WorldCom CEO apologizes in Washington

WASHINGTON--WorldCom Chief Executive John Sidgmore trekked to the nation's capital on Tuesday to reassure regulators, apologize publicly, and pledge that financial shenanigans are in the troubled company's past. In his first public appearance since WorldCom became embroiled in a $3.85 billion accounting scandal, Sidgmore acknowledged there has been an "outpouring of outrage and anger" directed at his firm and promised to do whatever was necessary to regain the public's trust.

"While the deeds we uncovered were part of a past administration, I want to apologize on behalf of everyone at WorldCom," Sidgmore said.

Tuesday's press conference comes at a crucial time for the troubled telecommunications giant, which stunned Wall Street last week when it announced it had improperly accounted for nearly $4 billion in expenses, making its results for the last five quarters look much better than they actually were.

Earlier Tuesday, Sidgmore met with Securities and Exchange Commission President Harvey Pitt, who had blasted the company for giving the SEC a "wholly inadequate and incomplete" answer when asked to account for how the intentional accounting error took place. Pitt said WorldCom's five-page response was largely a timeline of events and "demonstrates a lack of commitment to full disclosure to investors and less than full cooperation with the SEC."

Sidgmore said he had agreed to "clarify our filing," cooperate closely with the SEC, and not give executives excessive payments to prevent them from leaving. He said he also met with Federal Communications Chairman Michael Powell, but would not say whether the FBI or U.S. Justice Department had requested that WorldCom turn over internal documents.

At issue is more than just verbal jousting between an ailing company and Pitt, who is working to crack down on accounting problems and deflect criticism the SEC has been too lax. WorldCom, whose woes are likely to ripple throughout the tech sector, is in default with its creditors and has to convince them to invest more money so the company can restructure.

Analysts have predicted that WorldCom, which counts MCI and UUNet as its prized assets, is likely to file for bankruptcy. Sidgmore said that while WorldCom couldn't rule out a bankruptcy filing, the company had "significant cash on hand."

Sidgmore also stressed WorldCom's "commercial and national security" importance, noting that WorldCom provides Internet services to some 100 countries on six continents. "WorldCom is a key component of our nation's economy and communications infrastructure."

No matter what happens, Sidgmore said, there's little chance that customers will lose dial tone or Internet connectivity.

"I don't think there's much of a chance of any blip in service (or the) network going dark under any circumstances," he said. "I'm as confident as I can be that customers won't wake up without any service."

Meanwhile, WorldCom reportedly is fighting to keep its customers, which are actively being targeted by rivals such as Cable & Wireless, Sprint and SBC Communications, among others. The Bush administration said Monday that it may suspend future business dealings with WorldCom.

Sidgmore said that press reports have been exaggerated. "We have not had a single customer cancel yet despite all the histrionics," he said.

To add another wrinkle to the saga, WorldCom could be delisted from the Nasdaq as soon as Friday. WorldCom shares crumbled more than 90 percent Monday amid record trading volume of more than 1.5 billion shares. Trading was also heavy Tuesday.

Analysts said it's unclear what will happen to WorldCom or its assets. Many industry sources say WorldCom will first try to file for Chapter 11 restructuring and emerge as a slimmer company that could be acquired by one of the Baby Bells.

If that fails, WorldCom could have a high-tech garage sale. "If efforts to restructure as a going concern fail, we believe the company will be forced to liquidate its assets and distribute the proceeds to debt holders," Friedman Billings & Ramsey analyst David Marsh said.

Neil Boortz; 7-02-2002

Many of us got up Saturday morning ready to enjoy a day of relaxation, a round of golf or maybe a hike in the North Georgia mountains. Then we open the newspaper and see those pictures of people carrying their cardboard boxes out of the Alpharetta WorldCom offices. They have just been fired.

While we're teeing one up on the par 5 fourth, they're looking at help-wanted ads, writing resumes and trying to figure out how to hold the creditors at bay.

For the most part these people didn't lose their jobs due to their own incompetence or lack of a work ethic. They lost their jobs because the people who hired them were dishonest – they were crooks. The top guns at WorldCom, those in the six- and seven-figure class, were cooking the books. They were taking ordinary expenses and putting them on the books as capital expenditures.

Four billion, folks. Billion – with a 'B'. That's about how much these jerks overstated the WorldCom earnings. The higher the earnings, the more valuable their stock holdings and options.

Now the people who helped them make WorldCom what it was are making minimum payments on credit cards and holding garage sales while the people who cooked the books yank the ripcords on their golden parachutes and float off to comfort somewhere – often in Florida.

It shouldn't be that way. These people should be going to jail. They should be trading their corporate suits for prison uniforms and their fancy letterheads for prison return addresses.

They have stolen from their employees and shareholders as surely as any bank robber has stolen from depositors. They didn't use a gun. They used pencils, balance sheets, computers and Arthur Andersen.

They then bail out of their stock holdings before the truth is known and run off to Florida to build $20 million mansions.

It's not that we need new laws here. The laws are on the books. They just need to be enforced. President Bush has already indicated that he is about fed up and that he wants the Justice Department to go after these crooks. Arrest them, charge them, and let them go up in front of a jury of their former employees.

Find a way – a legal way – to get at their assets. I would dearly love to see one of these multimillion-dollar mansions seized and sold, the proceeds used to reimburse some employees who took a plunging stock bath.

The free enterprise system works. Like anything else, though, it depends on honesty. You report your earnings and expenses honestly. You give the taxpayers honest and complete information from which they can make their investment decisions. Any attempt to trick the investment community, and any support of those efforts by accounting firms, should be met with the full force and effect of law enforcement.

These crooks in pinstripes have done more to plunder and pillage than all of the bank robbers in this country in the past 10 years COMBINED. Prosecute them and lock the bastards away.

Neil Boortz; 7-02-2002

Now the people who helped them make WorldCom what it was are making minimum payments on credit cards and holding garage sales while the people who cooked the books yank the ripcords on their golden parachutes and float off to comfort somewhere – often in Florida.

Unfortunately for Worldcom corporate officers, the SEC has placed a restriction on WorldCom that effectively limits anybody at the VP level or above from getting compensated any amount in excess of $100,000.00 until this scandal is investigated. Still, it's highly likely that the insiders have already bailed out of the stock at its apex ... so they already have the golden parachute on the plane.

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