Chapter 8, Ethics at Work MLittle

Question:

Carlo di Florio discusses seven elements of an effective compliance and ethics program for corporations. While in the case of Adelphia, all seven elements appear to have been neglected, in your opinion, which three of the elements discussed by di Florio would have been most useful in preventing the improper business practices at Adelphia? Explain your answer.

In the case of Adelphia, I believe the following three elements would’ve been most useful in preventing improper business practices at Adelphia:

a. Oversight – As with the next two elements, I believe this was not in place because of the long-standing family ownership of the company. It is hard to have an oversight committee watching over what the other family members are doing, when the oversight committee members are also taking advantage of the fact that they are part of the ownership family.

b. Leadership consistent with effective ethics and compliance program – Again, since the inception of the company, the Rigas family was accustomed to the business paying for anything they wanted. And, since the father and leader of the organization did not have ethical values in taking care of the company and its stockholders, neither did other family members and cronies that worked for him. The tone at the top was squandering money. And, this attitude permeated to others in leadership positions.

c. Auditing and Monitoring – It’s quite apparent that the auditing and monitoring of what was happening at Adelphia was not very solid, if happening at all. The book didn’t really describe a lot about the auditors’ role in the fraud, but they sure weren’t apt at uncovering the fraud; especially items that should’ve been pretty blatantly seen, such as the pilfering of money into a golf course.