Posted on 02/07/2005 7:00:55 PM PST by wagglebee
NEW YORK (Reuters) - Former WorldCom Inc. finance chief Scott Sullivan began his long-awaited testimony on Monday by implicating ex-CEO Bernard Ebbers in an $11 billion accounting scandal that drove the telecommunications company into the largest U.S. bankruptcy.
"I falsified the financial statements of the company," Sullivan admitted under questioning from prosecutor William Johnson, who then asked the government's star witness to name anyone else involved in the crime.
Sullivan named five, including Ebbers. He was the first witness during the trial to directly link the one-time chief executive to the accounting fraud he stands accused of orchestrating.
Sullivan also described Ebbers -- who oversaw a telecommunications powerhouse with a workforce of nearly 100,000 -- as an intimidating micro-manager who fretted over whether staffers were stealing coffee from the company kitchen.
But Sullivan, who pleaded guilty last year and agreed to testify against his former boss in hopes of leniency, admitted to more than his own role in the fraud.
He also confessed to a drunk driving conviction and using marijuana and cocaine, as federal prosecutors sought to head off damaging evidence that defense lawyers might bring out.
In what seemed to be preemptive strikes, Sullivan was asked about his $10 million retention bonus, his $15 million Florida home, and his ambivalent feelings about his former boss.
When Assistant U.S. Attorney Johnson asked Sullivan whether he was afraid of Ebbers, he responded: "At times, at times I wasn't. He can be very intimidating."
But Sullivan also described a "very close" relationship with his boss during the 1990s, when working as a one-two punch they built WorldCom from a Mississippi upstart into one of the nation's most powerful telecommunication companies.
By 2000, he said, the relationship frayed under the "stress, tension, disagreements" as financial performance deteriorated. Prosecutors charge that Ebbers, 63, responded by orchestrating a massive accounting fraud, directing Sullivan to have his accountants puff up revenue and hide expenses.
Two years later, in 2002, WorldCom filed for bankruptcy protection, creating public outrage and giving rise to calls for the criminal prosecution of Ebbers.
Lawyers for Ebbers have argued that Sullivan was behind the accounting fraud, that their client stayed away from complex financial decisions.
Sullivan, however, said Ebbers knew more about accounting than many chief finance officers and chief executives he ran across in the industry.
"From the time I met him in 1992, he's not an accountant, but he had a good grasp of accounting," Sullivan said, describing his former boss as "detail oriented" and "a micro-manager."
Sullivan said Ebbers even took an interest in the smallest expenses, such as the cost of supplying coffee to staff.
"He would talk about that there were more coffee filters than coffee bags and that means employees are taking coffee home," Sullivan said.
Ebbers eventually ended the coffee service. "We needed to cut expenses," Sullivan said. "We needed to cut a lot more than coffee expenses."
Another witness, WorldCom internal finance analyst Brady Conner, testified on Monday that Ebbers was so obsessed with costs that he complained about a manager taking overly long smoking breaks and was irked by staff wasting time strolling around a pond on the company's Mississippi campus.
He testified that Ebbers once ordered a security guard at a branch office to fill bottled water dispensers with tap water.
"The employees didn't know the difference," Conner recalled being told by Ebbers.
May Ebbers lose every nickle he has and end up sleeping on the street.
that sounds kinky!
Fingered by a former right hand man.
The fugitive springs to mind! ;-)
Whoever wrote this headline is a riot. Funny stuff.
C'mon, tell us what you really think.
I could not post what I really think of Ebbers.
Maybe I can help get you started: he's a crook, a religious hypocrite, a tightwad, his misdeeds helped start the telecom bust that threw thousands out of work, etc.
-ccm
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