Star witness says Ebbers helped cook the books
NEW YORK — The former finance chief of WorldCom Inc. testified Monday he worked with CEO Bernard Ebbers to falsify the company’s books, describing his ex-boss as a micromanager fanatical about controlling expenses.
The testimony from Scott Sullivan, the government’s star witness, was the first to directly link Ebbers to the $11 billion accounting fraud that sank WorldCom.
Sullivan, who has already pleaded guilty to fraud in the case, said under questioning from a federal prosecutor that he had cooked the books to bring expenses and revenues in line with Wall Street estimates.
Asked who was involved with the crime, Sullivan listed “Bernie” first, along with four other former WorldCom executives who have pleaded guilty.
“We did not disclose these adjustments,” Sullivan said. “We did not talk about these adjustments, and the information was false.”
Sullivan described Ebbers as a hands-on manager with a “good grasp of accounting concepts” and a keen interest in finances that far exceeded CEOs and CFOs of other companies Sullivan encountered in his years at WorldCom.
Ebbers’ office at company headquarters in Mississippi was littered with thick stacks of revenue papers, printed specially for Ebbers on green-bar papers, on which the CEO would scribble and highlight, Sullivan said.
Sullivan is the linchpin of the federal case against Ebbers, who is accused in a federal indictment of fraud, conspiracy and false regulatory filings — charges that carry up to 85 years in prison.
The description of Ebbers as a manager is key because the prosecution and defense differ sharply on how involved Ebbers was in company finances. The defense has portrayed him as a visionary who left the numbers to Sullivan.
Sullivan pleaded guilty to fraud last year and agreed to testify against Ebbers, hoping his cooperation might ultimately win him a lighter prison sentence.
In addition, Sullivan must also eventually forfeit the proceeds from the sale of a house he is building in Boca Raton, Fla., where he lives — an estate expected to fetch $10 million.