I often use Bernie Ebbers, the infamous former CEO of bankrupt WorldCom, as an example when discussing unethical leadership. "At his corporate fraud trial, Ebbers said on the stand that he was unschooled in accounting and finance and that he left money decisions to his finance chief, Scott Sullivan. Ebbers was accused of orchestrating an $11 billion fraud which led to the largest bankruptcy in US history. "I know what I don't know," said Ebbers, "I don't, to this day, know technology. I don't know finance and accounting." Ebbers' testimony focused on his poor grades in school and his lack of knowledge about matters of finance and bookkeeping."
I tell students that I am thankful that Mr. Ebbers was found guilty on ALL counts. If he was declared not guilty, I would have to advise students to avoid learning anything, because that would be the best way to make a lot of money, and would offer the best defense against prosecution.
The WSJ today ran a story titled "Inflated Credentials Surface in Executive Suite" in which it stated that "Inflated academic credentials in the nation's executive suites may be more common than generally thought. A survey of 358 senior executives and directors at 53 publicly traded companies has turned up at least seven instances of claims that individuals had academic degrees they don't have."
After reading this article, I am not sure what advice to give students- to cheat, because it really pays, or to consider every action as a reflection on one's character.
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For the interested, I have picked some juicy extracts from the article. "Among the executives whose credentials don't check out: Dennis Workman, chief technical officer at Trimble Navigation Ltd., a big maker of global-positioning-system devices; and James DeHoniesto, until Wednesday the chief information officer at Cabot Microelectronics Corp., a supplier of chemicals and pads used to polish microchips. Misstatements have cost top corporate officials or directors their jobs in the past few years at companies including retailer RadioShack Corp., vitamin maker Herbalife Ltd. and Usana Health Sciences Inc.
One of the discrepancies involves Mr. Workman, Trimble's chief technical officer. According to his biography in the Sunnyvale, Calif., company's annual report, Mr. Workman holds a master's degree in electrical engineering from the Massachusetts Institute of Technology. M.I.T. says Mr. Workman attended the school, studying physics for two semesters, but never earned a degree.
A corporate biography claimed Mr. DeHoniesto, the Cabot Microelectronics chief information officer, had a bachelor's degree in computer science from the University of Pittsburgh. Although he did attend Pitt's school of engineering in the 1980s, the senior manager didn't earn a degree, the school says. After Cabot received inquiries from the Journal about the matter Wednesday, Mr. DeHoniesto announced his resignation from the Aurora, Ill., company. He couldn't be reached for comment.
A biography of Sam Box, until recently the president of Tetra Tech Inc., appears repeatedly in the company's SEC filings identifying him as the holder of a bachelor's degree in civil engineering from the University of California. After receiving inquiries from the Journal last month prompted by Mr. Minkow's work, the Pasadena, Calif. environmental-engineering company said Mr. Box "admitted that he does not have a college degree," and that it would demote him to vice president. A spokesman for Tetra Tech, Michael Bieber, says Mr. Box came to Tetra Tech after it acquired his past employer, and Mr. Box's academic credentials weren't verified at the time.
Maurice Schweitzer, who studies business ethics at the University of Pennsylvania's Wharton School, urges companies to take a hard line on misrepresented academic credentials "If you say, 'Look, the CEO has been doing a great job, we otherwise have no complaints about this person, so we're going to let it go,' my concern is that you're sending a message throughout the organization that you don't want to be sending," he says. "I'm very concerned that if people believe you can lie and get away with it, then down the line people will start cheating on their expense reports, they'll start misrepresenting their billable hours, they'll start misusing their corporate funds," Mr. Schweitzer adds. Further down the corporate pecking order, inflated credentials are fairly common, according to Jenifer DeLoach, who supervises background checks for corporate clients at Kroll Inc., the investigative arm of Marsh & McLennan Cos. Kroll issues an annual report of its "hit ratio" that says about 20% of job seekers and rank-and-file employees undergoing background checks by their companies are found to have inflated their educational credentials.
