DJ HealthSouth/Congress-2: Scrushy Attorneys: Hearing Unfair
By Mark Wigfield Of Dow Jones Newswires WASHINGTON (Dow Jones)--A House hearing examining the financial collapse at HealthSouth Corp. (HSC) got off to a bumpy start Thursday as former chief executive Richard M. Scrushy exercised his Fifth Amendment right against self-incrimination.
But that wasn't until the chairman of the House Oversight and Investigation subcommittee, Rep. James Greenwood, R-Pa., played a tape of Scrushy's interview on the "60 Minutes" television program on Sunday night. In that interview Scrushy proclaimed his ignorance of accounting irregularities that lead the company to overstate profits by $2.5 billion, despite guilty pleas entered by 15 executives to fraud charges in an investigation of the matter.
Flanked by his two lawyers, Scrushy agreed after consultation to Greenwood's demand that he be sworn in. He then read a one-page statement complaining that he would have testified had the panel subpoenaed his accusers to testify under oath.
"The committee wants me to answer charges without facing my accusers," Scrushy said. "I do not believe this is fair. I am, therefore, by advice of counsel, forced to take the Fifth Amendment today until I can get a venue where I can face my accusers."
Scrushy added that once he does testify, the committee "will also know that there is not now, and never has been, any 'financial collapse' of HealthSouth. The only collapse has been the temporary one in the HealthSouth stock price caused by the manner in which this matter was investigated last March, and the excess of media publicity generated."
Scrushy's statement prompted the top Democrat on the panel, Rep. Diana DeGette of Colorado, to request that House counsel determine whether by issued the statement Scrushy had waived his Fifth Amendment rights.
Members continued to question Scrushy, asking, among other things, whether he is innocent, but he repeatedly invoked his Fifth Amendment rights. Greenwood then excused Scrushy from the hearing and he and his lawyers immediately held an impromptu press conference outside the hearing room.
One attorney, Donald Watkins, said it was a matter of "simple fairness" that he should be able to face his accusers in the hearing. Committee spokesman Ken Johnson later told reporters, "Unless he is willing to testify under oath, we won't believe a word he says."
The former HealthSouth executives told investigators that Scrushy ordered them to inflate the company's financial results to meet Wall Street expectations, and manipulated reserves and accounting to back it up. Investigators are also looking into whether Scrushy took advantage of his knowledge of a probe into the matter to sell stock before its value dropped precipitously on the news.
The hearing is expected to continue into the afternoon.
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