The Hindu : International : WorldCom's ex-chief jailed

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Friday, Jul 15, 2005

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International

WorldCom's ex-chief jailed

David Teather— © Guardian Newspapers Limited 2004

Ebbers blames the accounting fraud on his chief financial officer Scott Sullivan

NEW YORK: Bernard Ebbers, the former chief executive of WorldCom, was sentenced on Wednesday to 25 years in prison for his role in the $11-billion fraud that drove the once high-flying American company into the largest bankruptcy in corporate history.

Mr. Ebbers (63), wept audibly as the sentence was read out, according to reporters in the courtroom, dabbing his eyes with a white handkerchief. He cut a figure far removed from the swaggering chief executive of the firm's heyday.

He had been found guilty in March on nine counts of fraud, conspiracy and making false filings with regulators, following a trial that lasted six weeks. The strain of the past few months clearly told on Mr. Ebbers as he grabbed a photographer's camera with both hands and forced him aside on his way into the court. He remained silent during the sentencing and left without making a statement to the media outside. He has been ordered to report to a prison in Yazoo City, Mississippi, on October 12 to begin his sentence.

The sentencing caps a remarkable saga of greed and ambition turning to desperation that has come to symbolise for many the boom and bust of the late 1990s. Mr. Ebbers, a former milkman and basketball coach, started WorldCom as a telephone reselling service in 1983, building it into one of the leading players of the technology boom as he went on an acquisition spree with Wall Street acting as cheerleader. At its peak in 1999, WorldCom was valued at $180 billion and Mr. Ebbers was one of a new breed of celebrity chief executive.

Things quickly started to go wrong. As the market began to disappear in 2000, WorldCom began fudging its books, wrongly classifying expenses and inflating revenues, to ensure it met Wall Street targets.

Mr. Ebbers resigned in March 2002 amid an accounting investigation. In July of that year WorldCom made the largest ever bankruptcy filing, wiping out billions of dollars of investors' cash and costing thousands of jobs.

Mr. Ebbers had protested his innocence during the trial, blaming the fraud on his chief financial officer, Scott Sullivan. Mr. Sullivan had already pleaded guilty. He is to be sentenced next month.

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