The former chairman of WorldCom testified yesterday that finance chief Scott Sullivan told him in 2002 that Chief Executive Bernard Ebbers...
NEW YORK — The former chairman of WorldCom testified yesterday that finance chief Scott Sullivan told him in 2002 that Chief Executive Bernard Ebbers did not know about the company’s improper accounting entries.
Bert Roberts, who held the title of honorary chairman of the board at the time, said he questioned Sullivan on June 20, 2002, as WorldCom’s massive accounting fraud was beginning to come to light.
“I asked Scott if Bernie knew,” Roberts said. “And Scott’s answer to me was that Bernie did not know of the journal entries.”
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On cross-examination, Prosecutor David Anders stressed the phrase “journal entries,” suggesting Sullivan was referring only to the specific entries made by lower-level accountants, rather than to the broader fraud.
Roberts took the stand as defense lawyers continued to present their case on behalf of Ebbers, who is accused of orchestrating the $11 billion accounting fraud that drove WorldCom into bankruptcy in 2002.
Sullivan testified earlier that Ebbers was aware of the fraud and that he repeatedly told the CEO he thought the accounting was improper.
He also testified, under questioning from the defense, that he did not recall whether Roberts had asked him in 2002 whether Ebbers knew about the improper accounting.
Earlier yesterday, former WorldCom internal-auditing chief Cynthia Cooper described how she and others gradually uncovered that accountants were hiding expenses by classifying them as capital expenditures, a type of asset.
She also spoke of a conversation in which Sullivan became angry at her for taking questions about accounting to Arthur Andersen, WorldCom’s outside auditor, rather than to accounting officials inside the company.
“At that point,” Cooper said, referring to spring 2002, “I would say he was angry and aggravated.”
In a later conversation, Cooper said, when she complained to Sullivan that an internal official was not cooperating, Sullivan became angry.
“I had never seen him like that before,” she said. “He started screaming at me that ‘This is all your fault,'[and] just went into a tirade.” She said she feared she would lose her job.
Cooper shared in Time magazine’s 2002 Person of the Year award for being the whistle-blower who alerted the WorldCom board of directors to the accounting fraud.
On the witness stand yesterday, she described unearthing “a spider web of transactions” that was not easy to track through the company.
A third defense witness who handled mergers and acquisitions for WorldCom testified yesterday that Ebbers never ordered him to stop talking to potential partners — including Qwest and Verizon — in 2001 and 2002.
“No, we were working very hard during that period of time,” said the witness, Bill Grothe, who was vice president for corporate development.
On cross-examination from a federal prosecutor, Grothe admitted that he had no knowledge of the accounting decisions at WorldCom and that Ebbers helped him get his current job at another company.
Jurors were excused until Monday. Judge Barbara Jones has not ruled on several defense requests, including granting immunity from prosecution to three people the defense wants to call as witnesses.
Ebbers, 63, is accused of fraud, conspiracy and making seven false filings to the Securities and Exchange Commission. The charges carry up to 85 years in prison.
WorldCom was forced into bankruptcy in summer 2002, when the fraud became known. It has since re-emerged under the name MCI, which is being bought by Verizon for $6.7 billion in cash and stock.