HealthSouth CEO’s tale of the tape
msnbc.com
FBI recording reveals Richard Scrushy defending accounting tricks
HealthSouth officials quickly had a statue of former CEO Richard Scrushy removed after local radio disk jockeys urged listeners to "liberate" the company by toppling the bronze icon.
By Mike Huckman
CNBC
BIRMINGHAM, Ala., April 14 — Birmingham is no Baghdad. And former HealthSouth Corp. CEO Richard Scrushy is no Saddam Hussein. But their statues have met a similar fate.
WHEN A COUPLE of local radio DJs urged listeners last week to “liberate HealthSouth” and topple Scrushy’s statue outside a sports medicine institute, the company beat any would-be vandals to it and had the statue taken down immediately.
Meanwhile, William Owens is the man Scrushy’s lawyers claim is trying to literally take down their client.
Owens is the former chief financial officer of HealthSouth who wore a wire for the FBI to record a conversation he had with Scrushy last month in the executive suite at HealthSouth headquarters.
Owens began by telling Scrushy about his wife’s concern over Owens’ signing of what he said she called phony financial statements.
“She said, ‘I’ve been reading about Enron and I’ve been reading about WorldCom.’” Owens is heard saying on the tape. “She said, ‘I’m afraid that if you keep this up you may end up in prison.’”
A few minutes later, Scrushy responded to that by saying, “I think what your wife is telling you is right.”
The FBI handed over a 10-minute portion of the recording to SEC lawyers to use in their case to keep Scrushy’s assets frozen.
The attorneys claim under the recently passed Sarbanes-Oxley law, Scrushy is not allowed to spend money he may have gotten by defrauding investors.
But on Friday, U.S. District Court Judge Inge Johnson permitted Scrushy to sell as much as $17 million worth of stock in his brokerage accounts to pay his state and federal taxes.
“I think you do need to pay your taxes. It’s a requirement. So I think it’s a good result also,” said Scrushy’s attorney Thomas Sjoblom.
Sjoblom argued in court that William Owens recorded Scrushy because he wanted to get back at him for demoting him to CFO after a brief stint as CEO when Owens allegedly failed to overthrow Scrushy as chairman.
But on the recording Scrushy, talking to Owens, made veiled references to accounting problems at HealthSouth.
“I just wish we could just burn it and get it where we want it to be and just buckle down on everything,” Scrushy is heard saying. “You’re a bright guy. You oughta be able to engineer your way out of what you engineered your way into. Does that make sense?”
And Scrushy acknowledged that the scandal may be taking a toll on his home life as well. “I mean, hell yeah, I can’t sleep at night. . .I mean, I’m holding my little baby every night and my wife is out of town. I got my little babies, I got my little boy,” he says. “And the reality is, look at how profitable this company is. Do we really want to trash all this?”
But later Scrushy tried to rationalize the alleged fraud. “I am convinced that there are 8,000 companies out there right now that got [expletive] on their books?” he asks. “Hell, yeah. Everyone I know are involved in this. Everyone I know. You know that.”
The feds are still investigating whether or how much Scrushy was involved in the cooking of HealthSouth’s books. His lawyers say he had nothing to do with it.
In the meantime, Scrushy and his wife Leslie — who has taken to reading a bible in the courthouse and occasionally quotes passages to her husband — are lying low, but holding their heads high.
“He has a very strong faith,” Sjoblom said. |
