Lack of Ethics, Corruption, Same Old Same Old…
Recently Ebony Magazine ousted CEO Willard Jackson for many of the same reasons Bernie Ebbers was sent to jail for the WorldCom scandal in the early 2000s. Jackson was forced out after the board discovered that he took personal loans secured by Ebony without the Board’s permission. Taking loans against companies by CEOs was common practice but it is dangerous because the loans are often secured using assets that belong to investors. This is a critical situation for Ebony because it has over $10 million in loans it cannot pay (Channick, 2020).
Culturally, Ebony has always had a strong ethical and social justice view but with the company failing in the digital age, weaknesses in its culture are appearing. Lack of oversight and survival mentality seem to be driving behavior to make money ignoring ethics (Asif, Qing, Hwang, & Shi, 2019).. The ability of Jackson to commit fraud in this manner reflects an environment of poor ethical oversight as well as accounting operations.
Like all cases of corporate fraud, leadership fails to identify and fix ethical loopholes and issues within companies. In fairness, Ebony’s leadership may simply be fighting to keep the company afloat and inadvertently allowed an opportunity for Jackson to commit fraud.
Currently, Ebony’s fate hangs in the balance with the company in default on loans. Perhaps the lesson in this situation is that companies need to draw closer ethically when times get hard. By allowing the company culture to take on a survival mentality this allowed for a culture ripe for fraud.
“Ebony is down to five employees and has yet to appoint a new CEO. Walthour said the company is in the process of hiring executives and editorial talent and hopes to rebuild a robust online presence within three months” (Channick, 2020).
With such a small staff an argument for too much control for the CEO can be made. In most situations where fraud of this nature occurs, it is the result of an ethical silo in which a single person or small leadership makes all the decisions (Asif, Qing, Hwang, & Shi, 2019).
Asif, M., Qing, M., Hwang, J., & Shi, H. (2019). Ethical Leadership, Affective Commitment, Work Engagement, and Creativity: Testing a Multiple Mediation Approach. Sustainability, 11(16), 4489.
Channick, R. (2020, July 23). Ebony ousts CEO, exits print as it struggles to stay relevant — and solvent — for the Black Lives Matter generation. Retrieved from Chicago Tribune: https://www.chicagotribune.com/business/ct-biz-ebony-magazine-ceo-print-black-lives-matter-20200723-jlwydybvmvbopn3z3k3ijzafbu-story.htmlPhoto by Verne Ho on Unsplash