WorldCom CEO Blames Ex-Execs for Woes
By MARCY GORDON
AP BusinesTuesday
July 2, 9:02 pm Eastern Times Writer
WorldCom CEO Blames Former Execs for Accounting Irregularities, Casts Doubt on Arthur Andersen
WASHINGTON (AP) -- The chief executive of embattled WorldCom Inc. on Tuesday blamed former company officials for its multibillion-dollar accounting dodges and cast doubt on auditor Arthur Andersen.
While striking a mostly upbeat tone about the company's future, John Sidgmore said he could not rule out the possibility of bankruptcy for the nation's second-largest long-distance carrier.
Sidgmore said he did not know whether WorldCom's founder and former CEO, Bernard J. Ebbers, had any prior knowledge of the $4 billion hole in the company's books.
"We don't know whether he was involved and we don't know whether he wasn't involved -- and that's the truth," Sidgmore said at a news conference at the National Press Club, where he was peppered with questions about the huge telecommunications company's current woes and future plans.
As for Scott Sullivan, the former chief financial officer fired by the company last week, Sidgmore referred to his role in addressing why the accounting lapses weren't detected earlier. He called WorldCom "a far-flung operation."
"No single operating unit knows what's going on in the rest of the organization, and it all came together at Scott Sullivan's level, to be honest with you," Sidgmore said.
Referring to Sullivan, company controller David Myers and Ebbers, he said: "As far as we know, we know that Scott Sullivan and we know David Myers were involved in it. And I believe they may have ordered a clerk to make these entries. But as far as we know, we don't know anything about Bernie."
Sidgmore expressed optimism at every turn, yet also apologized for "past transgressions" at the company and pledged cooperation as the government investigates.
The Securities and Exchange Commission filed civil fraud charges against WorldCom last week after the company disclosed it had improperly accounted for nearly $4 billion in expenses, thus inflating its earnings. The stunning news also sent the company's once high-flying stock plummeting below a dime and triggered an avalanche of anger from politicians -- President Bush included.
"We want the bad guys exposed," Sidgmore said. "We want the bad guys punished. And we want to move on with our lives at WorldCom."
Despite the company's deteriorating situation, he said he hoped to avoid bankruptcy but would not rule it out. He said WorldCom has about $2 billion in available cash.
"I am not going to stand up here and tell you that there's no way we're going to wind up in bankruptcy of some form, at some point," Sidgmore said. "But right now we are working very, very hard with the banks and others to try and find ways to accomplish our goals without going into bankruptcy."
Sidgmore also said that despite wide publicity given the company's difficulties, it had not yet suffered the loss of a major customer.
The company already has laid off 17,000 of its 80,000 workers, and Sidgmore said additional layoffs were possible.
WorldCom, which owns MCI Communications, is second only to AT&T in the long-distance market.
Sidgmore spoke as technology analysts said that despite WorldCom's considerable Internet holdings, the global network should not suffer any catastrophic difficulties if the company ceases to exist. They said there could be significant slowdowns in Internet traffic, however.
Andersen was WorldCom's auditing firm at the time the irregularities occurred, and Sidgmore referred to Andersen several times.
"They swear up and down that they didn't know anything about this," he said. "We internally are a little bit concerned that they didn't know anything about it, because if it was going to be obvious to anyone it should've been obvious to them."
"It just tells you how difficult it may have been to find these transactions," he said.
Andersen, once one of the nation's largest accounting firms, has been reduced to a shadow of its former corporate self as the result of its role in Enron's collapse. Andersen was recently convicted of one count of obstruction of justice for destroying Enron-related documents.
Sidgmore began his news conference by taking note of an "understandable outpouring of outrage and anger," but he firmly insisted that the management team he heads had worked from the outset to make the facts public.
"It was this company that audited our auditors. It was this company that turned ourselves in," he said. "It is this management team that will take this company forward and restore public confidence."
That remained to be seen.
On Tuesday, WorldCom requested a hearing to contest the Nasdaq Stock Market's plan to strip its battered stock from trading starting Friday. The delisting will be put on hold pending Nasdaq's final decision.
Harvey Pitt, the SEC chairman, has derided as "wholly inadequate and incomplete" a sworn statement in which the company explained how it had come to mask the $4 billion and then discover the deception.
Whatever the impact on the company itself, WorldCom's travails have robbed thousands if not millions of investors of retirement funds, and changed the political landscape.
Bush has repeatedly expressed outrage at the company's behavior in recent days. And Senate Majority Leader Tom Daschle, D-S.D., has announced that legislation to crack down on irresponsible corporate behavior will be the first order of business when lawmakers return to the Capitol next week.
"We completely agree with the president on this and I am committed to operating WorldCom with the highest possible standards of ethics and integrity," Sidgmore said.
Despite Pitt's criticism, WorldCom defended its report as an accurate accounting of what happened. |
