consequently, its stocks grew substantially, and after the advent of the Internet in the public sphere, the value of its stock increased as high as sixty dollars per share (Francis, 2015). All these acquisitions and expansions made this company one of the prominent names in the telecommunication industry; afterward, the company expanded its operation to cover the whole range of telecommunication services and managed to make a worldwide presence.
WorldCom Fraud: Background and Scenarios that Facilitated Fraudulent Practices
Based on financial and business experts' opinions, it is obvious to affirm a series of poor and ill-conceived management decisions. These decisions were characterized by imprudent business acquisitions, poorly managed mergers, and excessive services and products, the company's working environment was set to facilitate fraud and corruption (George, 2021). Non-professional and intimate ties between company executives and vendors came to be observed by the professional and diligent employees of the company. For instance, Kim Emigh, a budget analyst in the company, was one of the first to observe the malpractice of awarding contracts to favorable contractors or contractors being paid extraordinary amounts. However, his queries were quashed with the threat of termination (George, 2021). In 2000, Kim got his first experience of the company's fraudulent practices when the company directors asked him to "misclassify costs in accounting books." This was Kim's first glimpse of fraudulent practices in the company.
Several factors triggered and facilitated the company's fraudulent practices; however, WorldCom's business's continuance slowing down was the most significant contributor. Consequently, its line costs ...