Ethical Behavior of BellSouth Corp.

During the 1980s, attention began to be focused not only on what business companies were in, but on how that business was conducted. Insider trading, mergers and acquisitions, health related issues at Love Canal and Three Mile Island all became rallying points for considering the ethics of how organizations are run. Businesses discovered that it was not important just from a theoretical moral standpoint how they conducted their operations, but also from a very real financial aspect. Individuals and groups who felt they had been wronged began to seek redress from the courts, and often received large settlements. This research examines one company, BellSouth Corporation, aspects of its ethical behavior during the 1980s and early 1990s, and the effect of its behavior on its financial performance.

BellSouth Corporation is one of seven regional holding companies (RHCs) spun off from American Telephone and Telegraph (ATT) in 1984. There were 22 Bell operating companies that were combined to form the regionals. This divestiture which begun the company was itself the result of an antitrust suit, and can be considered the first ethical issue that confronted the company. The antitrust suit was brought by what is now MCI, which charged that ATT violated antitrust and monopoly laws through its control of the nation's phone system. MCI held that the monopoly effectively prohibited competition, an unethical (and illegal) position. After many years of legal wrangling, the courts f

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hat it had offered refunds to 30,000 affected customers (Collingwood, July 27, 1992, p. 40). Despite the company's protests and claims that it had taken steps to alleviate the problems, it eventually settled the dispute by announcing a $15.2 million refund program to Florida customers. The settlement meant that no criminal charges would be brought against the company in connection with the case. In addition to billing customers for services they did not order and intentionally overbilling customers, the company also failed to pay required rebates for phone outages that lasted more than 24 hours. Under the agreement, Southern Bell issued refunds and credits to 900,000 of its 3.8 million Florida customers. The company was also placed on a three-year review program and paid the state $1.4 million for the cost of the investigation. Prosecutors indicated at the time that criminal charges might be brought against individual employees involved in the case, although the company itself would be immune from such prosecution ("Southern Bell settles dispute, October 10, 1992, C3). The company's problems with customer rates continues, despite its settlements in the past. In January 1994, the company announced that it would cut its rate

Category: Business - E