Trial hears of books cooked at WorldCom

Published on Wednesday 9 February 2005 12:11

WORLDCOM’S former boss Bernie Ebbers ordered adjustments to the company’s books, the telecoms firm’s ex-financial chief has testified at a fraud trial in the United States.

Federal prosecutors are alleging that in 2000 Mr Ebbers refused to admit that his company’s earnings were falling short of expectations and instead orchestrated a massive accounting fraud.

The events represent the biggest accounting scandal in US corporate history, putting even the Enron scandal in the shade.

Scott Sullivan, WorldCom’s ex-financial chief, who has already pled guilty to fraud and conspiracy, is the first witness to link Mr Ebbers directly with the fraud. He said he cautioned his boss that revenue would have to be adjusted upward by more than 70 million to meet analysts’ expectations.

"I told Bernie this isn’t right," Mr Sullivan said. "We’re doing this, we’re making this change, we’re making this adjustment because this is the only way I can get the numbers up to the expectations of the marketplace."

Mr Sullivan then testified that Mr Ebbers looked at a piece of paper with the numbers, "studied it for a while and looked down and said, ‘We have to hit our numbers.’"

Prosecutors say that Mr Ebbers directed Mr Sullivan to direct his accountants to puff up revenue and hide expenses to keep the stock price from falling too sharply.

In 2002, investigators uncovered the accounting entries, causing WorldCom’s financial collapse with a hole in its books of around 6billion. But prosecutors did not bring charges against Mr Ebbers until Mr Sullivan agreed to cooperate last year after pleading guilty to fraud and conspiracy.

Mr Ebbers could face a sentence of 85 years if convicted of all charges.