Others with degree discrepancies discovered by Mr. Minkow in SEC filings and verified by the Journal with the applicable schools include: Robert Lazarowitz, a director of Knight Capital Group Inc. The New Jersey brokerage firm had said Mr. Lazarowitz earned a bachelor's degree in accounting from the University of South Florida. The school says Mr. Lazarowitz attended USF for only two semesters -- in 1975 and 1976 -- and never earned a degree. In a statement, Mr. Lazarowitz said, "I regret and take full responsibility for this mistake." Knight Capital says it will take "appropriate steps to update our corporate materials." Owen Kratz, the chief executive of Texas-based Helix Energy Solutions Group Inc. A corporate biography of Mr. Kratz claims he has a bachelor's degree in biology and chemistry from the State University of New York at Stony Brook. Not so, says Stony Brook's registrar's office. Mr. Kratz does have a biology degree from the College at Brockport, a less-prestigious SUNY campus where Mr. Kratz transferred in 1974, according to that school's registrar. A Helix Energy spokeswoman, Sheralyn Miller, acknowledges the mistake, and calls it "an internal error." She says Mr. Kratz had never claimed a Stony Brook degree, but "our proxy is off a little bit." Ms. Miller says the company will revise its filings. [CQ]Harold[/CQ] Rafuse, a director of Life Partners Holdings Inc., a Waco, Texas, insurance broker. Life Partners had said Mr. Rafuse held a bachelor's degree in chemical technology from Temple University. But he earned only an associate's degree, not a bachelor's, according to Temple officials. Life Partners' general counsel, Scott Peden, says the company will correct its disclosure in its next proxy. He says Mr. Rafuse had received what he thought was the "functional equivalent of a bachelor's" degree. The discrepancy isn't "material," Mr. Peden says. Kenneth Keiser, the president and chief operating officer of PepsiAmericas Inc., one of the country's biggest Pepsi bottlers. Mr. Keiser has been identified for three years in annual reports and proxy statements filed with the SEC by shipping concern C.H. Robinson Worldwide Inc., where he is a director, as having a bachelor of arts degree from Michigan State University. The university says that isn't so. It says Mr. Keiser attended from 1973 to 1976, but never graduated. A PepsiAmericas spokeswoman, Mary Viola, says the company was aware Mr. Keiser stopped attending college "10 or 20 hours short of a degree." She says C.H. Robinson had mistakenly imputed a bachelor's degree to Mr. Keiser in its past several proxy statements. "I'm sure [Mr. Keiser] does read their proxy, but he doesn't read his own bio," Ms. Viola says. "It's unfortunate that a communication error of another company is drawing attention to this for Ken." Angie Freeman, a spokeswoman for C.H. Robinson, says her company was responsible for the error and had "mistakenly assumed that he earned a degree." But Ms. Freeman says she believes Mr. Keiser signed off on his own mistaken biography. "The company did periodically provide the materials for him to review," she says, in the process of preparing its 2006, 2007 and 2008 proxy statements -- all of which included the erroneous degree."
The WSJ had another article today on this topic, "Resume Trouble." Here is that article.
• Iran Lawmakers Oust Ally of Ahmadinejad
11/5/08 * * *HerbaLifeGregory Probert, the president and chief operating officer of Herbalife Ltd., resigned in April 2008 after he was caught embellishing his academic credentials by fraud investigator Barry Minkow. Herbalife, a Los Angeles marketer of weight-loss products, had said Mr. Probert received a master's degree in business administration from California State University, Los Angeles. It mentioned the degree in at least 19 filings with the Securities and Exchange Commission. But Mr. Probert never finished Cal State's M.B.A. program, where he took classes in the early 1980s, the university said. In response, Mr. Probert said he nearly completed an M.B.A. at Cal State but did not take action to correct Herbalife's biography of him.
• Herbalife President Is Scrutinized
4/25/08 * * *Massachusetts Institute of TechnologyIn 2007, the Massachusetts Institute of Technology dismissed its longtime dean of admissions, Marilee Jones, after the university received an anonymous tip that she had claimed fake academic degrees. She attended college for one year, as a part-time student at the Rensselaer Polytechnic Institute in 1974, but never received the bachelor's or master's degrees that she claimed from RPI. Nor did she receive a degree she claimed from Albany Medical College, the university found. In a statement released by the university, Ms. Jones said she first fudged her résumé in 1979 when she was hired in a junior position in the MIT admissions office. When she was promoted to the deanship in 1997, she "did not have the courage to correct my résumé," she wrote.
