March 14, 1998

Drilling Down

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Richard Scrushy, founder of HealthSouth Corp., was indicted on 85 counts of fraud, money laundering, and other crimes in connection with a $2.7 billion accounting fraud that has nearly bankrupted the company. He was accused of conspiracy, mail fraud, wire fraud, securities fraud, and making false statements.

The man helped build HealthSouth into the biggest U.S. operator of rehabilitation hospitals. The company employed 50,000 employees at more than 1,700 facilities.

What went wrong? People say Scrushy conspired to inflate earnings and launder money to support his lavish lifestyle—a lifestyle that included houses, aircraft, a marina, jewelry, Picasso and Renoir paintings, and a Rolls-Royce and a Lamborghini. He gave generous donations, and his name is emblazoned across a college football stadium, a road, a library, and a Jefferson State Community College campus. He spent big—and prosecutors planned to seize $279 million worth of his assets.

Scrushy made a big name for himself in the business world. He was “successful,” but that didn’t stop him from failing the biggest test of all—the test of character. He brought down his own name, landed in hot water, and stands to lose plenty of riches.

The worst part: Employees lost their jobs, their retirement, the money they invested. A new management team is now struggling to pay down more than $3 billion in company debt and to avoid bankruptcy. The company stock, which once traded as high as $30 a share, has been closing at lower than $3.

All because of one person’s lack of character. All because of greed, corruption of power, and the desire to get more, do more, and be more. Scrushy failed to use his talents for good, and it cost him dearly. That’s not what the Power of One is all about. The Power of One condones using power for good—to help others, to build a company, to build yourself—but in a trustworthy, honest, and respectable way. That’s a lesson Scrushy—and many other executives in the same boat as him—probably wish they would have learned a long time ago.

Either they learned it and forgot it or never learned it in the first place. Scrushy chose himself into bad character. His talents were given to him but his character was something he was growing and protecting everyday.

Men best show their character in trifles, where they are not on guard. It is in insignificant matters, and in the simplest habits, that we often see the boundless egotism which pays no regard to the feelings of others, and denies nothing to itself. – Arthur Schopenhauer

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