Washington Lawyer Helps Companies Fess Up
By Jonathan Krim
Washington Post Staff Writer
Wednesday, July 3, 2002; Page E01
William McLucas calls himself "a pretty boring lawyer who is just trying to get through the day." Well, maybe, but the career Washington attorney has become the go-to independent investigator for companies involved in high-profile financial scandals.
When Enron Corp.'s board of directors wanted its own inquiry into the energy-trading firm's byzantine partnerships that inflated profits and enriched its executives, it hired McLucas to lead the investigative team. The result was a report that shocked the nation and provided a road map for ongoing investigations.
And last week, when WorldCom Inc. disclosed that it had improperly accounted for $3.9 billion in expenses, its board turned to McLucas, a partner at Wilmer, Cutler & Pickering, to head an internal inquiry that began last weekend.
Companies in such straits seek a harsh medicine: independent reports that probably will offer more embarrassing disclosures but in so doing will help restore credibility and demonstrate a commitment to fixing problems and exorcising demons.
That requires a lot of trust in the inquisitor. Enter McLucas, 51, who spent more than 21 years at the Securities and Exchange Commission and knows the terrain of examining financial impropriety as well as anyone. But personal qualities set McLucas apart, according to those who have worked with him.
"His total integrity, charismatic personality and absolute lack of artifice of any kind make Willie one of the most effective and engaging professionals I have ever known," said Arthur Levitt Jr., who was the chairman of the SEC when McLucas ran the agency's enforcement division. "Bill was always restraining me. I tend to be more impulsive. He tends to be more measured."
Indeed, it is difficult to find anyone with even an equivocal whisper about the man, a rarity in political Washington.
"People are drawn to Bill; they want to be around him," said Mary L. Schapiro, a former SEC commissioner who now is vice chairwoman of the National Association of Securities Dealers. "It's very interesting to watch."
McLucas approached the Enron and WorldCom jobs with his trademark deliberation.
"You go into it listening, trying to get the best sense you can have about what the problems are," he said in an interview. And he helps clients recognize the importance of disclosure of the results.
"That goes as much to the credibility as what it is you ultimately say," he said. Enron made its report public, and WorldCom chief executive John W. Sidgmore has promised to "make all the facts available" once the company has them.
In the case of Enron, McLucas worked with members of his law firm to help produce a report written by William C. Powers Jr., dean of the University of Texas Law School, who headed the overall inquiry.
The scathing report faulted senior Enron executives for either participating in or ignoring Enron-funded partnerships that made executives tens of millions of dollars and allowed the company to hide huge losses and debts.
McLucas would not comment on the ongoing WorldCom investigation.
The company fired its chief financial officer, Scott D. Sullivan, who the company says masterminded its scheme to improperly spread expenses over several years. Sources said the investigation will range beyond Sullivan and departed comptroller David F. Myers and will include former chief executive Bernard J. Ebbers.
McLucas, who grew up in the tiny town of Lilly in western Pennsylvania and attended Penn State University and then the Temple University law school, said he worries about the state of corporate credibility in the wake of the wave of financial misdeeds, but he also worries about an overreaction in response.
"The public pressure to move quickly and the political criticism concerns me," he said. "People have seen a breakdown in many of the market structures . . . that we relied on, but we need to sort this out before we decide that the system can't be trusted."
McLucas added that he thinks the SEC has moved aggressively to tackle the issues and is doing as much as it can with limited resources, which he said need to be increased.
© 2002 The Washington Post Company
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