Touro University California
Module 1 Case Assignment
ETH501: Business Ethics
Dr. Gary Shelton
Saturday, April 26, 2014
A Master’s paper submitted to the faculty of
Touro University California
In partial fulfillment
of the requirement for the award of
Graduate Diploma in Master’s Degree in
The purpose of this assignment is to provide a critical analysis of the 2002 collapse of Adelphia Communications as seen through the lens of Immanuel Kant deontological ethics. This analysis will be accomplished by providing a brief time lime of the Adelphia, identifying and discussing two key ethical problems raised and describing ...view middle of the document...
In 1999 at the height of its grandeur, the organization ranked the sixth largest cable network provider in the nation. Adelphia reportedly earned “$3.6 billion in annual revenues” 1 while leveraging its existing brand the customer base grew from “53.5 thousand to an estimated 1.2 million subscriptions”1. The financial success of the organization unquestionably bankrolled the Greek founders lavish spending habits with extravagant personal purchases. For personal gain, Rigas purchased Buffalo Sabres stake in excess of $20 million dollars12 and provided a saltish corporate social responsibility that would ultimately crown this founder, Coudersport, Pennsylvania’s richest man in town9.
In the ethics of deontology (duty) as expressed by Prof. Charles D. Kay “one should act so that you treat humanity, both in your own person and in that of another, always as an end and never merely as a means3”. Therefore, from the founder down to the Director of Internal Reporting each acted unethically, even though many say their initial actions displayed positive intent for the better good of the organization, its community and stockholders; ultimately led to the demise of Adelphia Communications Corporation.
The business code of ethics is defined as what is appropriate behavior and what is not-in other words, it is the ethical obligation collectively for an organization as to what are acceptable decisions and behaviors in both the organization as well as its employees. After an exhausting trial and eight days of deliberations, the Federal District Court in downtown Manhattan handed down a guilty verdict for Adelphia Founder, John Rigas and executives whose lack of business ethics resulted in charges of conspiracy, securities and bank fraud10.
In examining the U.S. Securities and Exchange Commission (SEC) complaint against Adelphia, there is much evidence to reconcile personal spending habits of its founder as what most of its township would consider the norm. According to Associate Regional Director, Barry W. Rashkover5”, Adelphia’s quarterly reporting (Table 1) reveals $2.3 billion of the organizations bank debt that was intentionally excluded from the annual and quarterly financial statements” therefore violating accurate corporate recording and SEC guidelines.
Table 1 Adelphia Communications Quarterly Reporting
Quarter Reported Liabilities True Liabilities Amt Removed From |
Public Company Books |
Q2 | 4,162,154,000 | 4,412,154,000 | 250,000,000 |
Q3 | 4,324,424,000 | 4,574,424,000 | N/A |
Q4 | 12,400,605,000 | 12,650,605,000 | N/A |
Q1 | 12,478,372,000 | 13,096,372,000 | 368,000,000 |
Q2 | 12,990,935,000 | 13,387,935,000 | (221,000,000) |
Q3 | 14,083,426,000 | 15,225,716,826 | 745,290,826 |
Q4 | 16,287,376,000 | 17,468,058,512 | 38,391,686 |
Q1 | 17,270,883,000 | 18,500,298,239 | 48,732,727 |