Discussion Of The Adelphia Communications Scandal?

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Introduction In today’s competitive and highly volatile market, the consumers’ trust and confidence is perhaps the most significant asset a company can have. In a blink of an eye, a company can lose years of progressive relationships and in effect, economic status, if its reputation is tainted, or worse, proven publicly to be corrupt. This is a lesson learned the hard way by Adelphia Communications Company, a business worth $3.6 billion and the country’s sixth largest cable company at the time (Leonard, 2002). This paper will examine how the executives of Adelphia Communications violated the trust and of the company’s shareholders and the trust of the larger public by engaging in the unjust enrichment and fraud. These two violations of business ethics will be discussed through the lens of deontological ethics. Discussion of Kant’s Categorical Imperative will be applied to provide further analysis of the two ethical issues identified. The Adelphia Communications Scandal The Adelphia Communications Scandal in 2002 dominated the corporate mainstream when the company’s management prepared financial statements that failed to represent the economic reality of the company by excluding billions of dollars of debt. The Securities and Exchange Commission (SEC) calls the case “one of the most extensive financial frauds ever to take place at a public company” (Markon & Frank, 2002). At the center of the case is John Rigas, the founder, former chairman, chief executive of the company and the patriarch of the Rigas family. Also arrested are his sons, Timothy and Michael, both former executive board members, James R. Brown, former Vice President of Finance, and Michael C. Mulcahey, former Director of Internal Reporting. The lawsuit filed by th... ... middle of paper ... ... the jury could not agree on verdict. He later plead guilty in making false entry in Adelphia’s records. For this he was sentenced to ten months of home confinement and demanded to pay a fine of $2,000.000 (Barlaup, Hanne, & Stuart, 2009). James R. Brown, the star witness, admitted to orchestrating much of the alleged fraud, remains free and awaits sentencing (Gilliland, 2012). The Rigas family still lives in Coudersport and still runs a cable company. In the years after trial. James R. Brown, Michael Rigas and a small team of former Adelphia Communications employees have reestablished the two private cable systems which were not ordered to be surrendered and sold. Currently, the new company has 35,000 subscribers in 12 states. The new company’s name is Zito Media, draws on their father’s native Greek (Gilliland, 2012). Loosely translated, it means “new life.”

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