• MIT Admissions Dean Lied on Résumé in 1979, Quits
4/27/07 * * *R.H. DonnelleyIn the fall of 2006, telephone-directory publisher R.H. Donnelley Corp. said that its chairman and chief executive never graduated from the Minnesota university he attended. David Swanson attended St. Cloud State University in Minnesota from 1973 to 1976 but didn't earn a degree. R.H. Donnelley had twice issued news releases stating that he had. One was issued to announce Mr. Swanson's appointment as chief executive in 2002; the other announced a promotion in 1999. The company said the detail had never appeared in any document filed with the SEC or the New York Stock Exchange. It said Mr. Swanson didn't claim to be a graduate of St. Cloud State when he was hired 21 years ago. Mr. Swanson remains at the helm of R.H. Donnelly. • R.H. Donnelley Corrects Details On CEO's College Background
9/12/06 * * *RadioShackIn 2006, RadioShack Corp. Chief Executive David Edmondson resigned by "mutual agreement" after he admitted inflating his educational background. Mr. Edmondson acknowledged misstating his educational credentials, saying he believed he received a ThG diploma from Pacific Coast Baptist College -- typically a certificate with fewer requirements than a bachelor's degree -- and not a bachelor of science degree as he previously claimed. But the CEO also acknowledged he couldn't document the ThG diploma.
• RadioShack CEO Agrees to Resign
2/21/06 * * *Smith & WessonJames Minder resigned shortly after being named chairman of gun maker Smith & Wesson Holding Corp. in 2004 when it was learned that he had spent time in prison in the 1950s and '60s for an armed-robbery spree and an attempted prison escape. Mr. Minder confessed his past to directors after getting a call from a reporter. He later spent more than two decades setting up programs and group homes for delinquent, neglected and developmentally disabled children and young adults.
• How Troubled Past Finally Caught Up With James Minder
3/8/04 * * *Bausch & LombIn 2002, eye-care company Bausch & Lomb rescinded a bonus for CEO Ronald Zarrella after learning his biography incorrectly claimed he had an M.B.A. He offered to resign; the board didn't accept his resignation and he remains CEO.
• Bausch & Lomb Backs CEO Despite False M.B.A. Claim
10/21/02 * * *U.S. Olympic CommitteeSandra Baldwin resigned in 2002 as president of the U.S. Olympic Committee after admitting she lied about earning an undergraduate degree from the University of Colorado in 1962 and a doctorate from Arizona State in 1967. She actually attended Colorado in 1958-1959 without graduating and earned a bachelor's degree from Arizona State in 1962. She said she completed the course work for a doctorate but didn't finish her dissertation. * * *Veritas SoftwareIn 2002, the chief financial officer of Veritas Software, Kenneth E. Lonchar, resigned after directors learned he had lied about having an M.B.A. from Stanford University.
• Veritas Finance Head Resigns Amid Resume Discrepancies
10/4/02 * * *A.T. KearneyGene Shen resigned in 2002 as CEO of Chicago-based A.T. Kearney Executive Search after alleged exaggerations of his education and work history surfaced. * * *University of Notre DameIn 2001, newly hired Notre Dame football coach George O'Leary was forced to resign after five days. Mr. O'Leary claimed to have a master's degree in education and to have played college football for three years, but checks into his background showed it wasn't true. Mr. O'Leary, who was mockingly called George O'Really, now coaches at the University of Central Florida. * * *Mount Holyoke CollegeIn 2001, Mount Holyoke College suspended Pulitzer Prize-winning historian Joseph Ellis for a year without pay for falsely telling students that he had fought in the Vietnam War.
• Opinion: A Bright Shining Lie
6/22/01 * * *Maori TVIn New Zealand, Maori TV CEO John Davy was fired and then jailed for three months in 2001 for lying on his application for the job. * * *Sunbeam"Chainsaw" Al Dunlap, ousted by Sunbeam in 1998 amid allegations of accounting irregularities, was later discovered to have been terminated by Max Phillips & Son after seven weeks in 1973 and by Nitec Paper Corp. in 1976 after two years as president, according to his lawyer. The two major search firms checking his employment history never uncovered those dismissals.
• Sunbeam Gives Dunlap the Ax
6/15/98
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