Sullivan links Ebbers to WorldCom fraud

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BERNARD EBBERS, the former chief executive of WorldCom on trial for allegedly orchestrating an $11bn (pounds 5.9bn) fraud, yesterday faced the most serious evidence so far when Scott Sullivan, the telcom's giant former chief financial officer, took the stand against him.

The prosecution's chief witness, Sullivan said he and his old friend "Bernie" committed the fraud together at the telecoms company. "We did not disclose these adjustments," Sullivan said. "We did not talk about these adjustments, and the information was false."

On the first day of Sullivan's eagerly awaited evidence, he also admitted he took cocaine and marijuana in the years he worked at WorldCom, which now operates as MCI.

Sullivan, who has pleaded guilty to falsifying WorldCom's accounts, is trying to mitigate his own sentence by trying to implicate his old boss, according to Mr Ebbers' lawyers.

They say Mr Ebbers, once a high school basketball coach, lacked the financial know-how necessary to carry out the sophisticated fraud which artificially buoyed WorldCom before it collapsed in 2002, in the biggest bankruptcy ever.

Sullivan attempted to undermine that argument, saying of Mr Ebbers: "He's got a hands-on grasp of financial information." Mr Ebbers faces a prison sentence of up to 25 years if he is found guilty along with Mr Sullivan.

Sullivan described Mr Ebbers' skill in managing WorldCom and in guiding negotiations as WorldCom swallowed up one company after another in the 1990s.

The government contends Sullivan was acting on orders from Mr Ebbers when he directed WorldCom accountants to hide out-of-control expenses, and that the chief executive was driven by keeping WorldCom in the good graces of Wall Street analysts. The case continues.