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Financial

Sullivan to Testify Against Ebbers

Yesterday was schadenfreude day for ex-WorldCom shareholders. The disgraced carrier's former CFO Scott Sullivan admitted conspiracy relating to false financial presentations, while former CEO Bernie Ebbers was formally charged by the U.S. federal government of being a very bad man (see Report: Ebbers to Face Criminal Charges ).

Now Sullivan will testify against his fomer boss, who is to stand trial for criminal fraud, conspiracy, and making false financial statements. And Sullivan is set to nail down Ebbers's legal coffin in a bid to cut back the severity of his own sentence (up to 25 years in prison and fines), having confessed to his role in the fraud. "As CFO at WorldCom I participated with other members of WorldCom to conspire to paint a false and misleading picture of WorldCom's financial results," Sullivan is reported to have told a Federal Court hearing.

In a press conference held Monday, U.S. Attorney General John Ashcroft gave hope to those former WorldCom investors who want to see Ebbers do time behind bars for his alleged financial sins. "Corporate executives who cheat investors by deceiving them about the nature of their businesses are not above the law and will be held responsible."

But while prominent individuals face the rap over the WorldCom scandal, there are those who believe that the modern incarnation of the carrier, MCI (Nasdaq: WCOEQ, MCWEQ), should not be allowed to trade without restrictions once it emerges from bankruptcy protection within the next few months (see Pressure Group Questions MCI Deals).

— Ray Le Maistre, International Editor, Boardwatch

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banobo 12/5/2012 | 2:19:52 AM
re: Sullivan to Testify Against Ebbers Comments like these continue to prove that the Bush Administration is more interested in the affairs of the wealthy and privileged than in the average American: "Corporate executives who cheat investors by deceiving them about the nature of their businesses are not above the law and will be held responsible."

Worldcom sent thousands of average workers, of average lower class to lower middle class wages, to the unemployment office, yet the concern is for the "investors".
btierney 12/5/2012 | 2:19:47 AM
re: Sullivan to Testify Against Ebbers Don't blame the bush administration. If they did nothing you'd be blaming them too.

You're just a clinton loving liberal who hates the fact that bush is such a great american president!
JoeBagadonuts 12/5/2012 | 2:19:46 AM
re: Sullivan to Testify Against Ebbers One thing to consider here is that investors included both workers and average everyday people who's savings were wiped out when the stock went south.

The fund managers made their money on management and transaction fees.
materialgirl 12/5/2012 | 2:19:43 AM
re: Sullivan to Testify Against Ebbers One point Ashcroft does get is that a primary reason our market leads the world is that it is not rigged. We all benefit from that transparency, including workerbees. If our markets do not exhibit superior honesty and openness than others, we deserve to get capital flight. If that happens, with our current account deficit and high general debt levels, we will get a taste of life in Argentina.
dadofamunky 12/5/2012 | 2:19:41 AM
re: Sullivan to Testify Against Ebbers Gotta give the right-wingers credit on this one. I doubted Ascroft had the nuts to go after guys like Lay and Ebbers, who are such ideological and religious soulmates. And yet Justice is making real progress on the corporate fraud cases. Nailing Enron's Fastow to the wall, and now WorldCom's Sullivan, is huge. It's great to see guys like Ebbers and Skilling getting hammered. If this continues, this could be a watershed moment in the history of white-collar crime in this country. Still won't make me vote Republican, but it does look like Ashcroft's principles are consistent and sincere, at least in this area. Good on him. He's actually doing his job.
diag_eng 12/5/2012 | 2:19:40 AM
re: Sullivan to Testify Against Ebbers ... thief -- he's a traitor and a coward as well.

flanker 12/5/2012 | 2:19:33 AM
re: Sullivan to Testify Against Ebbers Funny that the same yes-men that insecure CEO's hire to work for them are also the first to turn states evidence and rat out their boss.

Something to think about the next time you hire a spineless ass kisser.
DocGonzo 12/5/2012 | 2:19:31 AM
re: Sullivan to Testify Against Ebbers
A few comments.

First, without investors there would be no workers. Indeed many (most?) workers were investors in this company (and ironically Enron.) They seemingly all were equally harmed and defrauded.

Corporate execs must be bound to the integrity of their accounting and numbers. It is refreshing to finally see what appears to be accountability in both the WCOM and Enron frauds.

I fail to see how people can tie partisan politics to this latest action. The evident abuse of corporate power in these cases seemingly transcends any political agenda and should strike at the very nexus of right and wrong in this country.

The fact that Sullivan has decided to testify against Ebbers is no character flaw. Abuse of this magnitude deserves no allegiance. I seriously doubt that anyone in an executive position such as CEO could be ignorant of the deceptive tactics used to preserve the sanctity of the story. Ebbers own tactics to leverage loans from the board (lest he have to dump a lot of stock to meet margin calls) seems to show his arrogance in believing he could perpetuate the story.

The bubble was an infamous period which brought out the best and worst in certain individuals. During that period, there were many similar examples of this behaviour but on scales that pale comparatively and which will likely go unpunished. It is imperative that these larger than life examples be brought to justice to establish some level of awareness to this behaviour.

IMHO, this indictment was overdue. May they reap what they have sown.

Doc
technonerd 12/5/2012 | 2:19:30 AM
re: Sullivan to Testify Against Ebbers First, without investors there would be no workers.
Sorry, other way around. Investors should never forget this, but they always do.


Indeed many (most?) workers were investors in this company (and ironically Enron.) They seemingly all were equally harmed and defrauded.
Equally? I don't think so! The little people are always hurt worse.


Corporate execs must be bound to the integrity of their accounting and numbers. It is refreshing to finally see what appears to be accountability in both the WCOM and Enron frauds.
We shall see. Where is Bush's butt-buddy, Kenny-Boy Lay?


I fail to see how people can tie partisan politics to this latest action. The evident abuse of corporate power in these cases seemingly transcends any political agenda and should strike at the very nexus of right and wrong in this country.
The only reason any of these crimes are being prosecuted is because the Democratic attorney general of New York shamed the SEC and Justice Department into the minimal enforcement actions they've taken thus far.


The bubble was an infamous period which brought out the best and worst in certain individuals.
The bubble brought out "the best" in no one.


During that period, there were many similar examples of this behaviour but on scales that pale comparatively and which will likely go unpunished.
This is because the United States is more thoroughly corrupt than any Third World country. China and Indonesia are amatuers compared to us.


IMHO, this indictment was overdue. May they reap what they have sown.
Nothing will happen to any of Bush's friends.
btierney 12/5/2012 | 2:19:26 AM
re: Sullivan to Testify Against Ebbers So your another liberal weenie...

clinton and the dems take credit for the great economy that was all smoke and mirrors. then the bubble they created burst and they blame bush.

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