Fresh charges laid against WorldCom chief financial officer Scott Sullivan

Prosecutors in New York released a list of seven new charges against Scott Sullivan, the chief financial officer of WorldCom, including securities fraud, apparently after a breakdown of plea bargain negotiations.

The new charges add a new twist to the shocking tale of WorldCom, which declared bankruptcy in July after revealing that it had hidden $3.8bn (£2.5bn) in costs to meet earnings targets and protect its share price. Mr Sullivan is charged with overseeing the scheme.

Also indicted yesterday was Buford Yates, WorldCom's former director of general communications. However, no charges were released in connection with David Myers, the company's former controller. He and Mr Sullivan were arrested and hit with separate criminal charges last month.

While no details were made public, it was reported that prosecutors had been pursuing a plea bargain deal with Mr Sullivan, 40, in the hope that he would co-operate in building a broader case against WorldCom and possibly against its former chief executive, Bernie Ebbers.

In a separate development, documents submitted by Salomon Smith Barney to a committee on Capitol Hill this week revealed that the bank allocated shares in hot new public offerings to Mr Ebbers over three years worth $17m.

Investigators want to know if the shares were given as an inducement in return for which WorldCom used Salomon for its investment banking needs. Salomon has maintained its IPO allocations were legal.

Free on bail of $10m, Mr Sullivan could get up to 65 years in prison if convicted on charges of securities fraud, conspiracy and filing false statements with the Securities and Exchange Commission. But federal guidelines call for a sentence of 10 years or less.

The bankruptcy filing was the largest in US history, bigger even than the filing made by Enron last year. WorldCom, which owns MCI, is the second-largest carrier in the US and is responsible for about half of its internet traffic.Prosecutors also named two other executives, Betty Vinson and Tory Normand, as co-conspirators who are nonetheless not charged. The papers suggested that both executives are meanwhile co-operating with the prosecution.

There was no comment last night from Mr Sullivan's lawyer, Irv Nathan, but in the past he has urged that there should be "no rush to judgement" in his client's case.