Ebbers sentence opens US corporate debate

Judge Barbara S Jones said the penalty – the stiffest in a corporate fraud case in recent memory – was appropriate given the size and scope of the damages. But is it? Corporate America isn’t sure; there are strong views on both sides of the debate.

The severity of the sentence is outlined in a report in The New York Times, which notes Ebbers was convicted in March on nine counts of conspiracy, securities fraud and filing false reports with regulators. Prosecutors said that he masterminded the fraud to inflate artificially the company\'s earnings and its stock price. According to federal guidelines, Ebbers must serve at least 85% of his sentence. That is the equivalent of 21 years and three months in prison, which would make him 85 on his release. The reports says the severe penalties could also be a sign of what is in store for L Dennis Kozlowski, the former CE of Tyco International, who was convicted of fraud, conspiracy and grand larceny in June and is awaiting sentencing. Full report in The New York Times

The pros and cons of the sentence are being debated in corporate America. Stiff sentences like Ebbers\' and the 15-year term handed down recently to Adelphia Communications founder John J Rigas (80) are having a positive effect on corporate behaviour, according to former prosecutor Seth C Farber in a report in The Washington Post. ‘I think corporate executives are very aware of the recent spate of prosecutions and enforcement actions. People do feel the risk of personal exposure. It\'s causing people to be more cautious in how they act,’ he said. But some lawyers were asking whether the pendulum has swung too far. ‘This sentence is too harsh. I don\'t get the societal purpose that is served by the notion that he\'s going to die in prison,’ said defence attorney Charles A Stillman, who represented another corporate executive recently brought low, former Tyco International Ltd. finance chief Mark H. Swartz. But other legal analysts said harsh prison sentences are vital because they not only deter bad behaviour, they make it easier to persuade lower-level executives involved in fraud to co-operate with prosecutors. Full report in The Washington Post