"Family First" downfall of Adelphia Communications Corporation

The Adelphia Communications scandal is considered one of the highest-profile white-collar fraud cases in the post-Enron era. Adelphia Communications was a cable company founded by John Rigas in 1952. What could have been a great example of the American Dream ended up as a great unethical scandal and 15-20 years in prison for CEO John Rigas and his sons. Rigas came form a family of Greek Immigrants and founded Adelphia with a mere $300 and turned it into a multi-million dollar company. In March of 2002, the world discovered that the Rigas family borrowed $3.1 billion from Adelphia to buy Adelphia shares without disclosing the loan and many other family secrets became exposed. Investors had not been getting a clear picture of Adelphia's business since 1999, Adelphia misrepresented earnings by $160 million in 2000 and $210 million in 2001. Adelphia never managed to successfully transition from a family-owned operation to a public company with shareholders.

 John Rigas was not ethical because he did not seem to have concern with the values or morals that society found appropriate. He did not seem to represent what it means to be a morally decent being by misrepresenting earnings to his shareholders. He definitely is representing Ethical Egoism, which states that a person should act so as to create the greatest good for herself or himself. Adelphia prosecutors accuse Rigas of using complicated cash-management systems to spread money around to various family-owned entities and as a cover for stealing about $100 million for themselves. In this case John Rigas was looking out for the good of his family and did not stop at anything to provide them a wealthy life even at the cost of the companies shareholders. All of his family received special treatment,John Rigas gave his wife Doris, a $371,000 contract to decorate Adelphia buildings with $12.4 million in furniture from a Rigas family business. The Rigas family used the corporate jets for personal trips including a trip to African Safari. They also invested $130 million in the Buffalo Sabres hockey team and built a golf course on property owned by Adelphia. With Adelphia's money, the Rigas family secured two New York City apartments reserved for John Rigas' daughter and her husband, Peter Venetis.

Due to his passion for his company, close family relationships, compassion for the his employees and people in the community in which Adelphia was located I would have believed Rigas was an authentic leader. Which is interesting because his actions prove he wasn't and that brings up the question of what really is an authentic leader? Our book makes a great point on a criticism of authentic leadership where it asks the question of how moral values affect the components of authentic leadership. He might have been an authentic leader in the beginning of his career but his values might have changed placing his family and life style first and therefore affecting his authentic leadership.

Rigas claimed “In my heart and in my conscience, I’ll go to my grave really and truly believing that I did nothing but try to improve the conditions of my employees,” he said. I believe with this statement he used the third theleological approach of altruism that states actions are moral if their primary purpose is to promote the best interest of others. “Our intentions were good. The results were not,” says Rigas. He believes that he was helping out his employees out and that allowed him to act this way.


Liz Ramirez

Link:

http://www.msnbc.msn.com/id/8291040/ns/business-corporate_scandals/